The real China bull case for Bitcoin
They're going to introduce a blockchain based settlement currency to burn the dollar
Back on 25 October, Bitcoin started a 3 day rally from USD 7,300 to USD 10,300. Out of some communist party meeting none of us knew anything about, China started raving about cryptocurrencies.
That USD 3,000 pop was all around the idea that maybe, just maybe, 1.3 billion people were about to rush out and go buy Bitcoin. Since then the price has been pretty flimsy, because deep down we all know that 1.3 billion people are not going to rush out and buy Bitcoin because the communists have decided to like it!
So what is going on?
China is about to launch a blockchain based settlement currency. Go google china digital currency and read the 186m results. First off, what's a settlement currency? When Thailand ships prawns to Mexico, they do not trade in Thai Bhat or Mexican Pesos. They trade in dollars. Prawns go to Mexico attached to a dollar invoice. Mexico pays for the prawns in dollars. Everybody wants dollars, no one wants all these s h i t t y currencies in between. China would like other countries to take Renminbi when they import toys and laptops and huawei phones, but other countries are not daft, even sanctioned Russian oligarchs know dollars are better than Renminbi.
But what if we had another go between? A new digital currency governed partly by algorithms?
The whole time that countries and people are trading in dollars, we are giving America its exorbitant privilege. They can buy whatever they want in money they can print. We are fast moving to a world where this role is about to get challenged.
Let's check out Vitalik Buterin rubbing shoulders with the big venture capitalists out in China.
Something really big is about to happen in Crypto. Does it include 1.3 billion people buying Bitcoin? Sadly, no. No it does not.
Does it suddenly include lots of wealthy Russians and Thais and Mexican traders suddenly having lots of digital currency partly controlled by the Chinese?
Yes. Yes it does.
And what are they going to do with that money? Sure many will try buy dollars. But I wonder how many will take a look at Bitcoin and say "Hmm, I could hold this communist capitalist trading crypto, or maybe I could just have the real deal..."