Posted on 03/25/2021 10:57:22 AM PDT by Red Badger
Veteran investor Ray Dalio warns that governments across the globe are planning to outlaw Bitcoin because the financial elite cannot tolerate something that they don’t have monopoly control over.
“Every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing,” Dalio told Yahoo Finance.
“So, I think that it would be very likely that you will have it, under a certain set of circumstances, outlawed the way gold was outlawed,” he added.
Dalio cited the 1934 Gold Reserve Act, which ended all private holding and use of gold as money. This followed the previous year’s Executive Order 6102, which made it a criminal offense for U.S. citizens to own or trade gold and led to a widespread confiscation program.
The investor said that Bitcoin’s volatile nature also posed a threat to financial elites’ control of money and banking, “because things can get out of control.”
Back in January, head of the European Central Bank Christine Lagarde called for global regulations on Bitcoin, labeling the cryptocurrency “reprehensible.”
“(Bitcoin) has conducted some funny business and some interesting and totally reprehensible money laundering activity,” said Lagarde, who herself was previously found guilty of financial negligence by a French court.
Bitcoin is also despised by cultural and media elites because it allows people who have had their lives turned upside down by deplatforming and denied banking to continue to operate.
One wonders what the trigger could be to create the moral panic around Bitcoin to grease the skids for its criminalization.
Perhaps a massive terror attack that was wholly funded by the cryptocurrency?
The value of Bitcoin has continued to surge in recent months and now stands at over $51,000 dollars.
There is no such thing as “nationalization of cryptocurrencies.” They are decentralized and entirely outside of a governments’ control even in principle.
To see why, let’s wargame this. Since 60% or so of Bitcoin miners are in China, a CCP takeover would be the best shot at “nationalizing” Bitcoin. It would play out like this:
1. CCP announces that the Bitcoin protocol will be altered to conform to their dictates (say, introducing higher inflation and enlarging the block size). Since the BTC code is open source a couple CCP programmers make the modifications easily enough.
2. CCP orders all Chinese miners to implement the CCP-BTC code... or else. They comply to keep their heads attached.
3. Non-Chinese miners don’t implement the code, because users didn’t ask for it and don’t want it. Since Chinese miners control 51%+ of hashpower their form becomes dominant; non-Chinese miners are forced to adopt the CCP code to keep mining.
4. Meanwhile the Bitcoin community is in an uproar. The dev community quickly releases code restoring the original protocol and disqualifying any blocks conforming to CCP dictates (practically speaking, even if the CCP action came out of the blue, this would happen within a matter of hours.)
5. Meanwhile exchanges have halted trading in CCP-BTC almost from the beginning, knowing it is worthless. Withdrawals and deposits are also on hold.
6. The restored code is released and quickly adopted by non-Chinese miners. Since CCP-BTC blocks are rejected their fork becomes irrelevant (at best it becomes a marginal forked coin mandated for use within China and mocked and rejected everywhere else - think Bitcoin SV). 7. Exchanges reopen as soon as the free mining community begins producing blocks with the forked code. Life quickly goes back to normal for the Bitcoin community (though blocks are slow for a few weeks until the automated adjustments come - assuming Chinese miners are kept off BTC).
In this scenario the only thing the CCP accomplishes besides a temporary disruption is the destruction of the Chinese mining industry, if they are blocked from mining the concensus protocol. In other words it would be stupid for China to even try to nationalize Bitcoin. Other countries would have even less leverage. It’s the users who choose by consensus what code to run who ultimately define Bitcoin.
Sounds like you guys need to read and digest this:
https://99bitcoins.com/bitcoin-obituaries/
We have a good laugh reviewing “death of bitcoin” pronouncements over the years.
obviously you have no true understanding how bitcoin works or why it has value
its scarcity is based on encryption and the blockchain its stored in across the globe.
you can’t ‘just produce more’
Oh, I believe I could be wrong about this whole thing. I’m just not seeing it, kinda like I didn’t see a Biden victory, but here we are
you can’t ‘just produce more’
I made a mistake in my wargame scenario. The current bitcoin code has rules against accepting larger blocks or blocks with the wrong number of bitcoins mined. So if the CCP forced a new protocol on Chinese miners the result would be an immediate fork; all existing exchanges and organizations outside the sphere of the CCP would not even see the CCP fork as the regular bitcoin blockchain would just keep progressing. The only impact users worldwide would see is a drop in hashrate and slower blocks for a couple weeks.
Meanwhile the Chinese miners would be producing a blockchain no one outside the CCP cares about, values, or is even aware of. The best the CCP could do is stick the same gun to the head of Chinese exchanges and demand they list CCP-BTC (and presumably delist BTC). But users would learn of the difference and that it is worthless outside China, so the value would be only a tiny fraction of bitcoin’s price, if it got any traction at all. And that means the massive Chinese bitcoin mining industry would be hemorrhaging money at a huge rate producing almost nothing of value despite huge electrical and hardware expenses.
Add me please
NeoCaveman, will do!
Welcome aboard!
I’m just beginning to learn about bitcoin, all of this is new to me. So I have questions if you don’t mind. You said this:
“And that means the massive Chinese bitcoin mining industry would be hemorrhaging money at a huge rate producing almost nothing of value despite huge electrical and hardware expenses.”
Since China has about 1.4 billion people, wouldn’t that provide enough transactions to make it worthwhile for China/China miners to have their own new blockchain?
And couldn’t China also require that any crypto transaction used by an outside business (or individual) must use China’s crypto currency? So many U.S. corporations along with businesses in other nations make huge purchases from China. Couldn’t China just give a choice of purchases made be in either yuan, dollar, or the CCP cryptocurrency?
It becomes a question (1) how badly the CCP screws up the protocol, and signals a willingness to further screw it up, and (2) how well Chinese traders can escape the control of the CCP and utilize other, more decentralized options.
Chinese bitcoin traders have been dealing with CCP threats and interventions for years, so my gut feeling is that even if the CCP tried to be “reasonable” with its takeover and tried to keep bitcoin traders within China corraled, their forked version would be a flop. Note that China is at the forefront of developing a central bank digital currency already, so an attempted takeover of bitcoin would be redundant.
You also have to understand the mindset of the vast majority of people in crypto at this point: We favor it precisely because it is decentralized. Any attempt at a hostile takeover thus automatically makes the resulting centralized coin an object of scorn and debasement. That would be true among the Chinese bitcoin community the same as elsewhere.
Oh, and as to the question of China forcing people to use their digitial currency... they could do the same today with their fiat currency. All it would do is cost them lost sales, so long as there are any alternatives.
I would hope at this point the American people and many others are starting to make a serious effort to avoid buying from China, and that businesses are moving supply chains outside of China. This willing enslavement to the CCP by Americans is just insane.
President Trump tried his best to get the U.S. back to fair balance with China. I agree with you, our country needs to be free of that enslavement. But after watching documentaries on the many major corporations (Apple, etc.) now having an established presence in China, I think businesses moving there will continue. China has the consumers of today and especially of tomorrow.
Thanks for responding to my questions. The leadership in China vs. Chinese miners. It’s an interesting topic, and I appreciate your knowledge on it.
Thanks; if businesses won’t move of their own accord I think people need to speak up more to pressure them. Voting with our pocketbook (and letting them know when we can’t purchase something at all because all the options they offer are Chinese) may be our best option short of “Boston Tea Party” actions.
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