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China now Controls Bitcoin and that’s just the Beginning

Americans have had it good for a long time. Since the end of WWII, it has been a privilege to be an American. Since the United States took over the Global Reserve Currency from Britain in 1944 at Bretton Woods, life couldn’t be better for an American. When you have a license to print money that everyone else in the world must use, you can do a lot of things the rest of the world can’t do.

You can create the biggest, baddest military in history. Your culture can flourish with the latest technology in automobiles, computers, sports, media, and Hollywood. You can create, in essence, the world’s most dominant empire since the Romans. For Americans, that’s generally a good thing. Not knowing what real inflation is like (the rest of the world gets that), or to have the indignity of a foreign military base built in your cities because the ruling American empire feels like it. These are things the privileged American has never had to know. Alas, all good things must come to an end. There’s a new global empire growing. It’s been slowly changing the world for the last fifty years. And now, it’s about ready to change everything forever.

china-now-controls-bitcoin-and-thats-just-the-beginning

The Era of the Red Dragon Begins

china2China, up until about 50 years ago, was a small-time player on a global scale. They have had legendary wars with Japan, but they did not have any real influence over global markets of commerce. Long story short, their ability to manufacture goods of high quality at low prices, almost exclusive land rights to mine the critical “Rare Earth Elements” (The secret ingredients that make your hybrid, cellphone, and laptop so epic), and create economies of scale in food production and manufacturing has begun to bear fruit. China is now the world’s largest economy, and given their population is four times that of the U.S., there is more where that came from.

Bitcoin is largely an American invention. While no one knows who Satoshi Nakamoto is, it is believed that Satoshi primarily spoke and worked on Bitcoin in English, resided on the west coast, and refined his protocol with the late Hal Finney over six years ago. Yet just 18 months ago, China began to get a taste of the wonders of Bitcoin, and it blew the roof off of the market, driving prices to over $1100 USD within a couple of months. Bitcoin never had that level of fervor as a new currency/investment in the U.S. because Americans have been so privileged as to have the global reserve currency as their national currency. Bitcoin is just a cute speculative investment for Americans. For anyone outside of the U.S., it can represent much, much more. The average Chinese investor quickly saw a decentralized currency not manipulated by the People Bank of China as a wonderful thing and acted on it. The average American should be just as hyped by the invention of economic freedom, but, again, there goes that privileged upbringing again.

The Chinese government got wind of the financial shift in the markets and countered, making Bitcoin persona non grata when it came to banking and regulatory authority. They have also censored Bitcoin rallies and conferences, to keep a lid on Bitcoin’s publicity and level of interest nationwide. Coupled with the Mt. Gox collapse, this started a financial market crash that only now Bitcoin is starting to recover from. This is just a taste of the power China can exert on ANY financial market within a matter of months.

Oddly, restrictions were either navigated around or lessened, and Bitcoin is not seen as an insurgent threat to their national currency, but an online commodity to be traded. Throughout 2014 until the current day, China has increased and maintained a massive market share in Bitcoin. According to global financial giant Goldman Sachs, currently around 80% of all Bitcoin is traded in Chinese Yuan. China has maintained more than 50% of the global Bitcoin market ever since Q4 of 2013, when Bitcoin prices exploded almost overnight. It’s like a light came on; Bitcoin was seen as available for purchase, and a stampede that would make Wal-Mart on Black Friday blush began. You can see below Bitcoin was almost exclusively a US Dollar investment from the beginning, but the US Dollar has faded fast since Chinese found out about it.

 

Is this level of interest and dominance a good thing for Bitcoin? You can argue yes, based upon the next section we must discuss, shortly. And having one billion people potentially gravitate towards Bitcoin is better than being dominated by a country a quarter of the size. Or no, since China is a well-established and highly restrictive totalitarian regime that makes the growing “Police State” in the U.S. look like a Cub Scout meeting. You can see a downside, since the People Bank of China, directly run and managed by the Chinese government, has dropped the hammer on Bitcoin investors and owners before. They can do it again. At least in the U.S., the government has carried a “laissez-faire” approach to Bitcoin due to corporate business interest and a need for tax revenue by the government. American greed and fascism have gone a long way in protecting Bitcoin in the West.

