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. Although being a Bitcoin maximalist, Thiel now wonders if Bitcoin should be considered a weapon from the Chinese government to dethrone the US dollar as a global reserve currency.
“Even though I’m a pro-crypto, pro-Bitcoin maximalist person, I do wonder whether if at this point Bitcoin should also be thought of in part as a Chinese financial weapon against 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. The media noted that his appearance with Pompeo could have implications for the next presidential race. 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. The success of Bitcoin in the global market has given the Chinese more power over the United States and now deemed to dethrone the dollar according to Thiel. 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. Thiel urged US policymakers to focus on the geopolitical aspects created by 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. In the process, the Chinese government anticipates eating away part of the United States Dollar global dominance 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. As a result, a digital Yuan could have a significant impact in the payment industry thus a direct 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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