I was just about to say that. China has an economic system where it is politically feasible for the state to own significant assets and portion of the economic capital. The West doesn't, we have a (mostly neoliberal) system based heavily on finance and private ownership, and nationalization of assets is an impossible policy.
You can destabilize the finance system by creating free money, in fact, according to exogenous money theories, it was always possible to create money out of thin air. But until cca 1980s, the creation of new money was confined to financial institutions (not just government) and heavily regulated.
The regulation was gradually lost (that's why we are having these asset bubbles and financial crises), and Bitcoin democratized the money creation even more.
But regardless whether you believe or not that Bitcoin can destabilize financial system, ultimately, if things go south, China can actually react and pull the plug on the financial industry, limit its power in the economy at large, because it owns big chunk of it (or can make sure it owns it). In the West, however, this is a political issue, and governments can only watch the financial system fail and cause another big recession (or at least, huge misallocation of resources, for example in real estate).
So why would China care? Geopolitically, they have the upper hand. We should care, though!
> They endorse Bitcoin openly to their citizens as a good investment.
The Chinese government is not usually in the business of recommending specific investments. (However, they might discourage people from investing into known scams.)
Specifically, he said that stablecoins would have to subject themselves to the same strict regulations as banks if they want to become widely used payment channels, and that cryptocurrencies aren't per se currencies, but a different kind of investment, and that, like other countries, they're currently investigating how to regulate them to manage the associated risks.
How that turned into an "endorsement" I don't know for sure, but I suspect hype factories trying to sell bitcoin using whatever story works.
Okay so that’s a competing theory to the parent I was replying to, to be clear, though it does seem a better fit for available evidence to my unsophisticated self.
I don't think they're mutually exclusive. If China wants bitcoin to succeed, they would do well to turn a blind eye to people evading currency controls, in order to maximize incentive for their citizens to mine and use it.
That makes sense, but it seems like an unstable temporary situation? If what you say is true there’s a tension- crypto can help unseat USD as the global reserve currency, but a huge part of crypto’s value is because... Chinese oligarchs can use it to transmute their renminbi into USD? What am I missing?
I'm on pretty shaky ground hypothesizing further, but if it were the case, they must believe whatever they cede through allowing the circumvention is worth the outcome. Would trading Chinese-mined BTC (on equipment largely produced in China) for USD necessarily be good for the dollar?
The value of Bitcoin comes from the fact it can provide strong property rights to anyone in the world.
There are many countries where the governments have failed to secure property rights appropriately, mismanage their currencies, embezzle public funds, and abuse their citizens in so many other ways. It's disgusting.
Citizens of those countries can opt-in and benefit from Bitcoin and security guarantees it provides.
Billions, quite literally billions, of such people live in such situation today. They have no economic security. No property rights. Even the land they live on gets confiscated every now and then.
....how is granting strong property rights to the less fortunate of the world is not one of the most valuable things in the world?
Bitcoin is a freedom technology, disguised as get-rich-quick scheme.
This is the best pro-bitcoin argument I’ve heard in a long time! One big question I have is why bitcoin specifically has the value and not other cryptocurrencies. Others provide the same technical security guarantees. Bitcoin has a lot of hash power, which is nice, but that doesn’t seem to provide much additional security compared to other major cryptos, especially if the government of China can ruin it at any time. Why not Etherium, which has a lot of additional useful features? Or some other crypto with lower fees and a higher transaction capacity? One that’s carbon-neutral? I buy that bitcoin is important (I do own some), but I don’t see why the value should go up, or that it should end up being worth a big proportion of the benefit that cryptocurrency brings to humanity.
1) it was launched fairly by a person who uniquely had no reasonable expectation of profit when doing so,
2) it was launched first, giving it first-mover advantage, and
3) its proprietors made the very wise choice from 2015-2017 of censoring their populist opponents pushing for Bitcoin to become PayPal 2.0, and instead euphemistically refering to Bitcoin as “digital gold” — the speculative store of value to end all speculative stores of value
The very fact you’ve asked this question in full knowledge of owning both BTC and altcoins whilst also alluding to altcoins being more valuable, and the fact readers can only possibly act on your narrative by investing in the coins to which you allude — obviously only as a speculative store of value — just goes to show why Bitcoin is #1. Cryptocurrencies are simply nothing more than speculative stores of value, there are no exceptions.
It doesn't provide any property rights? Well then, why don't you go ahead and help yourself with some billions in Bitcoin from Musk's personal holdings? Should be easy, according to you.
I think you'll find that it's much much easier to repossess a house, rather than repossess a bitcoin address with billions.
The mythical land where it is easy to safeguard crypto keys than physical properties while people still haven't learned to safeguard their passwords.
If the govt knows about your properties than they would also know about your digital activities as well.
Bitcoin is only freedom for the oppressors in this scenario since only they are allowed to move unchecked and will use it to get out when they realize their days in their country is numbered.
Why wouldn't they want to dethrone USD as the reserve currency?