Also, American legislation has defended Bitcoin well. The Citizens United Case has made the legal precedent of money as a form of speech and information, which has huge ramifications for Bitcoin. If the U.S. Government wants to ban Bitcoin, they risk creating a solid legal precedent that Bitcoin is money and is a legal form of information and speech in accordance with Constitutional law and current legal constructs. Not a road any government bureaucrat wants to head down. Plus, Bitcoin is used in religious tithings as donations, and there are many American laws protecting the freedom of religion. And politicians also have little incentive to attack Bitcoin, as they can now legally get donations in Bitcoin via a judgment by the Federal Election Commission, so why close a potential long-term stream of income? Politicians love getting bought off, so Bitcoin is on pretty solid legal ground in the fifty States.

Bitcoin and Rare Earth Elements are just the beginning for China

So, in effect, China has taken a global leadership role, somewhat quietly, in many industries. Food production (mostly rice and noodles), manufacturing (in multiple industries), Rare Earth Element mining (around 90% of the world’s capacity), the overall #1 global economy, a leading global market buyer of many top resources like oil, steel, and concrete, and now Bitcoin. That’s quite a jump up in status in a couple of generations, but that’s all foreplay. What China is really all about is this, according to an article by Tyler Durden at Zerohedge.com.

As you can plainly see, a Renminbi is being advertised by the People’s Bank of China, which is mostly owned by the Chinese Government as the future “World currency”. Does this mean the US Dollar is in immediate peril of losing it’s cherished Global Reserve Currency status? Not exactly, as China needs to build a demand and infrastructure for the RNB to become a “global” currency. It is currently the #5 most-traded currency worldwide, when five years ago it wasn’t in the Top 10. China has successfully struck deals in Toronto, Canada, Britain, Japan and other international financial hubs to get the RMB moving globally. And considering how much of an economic force China is already, few countries will stand in their way to get over in the financial markets. Everybody needs China for something, at this point. China right now really needs this one thing to pull it all together.

In order to become the Global Reserve Currency, they need some other infrastructure, like the BRICS Development Bank, which they created with Russia, India, Brazil and South Africa last year. This will become an effective alternative to the West’s IMF and World Bank hegemony. They also need an international bank transfer system, so they are creating the China International Payment System (CIPS), which should be fully operational by year’s end. Think of it as a PayPal for central banking. Many, many nations are looking for a way off the Western-run SWIFT monopoly, and once an option arrives, many will flee to the first legitimate global competitor. Chinese super-partner Russia also is mounting a similar “Double Eagle” system, to counter the economic sanctions fostered by the U.S. and the U.K. against them, so SWIFT is under attack on multiple fronts.

So China is not-so-slowly, but surely, looking to take over the world economically, and it’s only a matter of time before they succeed. I give them two years before they can overthrow the US Dollar’s monopoly on global economic power. When, not if, the Dollar falls, life in the West will not be so privileged anymore. American mismanagement, really abuse, of the currency is the biggest factor. The arrogance, and the lack of forethought about the ramifications of their actions is the leading factor in these upcoming changes that will affect Bitcoin, fiat currency, inflation, banking, and your retirement account.

Everything having to do with economics in this world will change by decade’s end. The US Dollar and every American’s bank account will suffer for all the years of “living high on the hog.” Call it economic backlash. Bitcoin is a part of that change. Bitcoin was created to decentralize the economic power of the US Dollar.

In closing, the world isn’t going to sit idly by as America runs roughshod over them at will for generations. The Red Dragon has awaken and has decided enough is enough. China growing into an economic superpower was only a matter of time. Their aspirations and ambition will come to fruition. Global Reserve Currency status only lasts about 65-70 years, on average. The US Dollar sits at almost 71 years. It’s time was running out. All good things must come to an end. You also reap what you sow. These changes are a long time coming, and the whole world is watching, and waiting.

Bitcoin was designed to be a part of the future of money. And now China is definitely a part of Bitcoin’s future. Only time will tell if it is for better or worse.

COMMENTS(19)

  • 12 months ago Hitchslappy

    I try to go along with this argument, but there is a crucial issue: From what I understand, and I’d love someone to correct me on this, nearly all of the VC capital flowing into crypto comes from the west, and of that nearly all of it from the US, and of that nearly all of it from Silicon Valley.

    Another thought that springs to mind is that the new world might be dominated by small elite hubs of eclectic people from all over the world. If crypto frees up communications and the money system, nations and borders will have less and less power. What do you guys think?

