17.04.2024

PayPal Co-Founder Calls Bitcoin «China’s Financial Weapon»

PayPal co-founder and venture capitalist Peter Thiel believes Bitcoin could be China’s weapon in a financial war with the United States. Thiel voiced his point during a talk at the Nixon Seminar this week.

According to him, Bitcoin can serve as a very strong reserve currency for the PRC government, and even the imminent launch of the digital yuan does not play such a big role in the context of China’s rivalry with the United States.

Bitcoin may well become a threat to the turnover of the US dollar, Thiel is sure. Here is his remark, in which he shares his thoughts on this matter. The quote is from Decrypt.

While I am somewhat of a cryptocurrency advocate and Bitcoin maximalist, I am really wondering if Bitcoin should be viewed as part of a Chinese financial weapon against the US at this stage. In particular, does the main cryptocurrency threaten the dollar.

Recall that Bitcoin maximalists are people who support only BTC in the cryptocurrency niche. They predominantly oppose the popularization of other coins and question their potential. This is mainly due to the fact that they use blockchain assets exclusively for storing and transferring value. Naturally, the same niche of decentralized finance based on Ethereum offers much more exciting opportunities – however, for some reason, BTC-maxi is not of interest.

Here is a transcript of a conversation with Thiel. We recommend that you watch if you understand English by ear.

The question Thiel answered was not about Bitcoin per se, but about China’s plan to create a digital yuan. Seminar moderator Hugh Hewitt wanted to know if the digital yuan was «a threat to the dollar and its dominance in world markets. » Thiel noted that this is not the case. According to him, CBDC in China will only become an “instrument of totalitarian control” over the financial flows of the population, that is, the digital yuan project is allegedly not aimed at international politics.

Recall that the digital yuan is actively used in test mode within the country. Moreover, representatives of the country’s main bank believe that the rise in the Bitcoin exchange rate over the past year has seriously helped popularize the new form of money.

Bitcoin is the real problem, because it is more likely to serve as a functional reserve currency. And this makes sense: the less the dollar dominates, the less influence American monetary and foreign policy has. Peter continues.

If China is buying up Bitcoin, then perhaps from a geopolitical point of view, the United States should ask somewhat tougher questions about the current situation.

Note that American companies are actively buying the first cryptocurrency and are clearly not worried about the possible role of China in its creation. Still, BTC is a decentralized project that exists thanks to all participants in its network. Therefore, such remarks seem exclusively political, in addition, the creator of PayPal has reason to worry about the popularity of his platform in the future, where people will switch to active use of cryptocurrencies.

Bitcoin cryptocurrency blockchain

Bitcoin price change in the last 90 days

Does this mean BTC will soon be heavily regulated within the US? According to JPMorgan CEO Jamie Dimon, the infrastructure for regulating Bitcoin could be a problem. He expressed his concerns in an open letter to shareholders.

There are serious problems that need to be addressed, and quite quickly: the rise of shadow banking, the legal and regulatory status of cryptocurrencies, the correct and inappropriate use of financial data, the huge risk of cybersecurity problems, the correct and ethical use of artificial intelligence, and the effective regulation of payment systems.

Dimon’s position is understandable, especially when it comes to cryptocurrencies: different government agencies have different plans, and sometimes with opposite positions. An example is the Securities and Exchange Commission (SEC), which claims to regulate the circulation of Ethereum-based tokens previously sold in the United States. At the same time, the Commodity Futures Trading Commission (CFTC) controls everything related to BTC: for example, futures and options contracts. In addition, there are the IRS, FinCEN, and various state and local regulators who have their own opinions on this.

Let’s return to the main question – what will the US do with Bitcoin? Perhaps the only way out for America in this case is the decentralization of BTC mining, that is, the placement of more large crypto farms on its territory.

This can be done due to preferential conditions for miners, which will even allow many to lure away from China, where most of the devices for BTC mining are concentrated due to cheap electricity. However, this does not make much sense, since in the overall picture it is unlikely to affect anything.

We believe that such experts should better study the topic of decentralization and its features, and at the same time stop treating cryptocurrencies as something hostile. By the way, such changes are already noticeable. On the eve of the Minister of Economy of the United Arab Emirates said that «cryptocurrencies and tokenization will be the key to doubling the country’s economy.»

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