The success of Bitcoin in the global market has given the Chinese more power over the United States, according to Thiel.
Venture capitalist and PayPal Holdings Inc (NASDAQ: PYPL) co-founder Peter Thiel highlighted his thoughts on the cryptocurrency market and Bitcoin during a virtual roundtable hosted by the Richard Nixon Foundation Wednesday alongside former Secretary of State Mike Pompeo.The Bitcoin aficionado now wonders if Bitcoin is being used as a weapon against the US dollar as the world's reserve currency by the Chinese government.
Though I'm a pro-crypto, pro-Bitcoin individual, I wonder if Bitcoin is also a Chinese financial weapon versus the U.S...it threatens fiat money, but it especially threatens the dollar,” Thiel noted.
Thiel Sentiments on Bitcoin in US-China Relation
Thiel who dramatically left Silicon Valley back in 2018 has been backing the geopolitical stance, particularly in the technology sector and now the cryptocurrency market.He appeared with Pompeo on a number of occasions, which the media noted could have implications for the 2016 presidential election.Notably, Pompeo has widely been viewed as a possible candidate for the Republican nomination for the next presidential election.
Chinese Bitcoin miners play a critical role in maintaining and securing the Bitcoin blockchain.Based on Thiel's account, the success of Bitcoin has propelled Chinese power over the United States. He considers Bitcoin to have dethroned the dollar.Worth noting, Bitcoin remains a decentralized ecosystem whereby anyone can participate in the mining process and in turn control the blockchain.
As a result, institutional investors from the United States have turned to Bitcoin mining besides using it as a hedge against the deflationary fiat market.US policymakers should pay close attention to the geopolitical aspects of Bitcoin.According to him, the Chinese government might use Bitcoin in disguise to dethrone the United States dollar as a global reserve currency with its new digital yuan.
The Chinese government has been rolling out the digital yuan in a bid to revolutionize its economy amid the crisis.Through this process, China envisions eating away some of its global dominance from the US Dollar in the near future.Notably, the US dollar enjoys nearly 90% of foreign-exchange transactions and more than 60% of all global central-bank reserves.
Currently, there has been a huge demand for digital payments fueled by the ongoing Covid crisis.Consequently, a digital Yuan might have a dramatic effect in the payments industry, and thus a threat to the US dollar.
“Most cross-border payments either for trade or finance are already digital, so it’s hard to imagine a digital yuan having a huge impact on international payments,” said Eswar Prasad, a former head of the International Monetary Fund’s China division and economics professor at Cornell University.
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