    • JMorris
      12 months ago JMorris

      China is dumping loads of cash into anything that walk in china, mainly because they are prohibited from investing outside of china.

    • RonFinberg
      12 months ago RonFinberg

      What does VC have to do with……anything? You know how many VC-backed startups flame out in 6 months? How long it takes to get a ROI?

      The Chinese market has a real demand for a non-state controlled currency, and an investment. The West has so many options, Westerners don’t have to use Bitcoin. It’s a lark to Westerners. In China, besides the Yuan, it’s probably their only other option. If you are in China and hate your totalitarian government, what better way to diversify your limited portfolio and invest in a growing global commodity?

      You have to learn to not look at the global market only from a spoiled Western standpoint. The rest of the world doesn’t have the conveniences, resources, or options Westerners do. The Chinese clearly appreciate what Bitcoin is and what it can become. Spoiled Westerners not so much…..

      • hicaribou
        12 months ago hicaribou

        My thinking is that VC capital has to do with who will own the successful companies in the future, regardless of where in the world those companies have their users.

    • cryptocoins
      12 months ago cryptocoins

      The commie-chinese, not the Taiwanese, have utterly banned Bitcoin. In comic-china, you see lots of SMUGGLING of currency out of china using bitcoin, but comic-china is NOT using it for any legitimate use and they may NEVER be able to make crypto-currency policy – why? They illegally chained their currency to the US dollar. The value of their fiat currency is pegged to give them fiat advantage – a bad move now that they want to start growing a middle class…everything will be too expensive…Look, LOOK at what a pair of 501 Levi jeans cost in Beijing…OMG! Yes, the EXPORT price is lower…I was in Shanghai not that long ago….Holy Cow!!!

      • itsnotlupus
        12 months ago itsnotlupus

        Chinese lawyers, Bitcoin exchange owners, and miners there say the opposite.

        China has backed off heavy regulation. Getting a bank account with a Bitcoin business might be tricky, but Bitcoin is not banned in any way.

  • JMorris
    12 months ago JMorris

    Just some scientific facts about the rare earths: they are not rare. They’re found all over the place, and aren’t that difficult to mine collectively. The problem is separating them. All the rare earth atoms have identical outer shells so they react almost the same way chemically. Separating them is a difficult and very dirty process, involving dangerous chemicals and China’s only advantage is their willingness to pollute. Once the separation tech catches up to the demand China will have no stranglehold on rare earth supply.

    • cryptocoins
      12 months ago cryptocoins

      expense…The US has substantial holdings in rare earths…but restarting the mines, is utterly expensive and takes most of a decade. But, china may force western nations to reopen those mines-another bad move by a commie-chinese government, over-the-people, beyond-the-reach-of-the-people, and be-damned-about-the-people!

  • itsnotlupus
    12 months ago itsnotlupus

    This is a poor economics article with misguided relevance.

    USD is still the global trading and reserve currency and the RMB is miles away from being anything like a substitute. Just watch this year as the Fed increases interest rates and the effect that has on the global economy. With the volume of loans in USD and how this plays out in, for example Brazil where many companies have gobbled up USD loans based on the assumption that cheap interest rates were here forever – not to mention the simulaneous rise in USD exchange rates with so many other global currencies. In case you’re not aware China’s recent growth is based on massive monetary expansion and debt of astonishing levels.

    Yes much BTC is trade in RMB however perhaps the reason is that if offers users a way of actually moving their native RMB currency to another one and therefore allows them to have some funds out of control of the Chinese central bank? Can’t say I blame them for wanting to do that…

    • hicaribou
      12 months ago hicaribou

      If you think the FED can raise rates by any meaningful amount and keep them there they would have done so by now. Its all talk from the FED, the US is insolvent an interest rate hike would only quicken its collapse. I think youll find you are misguided believing the FED spin.

      Still waiting for the rate hike

  • parameta
    12 months ago parameta

    *sigh* Another article written by a moron. Why even bother… I’m sure this person is just desperate to stir up controversy and generate views.

    • L.M. Goodman
      12 months ago L.M. Goodman

      Were you always this ignorant, or did you have to work at it?

      • parameta
        12 months ago parameta

        I’m far from ignorant of this topic, unlike the author of this article. I have lived in both China and the US, and I have a very profound understanding of this subject. I can tell you now that the stereo-typical people who generally spread this BS are Europeans, usually because they conjure up this delusional nonsense whilst drunk in a bar. This article is so far from the truth that it’s obscene and factually worthless. I’m not about to humor and debate every part of this, because that’s exactly what this borderline retarded failure-as-a-journalist wants. It’s disgusting that this was even published in the eyes of someone with my experience. What’s more disgusting is that they’re molding this garbage together with Bitcoin.

