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Xiao Lei, a Chinese financial analyst, has published an article that seeks to argue that the spheres of bitcoin and cryptocurrency are increasingly becoming a battleground in “a new currency” war between China and the United States. Despite some bitcoin users describing Lei’s views as conspiratorial, the article has garnered significant attention after becoming recommended by Baidu Baijia – an online media channel owned by major Chinese company Baidu.
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Mr. Lei is Concerned About the Future for Chinese Bitcoin Traders
Mr. Lei argues that the contemporary era comprises an epoch in which “the strategic significance of [traditional commodities such as] oil and grain… may not be so important [now, as] the game between countries has entered [the] virtual” domain. Xiao Lei posits that control over seigniorage (profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs) has become the principal means through which economic power is assured in the contemporary context.
Mr. Lei Argues That “The Battle of Seigniorage” Has Manifested At “The Level of Virtual Currency”
Mr. Lei states that “the bitcoin core development team” has sought to “curb China’s growing influence in the bitcoin market”, arguing that such has resulted in a power struggle between western-based bitcoin developers and Chinese-based miners for influence over the network.
Xiao Lei asserts that “since 2013, Bitcoin has seen tremendous growth in China with 95% of the trading volume and more than 50% of the computing power.” Mr. Lei argues that the growing Chinese presence in the bitcoin ecosystem has correlated with a reduction in the influence bitcoin’s core developers — of which he emphasizes “there are very few Chinese.” Mr. Lei even goes as far as stating that “cultural and strategic intentions determine that there is a natural and irreconcilable contradiction between the core developer and the Chinese government.” Mr. Lei alleges that “in order to counterbalance the rise of the Chinese market…Bitcoin is… constantly using technological improvements to weaken China’s influence.”
“If the Current Trending Continues, One Day You Will Find That Holders of Bitcoin and Those Who Do Not Own Bitcoin May Be Two Totally Different Classes”
Mr. Lei points out the majority of Chinese bitcoin trading now occurs on over the counter (OTC) markets. Mr. Lei asserts that “if CME successfully launches bitcoin futures in the fourth quarter, …over-the-counter transactions in China or exchanges in Japan and South Korea may not have much pricing power… Once CME’s bitcoin futures market goes public, it will become the world bitcoin [market] maker.”
It should be noted that members of the cryptocurrency community have dismissed Mr. Lei’s assessments as conspiratorial and lacking in evidence – with many pointing to Mr. Lei’s frequent insinuation pertaining to the Central Intelligence Agency (CIA), including implying that the CIA may in some way have colluded with bitcoin’s creator, Satoshi Nakamoto, as unsubstantiated claims that serve to undermine Mr. Lei’s credibility.
What do you make of Mr. Lei’s arguments? Share your thoughts in the comments section below!
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