Let’s Not Entirely Cede Cryptocurrencies to Already-Dominant Communist China
Communist China Monopoly We have oft documented the decades’ worth of really awful trade deals in which the United States has participated. Chief country amongst the many with whom we’ve cut really awful deals - is, of course, Communist China. Our very stupid trade deals have bled millions of jobs from US to China. China in some instances took nigh entire sectors away from us (Hello, manufacturing). God bless President Donald Trump for addressing the dragon in the room (dragon seems more China-appropriate than elephant). In two years he has revamped many trade deals and reversed much of this awful job outsourcing trend. But many of those jobs - are today’s and tomorrow’s jobs. Eventually, more and more manufacturing will be automated. (Though I am highly dubious of any major robot takeovers any time soon.) We are now in the very early stages of the Information Economy. Where more and more the tangible will give way to the intangible. We must also keep China from dominating that sphere. We already know China loves to warp the financial sector to its advantage. They manipulate their currency (the Renminbi, commonly referred to as the Yuan) so as to artificially inflate the prices of their exports - and conversely lower the price of goods they import. Entrepreneurial people who don’t like these sorts of centralized, government-controlled money manipulation and pernicious, overlording control - have been looking for ways around it. To wit: Cryptocurrency (or altcoin): “A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. “Cryptocurrencies are a kind of alternative currency and digital currency (of which virtual currency is a subset). Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems. “The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.” The most commonly known cryptocurrency is BitCoin. But to paraphrase the old saying: "All BitCoin is cryptocurrency - but not all cryptocurrency is BitCoin.” Of course, Communist China is most aware of the cryptocurrency movement. And they have been working to block any and all cryptocurrency end-arounds - by trying to monopoly-lockdown the entire global cryptocurrency market. To wit: Hash power: “Everything in our lives that performs work is measured in units of work over time. Cars travel in miles per hour. Your fitness tracker measures your heart’s beats per minute. The same is true of altcoins and their ‘hash power.’… “Remember that all altcoins are networks. Everybody who has a proper ‘client’ for the altcoin, AKA a node, is contributing some computing power to keeping the network going. The more nodes you have and the more computing power those nodes are contributing to the network in a given ten-minute span, the higher the overall “hash power” or “hash rate” of the altcoin’s network. “What does ‘hash power’ do? It mines or mints new altcoins, calculates the blocks, processes the transactions that are added to the blockchain, and so on. So the higher the hash power, the more efficiently and cost-effectively the network operates. This is why bitcoin miners spend thousands on high-end graphics cards, as it lets them process more transactions that much faster.” So no hash power - no cryptocurrency. And guess who’s dominating hash power? Why, Communist China, of course. Why the Biggest Bitcoin Mines Are in China: “Bitmain (is) a Chinese firm headquartered in Beijing that is arguably the most important company in the Bitcoin industry. Bitmain sells Bitcoin mining rigs - the specialized computers that keep the cryptocurrency running and that produce, or ‘mine,’ new bitcoins for their owners…. “Jihan Wu, the CEO of Bitmain, claims that 70 percent of the Bitcoin mining rigs in operation today were made by his company. And, according to a study conducted last winter by the University of Cambridge, in England, it’s likely that most of those machines are plugged into an outlet somewhere in China.” And guess who is already using their market domination to warp the system? Why, Communist China, of course. Research: China Has the Power to Destroy Bitcoin: “... and it's already manipulating the network. “A damning new study has suggested China holds threatening influence over Bitcoin - and perhaps even the ability to attack and ultimately destroy the entire Bitcoin network. “Academics from Princeton and Florida International Universities have explored how China ‘threatens the security, stability, and viability of Bitcoin’ with its ‘political and economic control over domestic [cryptocurrency] activity […] [and] internet infrastructure. “China has both ‘mature capabilities’ and ‘strong motives’ to perform a variety of attacks against Bitcoin. Even worse, it is already exerting its power over Bitcoin in a myriad of ways. “‘As the value and economic utility of Bitcoin have grown, so has the incentive to attack it,’ the researchers explain. ‘We singled out China for analysis because they are the most powerful potential adversary to Bitcoin, and we found that they have a variety of salient motives for attacking the system and a number of mature capabilities, both regulatory and technical, to carry out those attacks.’” Of course if China is doing all this to BitCoin - you know they’re at least looking to do it to every cryptocurrency there is. What can we do to counteract Communist China’s massive cryptocurrency head start? We can begin by not stupidly over-regulating cryptocurrency here. The US Securities and Exchange Commission (SEC) had been regulating cryptocurrencies as monetary transactions. Which, of course, they are. This is the correct, light-touch regulatory approach. But then…. The SEC Just Made It Clearer that Securities Laws Apply to Most Cryptocurrencies and Exchanges Trading Them Danger, Will Robinson. “Securities” - are stocks. Cryptocurrencies - are absolutely not stocks. To impose this abusive, heavy-handed regulatory framework upon US cryptocurrencies - would be to smother the entire US cryptocurrency sector in the crib. Because as anyone not totally ruined by government school and/or ideology can tell you - more government means less investment. If we over-regulate - especially to the “securities” degree - we crush any hopes of the very major investment we need. Thereby handing Communist China the win - by default. We already have tons of China-catching-up-to-do on cryptocurrencies. Let’s not have our government hobble us - before we can even really begin to try.