        • L.M. Goodman
          12 months ago L.M. Goodman

          Oh, so you are such an global economic authority that you can’t back up your point of view with….anything? You have such scary experience that you fear a debate? You seem just qualified enough to troll articles.

          Thanks for sharing, Nancy.
          Moving on…..

          • parameta
            12 months ago parameta

            Neither you, nor this author, are worth my time.

  • L.M. Goodman
    12 months ago L.M. Goodman

    China might be an economic superpower for a little while, if they hadn’t been so irresponsible with their fiat currency yuan or renminbi or whatever it is. What the heck did they build all that unused infrastructure for? They have unused superhighways, apartments, office buildings, basically unused ghost cities and towns that aren’t being used by anyone at all. Someone must own it and might like to get paid some rent money, ya think?

    • 12 months ago solex

      RESPECTFULLY: I HAVE BEEN TO THESE TOWNS YOU SPEAK OF. I enquired as to rental opportunity even as you just outlined. These houses, offices, in fact whole cities…were used in INVESTMENT schemes and the price per unit, for houses, condos, business/retail property have exploded through the roof of heaven due to speculation! real estate is one of only three areas that the people of commie-china can invest in…so they purchased/’flipped’ the houses a BILLION times since their construction …what am I saying?
      NO ONE WILL ever own and LIVE in any of these houses..unless they can afford a pro-football and basketball team.
      The commie-chinese have smuggled so much money into canada, Vancouver, my home town, that our home prices are utterly WRECKED…the closest affordable housing in canada, for people leaving on the west coast of canada..is either ALL THE WAY to the east coast of canada – Nova Scotia, or New Brunswick or across the border into the USA!
      American’s like money- it IS a business nation: The commie-chinese will sell you their last breathe or the rope you hang them with THEY WORSHIP CASH…I Kid You NOT!

      • parameta
        12 months ago parameta

        Ferroxian…. And?….. now what?
        Apparently you can understand that the Chinese OWN your future….. so you rage at the “coming storm” which does not stop the winds from blowing and the rain from falling.
        .
        … “commies”??? Really????
        You had better begin a study program on who China, Russia, BRICS, South America, Central America really are in TODAY’s world.
        “commies” (aka “red” – “pinkos”) hails from 1952 so you really need to get up to speed.

      • 12 months ago solex

        No, no, the commie-comic-chinese you worship as gods, who call themselves the Middle Kingdom, have earned my contempt and my Middle Finger!
        They do not own our nations, and do not own any futures – they will struggle to have one of their own…in the west we can exercise political choice- we CAN vote…not having a perfect world does not mean having a voice does not count: The comic-chinese cannot even own their own nation – they had to steal china, a nation, from the people living on Taiwan. They did this after WWII and The world’s only remaining Super Power is ensuring that Taiwan continues to have a voting voice in its own affairs – comic-china has enslaved Tibet, crushed free-will at Tiananmen Square and is murdering many many thousands of its own citizens for embracing a loving and kind religion: Falun Gong- Nay, nothing comic-china does will ever amount to anything, certainly, nothing I should fear, for any reason!
        comic-china is a BRIC: They are a group of DEVELOPING nations – now that you have received proper guidance do not forget that.
        The intense and nefarious, ruthless, cyber-crime unleashed on the free world, is backing us all into WWIII – one hack too many will set it off. But, commie-china will be remembered best for: Theft, piracy, stealing, along with mass-murder of Falun Gong and the forced harvesting of HUMAN ORGANS – these rulers of your heart are like some kind of alien-from-outer-space-disease…literally stealing body parts out of political prisoners and the oppressed.
        Trillions of dollars smuggled out of your country each year, millions of chinese girls mass murdered for being female, 30 Million men will never have wives due to rampant sex-selected abortion, wholesale abandonment of your children so that hardworking people can slave for less than minimum wage and see their children a week a year – pollution so bad it affects the weather 10,000 miles away – etc, etc, etc….no I have nothing to fear – you are wiping yourselves off this planet, you have NO future! Yeah I said commie-chinese, now what are you going to do about it?!

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