Paypal co-founder Peter Thiel sounding an alarm on bitcoin speaking at a Nixon foundation event teal said quote “I do wonder whether if at this point bitcoin should also be thought of in part as a Chinese financial weapon against the U.S. It threatens fiat money, but it especially threatens the dollar.” He says he’s not against cryptos but that the government should take a closer look at why China is using bitcoin.
Bitcoin higher again today, up nearly 700 percent in the past year. How would china use bitcoin as a weapon to weaken the dollar? Well, the general premise here is that bitcoin’s ascendance does come at the expense of the dollar’s role as the world reserve currency.
If China had some kind of participation in that trend where the U.S. dollar is not as central to the world financial system and the economy as it was before and if official Chinese authorities are owning bitcoin and benefiting from its appreciation, it could tilt the financial balance of power.
It is interesting because Teal is very much an advocate for cryptocurrencies and bitcoin as well. He’s more or less pointing out that this becomes a bit disorderly in terms of a power relationship thing if the ultimate destiny of bitcoin that the true believers see out there for it as overtaking to some degree existing currencies would have other unintended consequences.
The idea of bitcoin as a store of value is building even though it is volatile. You’ve seen this massive run-up, but it’s very hard to argue that China uses bitcoin. In fact, China sees the cryptocurrency as a bigger threat to the communist party more than it’s worrying about it as a threat to the U.S. dollar. What they are interested in is the technology behind bitcoin – blockchain.
You had earlier this week, China coming out saying it’s going to be launching its own digital yuan. That may be where the real threat is. China is moving quickly on this technology. The U.S. has talked about a digital dollar, but there’s been no action, and maybe for a good reason, there needs to be very thoughtful and planned out.
We think that is where the real threat is and if the Chinese get their massive population to use a digital yuan, that could lead to more usage of bitcoin and to the point that could eventually sort of taking over the U.S. dollar.
