What is Bitcoin, and how does it work?
Bitcoin is a decentralized digital currency that enables users to invest money without dealing with a bank or government. Users generate the coins by “mining” them by lending a computing lever to validate the transactions of many participants. So, as a result, They get paid with bitcoins.
Similarly, these crypto coins can be purchased and traded in exchange for many currencies, such as the US dollar. While several companies adopt Bitcoin as payment and a range of financial firms accept it as part of their client’s portfolios, public adoption is still restricted. Bitcoins are digitally registered lines of programming code that are transferred among users. The currency is common among libertarians, as well as technology fans.
Bitcoins must be held in a digital wallet, whether online with a Crypto exchange or offline with advanced apps on a hard disk. Based on cbsnews statement, about 18.7 m Bitcoins are currently in existence, and about 21 million are ever created. The explanation for this is unknown because no one knows where/what is Bitcoin’s source.
China, USA, and Bitcoin; Restrictions and Opportunities
Bitcoin is something more than an investment opportunity for many of its early supporters. According to its most loyal fans, Bitcoin has the ability to change the global political situation completely. However, since Bitcoin’s emergence, controversy has erupted about whether it would ever achieve the popularity and universal adoption that fiat currencies like the dollar do. While Bitcoin has several benefits and may be used as a medium of trade or a store of value, we must recognize that cryptocurrencies may not exist in a bubble or even a free market. Peter Thiel recently said that Bitcoin is a “Chinese financial missile.” Although there is much more to this narrative, it poses some major worries concerning Bitcoin’s and cryptocurrency’s existence.
To comprehend the potential status of Bitcoin (and other cryptocurrencies), we must examine them from the eyes of the world’s two most powerful monetary rivals, China and the United States.
What are the opinions of these world forces on Bitcoin?
Will it be applied against the other nation as an economic weapon?
And how do the United States and China take advantage of cryptography and blockchain technologies while maintaining a centralized currency monopoly?
In fact, the new economic force, China, is attempting to unseat the United States as the global economic powerhouse. Wrecking the world’s reliance on the US dollar is a major part of it. To put it another way, China would not want the US dollar to be the global largest economy. Would this imply that the Yuan will become the world’s resource currency? That seems to be the case. While the Chinese have had great success exporting their goods, few countries want to keep their currency. The Yuan currently represents only 2% of global resources, although this figure is expected to rise.
On the other hand, the US dollar provides approximately 60% of global resources, despite the fact that this percentage has been declining over the last decade. Generally speaking, anything that makes China outpace the US currency is in China’s desires. Here, the key role of Bitcoin enters the picture. Bitcoin is posing a threat to fiat currency. On the other hand, since the dollar is the resource money, it is more probable to lose the most. This condition may be what Thiel meant by referring to Bitcoin as a Chinese economic missile.
So, can it be said that bitcoin is under Chinese rule?
According to some figures, China mines about 75% of total Bitcoin reserves. As a result of their massive hash rate, these Asian miners have a high amount of strength. Does this, though, imply that they have power over the cryptosystem? The answer is “No,” technically, but what happens if they do? If people see this as an unconstitutional threat, Bitcoin will split into a novel chain, nodes will turn, and miners will switch. To function, bitcoin, like every other type of financial system, requires social acceptance.
The future of Money and Bitcoin
Bitcoin has the potential to become the global reserve currency and haven. Similarly, modern and quicker Bitcoin versions can be used to carry out routine transactions. Most certainly, these will be fully decentralized.
What an amazing future it will be. Unfortunately, it is not likely for the time being, as neither China nor the United States is willing to relinquish the power of their currency reserve. Maintaining its value nowadays, Bitcoin will not be included in daily purchases.
Despite being inefficient, traditional currencies wield much strength and abandoning the dollar would require reshaping the entire global financial structure. Digital Yuan has already been hailed as another great awakening in the field of currencies in recent years. The Chinese government has the correct approach and is doing an excellent job of promoting the digital Yuan. The benefits of seamless, stable money transfers combined with the security of a government-backed currency will be provided by a digital Yuan. Therefore, we can conclude that China is unlikely to accept bitcoin, particularly when attempting to ‘digitalize’ its own money. It contradicts the ideology of the Chinese government, which states that they would not help something they do not have the power of.
