Financial news headlines in 2019 have been dominated by stories of the trade war between the US and China. The actions of President Donald Trump with tariffs have strained the financial relationship between the two superpowers. China seems to have taken the worst of it so far, but some financial analysts are suggesting that China intends to use cryptocurrency as a counter-attack which could have devastating consequences for the United States.
China Using Cryptocurrency to Create a Trap Door
One cryptocurrency expert, Max Keiser, revealed on his podcast that China intends to use cryptocurrency to devalue the US dollar. The project would involve creating and launching a crypto token that is backed by gold. The overall point of the exercise would be to completely devalue the US dollar to zero.
According to claims made by Keiser, China has 20,000 tons of gold. The country would first announce that it has these gold reserves. This would be followed by an announcement that the Chinese government is developing its own digital coin that is backed by gold. The point would be made that all of this is happening because the Chinese want to crash the US dollar.
Many people believe that cryptocurrency such as Bitcoin is superior to gold and fiat currency. The reason for this superiority lies in the potential of simultaneous settlements in addition to other factors. Some claim that digital assets are more difficult to steal, although there are plenty of people who would argue against this assertion given the number of hacks that have taken place at cryptoexchanges.
A Digital Version of the Yuan Could Spell Trouble for Bitcoin
Not everyone thinks that Bitcoin is better than gold. Peter Schiff is a market analyst who thinks that gold is superior. Schiff also thinks that a gold-backed cryptocurrency developed by China would be bad for Bitcoin and other crypto tokens that are not supported by gold.
China’s cryptocurrency is believed to be a digital version of its fiat currency, the yuan. Schiff’s opinion is that some form of backing for digital currencies is better than none at all. Therefore he sees the potential in a Chinese cryptocurrency and its impact on the gold market. Schiff believes the token could push the price of gold higher while lowering the value of Bitcoin.
The Latest Word From China
There has been no official word from China regarding the use of gold to back its cryptocurrency project, although there is no denial from the country that a crypto project is in the works. Many believe that the hand of the government was forced with the announcement of Facebook’s Libra crypto project. That project has faced many stalls on its way to a launch that is still up in the air as American lawmakers target Mark Zuckerberg’s intentions.
Cointelegraph was one of the first to report that China had begun the project. Since that time there has been little information from the Chinese government, and this would be expected. China has has a turbulent relationship with cryptocurrencies to say the least. The country has made moves to restrict trading on cryptocurrency exchanges in what many feel is a limited effort to control Bitcoin usage.
*** Here at CryptoSwede you will find information on Crypto Mining the different cryptocurrencies as well as the best cryptocurrency exchanges. You can trade or you can set up trading bots instead and then store the crypto on crypto wallets. Later, spend them using crypto debit cards!***
An ex-Congress member recently made the suggestion that a cryptocurrency developed by China would be pegged to gold in some form. It has also been suggested that China has far more gold reserves than thought. This could all create trouble not just for Bitcoin but also for the US dollar.
China Softens Its View on Bitcoins and Blockchains
China seemed to do a 180-degree turn when it recently made an endorsement of blockchain technology. The country also initiated measures that made it easier for blockchain development to take place within China. This news had a positive impact on the price of Bitcoin and other tokens in the short term. However, state media outlets in China were quick to contradict the government’s stance.
News outlets reported that China was still sticking by the harsh measures it has taken against cryptocurrency. Among these is a 2017 ban on cryptocurrency trading which still exists, although some claim there are ways to circumvent the ban. Some even claim that the Chinese government itself is using method to evade the ban.
Is Crypto a New Weapon in Trade Wars?
What many people want to know is whether or not Bitcoin and other cryptocurrency can be weaponized by countries to prevail in trade wars like the one that is being waged between China and the US. If other countries follow the lead of China and begin developing their own cryptocurrency projects there is the potential for disruptive technologies to truly disrupt world markets.
Many have accused both China and Japan of manipulating their own currencies for many years. Cryptocurrency is not an asset with a value that can be easily manipulated. It is possible that digital tokens could become an agent for the manipulation of fiat currencies as more governments realize the potential of such actions.