China bans Bitcoin, strategic choice?
News of a few days ago, China has completely banned Bitcoin and cryptocurrencies in general.
All financial institutions are no longer allowed to trade with cryptocurrencies: both buying and selling.
Not only that.
Even Alipay has been intimated by the central bank to suspend all operations.
The Casus Belli was the extreme volatility of cryptocurrencies; in fact, Bitcoin has been fluctuating lately.
With this stance, the Chinese government thinks it can secure all (or most) of the assets held by investors.
Questionable.
The true investor has a perfect and rigorous Money Management to respect; in case he disregards the rules, he has imposed on himself, he is perfectly aware of the risks.
And for this reason, he does not make rash operations in the euphoria of the market.
Let's face it: most of those who have approached Bitcoin don't even know what a DLT (Distributed Ledger Technology) is and have started trading (purely speculative) without knowing anything about this world!
Starting from this concept, we can rectify, saying that the Chinese government has a certain thoughtfulness for the uninitiated.
It is necessary, from certain points of view.
Now a polemic note: when I have a broken pipe in my house, I call a plumber to fix it; in parallel if I have a certain amount of money that I decide to allocate in some financial product, I have to go to an advisor.
Instead, due to the fact that there are applications that accomplish everything, some people feel they have an infused science and set off as determined as firemen.
And they get hurt.
But back to the exploit, this time seeming more vehement than the previous one, from China.
Bitcoin declared outlawed by local regulations and almost 90% of mining power suspended.
With regard to mining farms, they have been attributed with an indefinite consumption of electricity.
Undisputable, even if many mining farms use renewable energy and, anyway as I wrote in this article, the consumption of the whole BTC system is 3% of the world electricity produced but dispersed!
I want to instill a doubt in you, and with it my thoughts.
Have you heard of the digital yuan?
Definitely!
To understand my position, it is necessary to make a parallel between the two currencies: BTC and Yuan
BTC is decentralized, while the digital Yuan is centralized.
BTC has a public blockchain, digital Yuan has a private blockchain.
BTC is not censurable, digital Yuan is, should the government want it, it ceases to exist.
BTC is regulated by the market (supply/demand), the Digital Yuan is a stable coin.
As you can see the Digital Yuan is nothing more than a private Stable-Coin: it disregards some points of cryptocurrencies, but, in fact, it is!
Now, the records will have to be executed and how else but by undermining them? Because, obviously, a margin of safety is necessary.
Clearly, the consumption is not comparable to that of a public blockchain because validation is not a race to see who gets to find the solution first.
In this case the node is only one!
At this point the owners of the machines what do they do, throw them away? But I don't think so, they will ask the government to outsource the registrations; after all if they were efficient for Bitcoin they can't be efficient for the digital yuan?
And there you go, solving a problem of scalability and machine availability....
By doing so, however, the privacy of transactions wavers: the government can verify all of them to intervene if there is a possibility of wrongdoing. But as we know China is not really concerned about the privacy of its citizens.
As for the volatility of the value between BTC and digital Yuan it's obvious that there are fluctuations, but we already know the stable-coins: does Tether mean anything to you?
With this comparison, conclusions are quickly drawn.
BTC has possibilities that the digital Yuan cannot have, so the only weapon in the hands of the Chinese government is to declare it outlawed.
Obviously, not being censurable, the possibility that you have is to force banks to prevent the purchase or sale.
But the human being is diabolical: surely there will be someone who finds a ploy to continue to use cryptocurrency.
The possibilities are many: you convert the BTC into Dollars or Euros and in turn converted back into digital yuan.
We take it for granted that exchanges cannot use digital yuan because if this possibility were to emerge this whole operation to the Chinese government would have brought only popularity ...
In conclusion, I think that this situation has been created ad hoc to launch the digital yuan and give a further setback to cash and not specifically to BTC.
Anyway, with China or without China, BTC goes on anyway: everything else in the world continues to use it.
On an economic level, though, I think China has seen far ahead of other states: the digital yuan, as a cryptocurrency has no borders, and therefore could replace the dollar in international trade.
If this were the case, the West would have to take a nasty blow from the East.
I am increasingly convinced that the maneuver implemented by the governor of El Salvador is the most insightful and fruitful: he did not declare war on Bitcoin, rather he wanted to make friends with it, and at the economic level it is "a friendship that counts".
What do you guys think? I look forward to seeing you in the comments!
