China declares war on Bitcoin.
Their reason?
Not what you’d expect...
Welcome to China Uncensored, I’m Chris Chappell.
Good news! The Chinese Communist Party has found something new
to declare war on. This time it’s crypto mining. Stirring wider fear...
...into a porridge of peril.
This is a big deal for Bitcoin, which is the most popular cryptocurrency.
That’s because “China accounts for around 65% of all Bitcoin mining globally.”
“In comparison, the United States accounts
for 7.2% of global Bitcoin mining.” I’ll explain why that is in a bit.
But the Chinese Communist Party is not a fan of Bitcoin.
“Bitcoin are created and moved around not by a central bank or financial institution
but by a broad and disparate network of computers,” on what’s called a blockchain.
Bitcoin operates entirely outside of China’s Central Bank or Communist Party control. It gives
Chinese people a way to use money completely free from oversight by the government.
So if you’re, say, a Chinese dissident, the Communist Party
can make the bank freeze your savings account. But they can’t freeze your Bitcoin assets.
But that’s not why the Communist Party is cracking down on Bitcoin mining. No, no, no. It's cracking
down, because the Communist Party wants to save the environment. More after the break.
Welcome back. Unless you didn’t see an ad, in which case YouTube may have demonetized
us. That’s why China Uncensored relies mainly on viewer support. Which reminds me,
did you know we accept Bitcoin? Visit chinauncensored.tv/support to learn more.
So China has declared war on crypto mining.
In order to help the environment, you see. You might be thinking—WHAT?!
Well, it makes total sense.
Simply put, Bitcoin mining is a process where people can run powerful computers
to solve complex math problems that validate Bitcoin transactions.
They're rewarded with Bitcoins. This is how new Bitcoins are created.
And the computers doing that Bitcoin mining requires a huge amount of energy,
more than entire countries like Ukraine and Argentina.
And as I said, China makes up about 65% of all Bitcoin mining globally.
And the Chinese region of Inner Mongolia alone “accounts for about 8%, due to its cheap energy.”
Which is why Inner Mongolia is not only banning Bitcoin mining,
but also banning any new digital coin projects.
You see, Chinese leader Xi Jinping promised,
promised the UN that China will be carbon neutral within four decades.
You can make that kind of long-term promise when you have the power to rule indefinitely.
But becoming carbon neutral is going to be tough,
considering China burns more coal than the rest of the world combined.
So yeah, Xi could have reined in the number of new coal plants they’re building.
But banning Bitcoin mining instead—that just makes so much more sense.
For purely environmental reasons.
A few weeks ago, China’s top economic planner released this statement blasting Inner Mongolia
not meeting energy targets.
So they had to ban Bitcoin mining you see. For the environment.
This has led to a surge in the price of Bitcoin.
Did I mention we take Bitcoin?
So you can see, the Chinese Communist Party has nothing
at all against Bitcoin or other cryptocurrency.
In fact, they love the idea so much, the Party wants to make its own digital currency!
More after the break.
Welcome back.
So I wouldn’t want you to think the Chinese Communist Party has something
against Bitcoin. Sure they’ve declared war on Bitcoin mining.
And in 2017 they banned cryptocurrency exchanges.
For the environment…?
But as the New York Times recently reported,
China is charging ahead with a National Digital Currency, called the e-Chinese-yuan. (eCNY)
China’s central bank began testing it in four cities last year.
And now it’s being brought to bigger cities like Shanghai and Beijing.
“In my hand is the new digital RMB. It’s held inside a digital wallet on an app on my phone.”
Held by Mao Zedong, who’s watching you from the grave.
But China’s digital currency is like the anti-Bitcoin.
Because while Bitcoin uses blockchain technology that keeps transactions anonymous,
China’s digital currency...does not do that. In fact, Chinese authorities
can see every transaction you make with the digital yuan.
China’s digital currency is not actually a cryptocurrency. Cryptocurrencies by definition use
a decentralized system to record transactions. That keeps the records from being manipulated.
But China’s digital currency uses a centralized system. It’s controlled by
the Chinese Central Bank, and ultimately by the Chinese Communist Party itself.
But it *feels* kind of like cryptocurrency, so it’s the same thing, right?
The digital yuan could “give the Chinese government more power
to monitor finance flows because a digital currency system can record every transaction.”
“[It] can make it easier for governments to track financial transactions
to stamp out tax evasion and crack down on dissidents.”
Those two things definitely belong in the same sentence.
And believe it or not, it gets better.
“It will give the central bank new powers, including
novel types of monetary policy to help the economy grow.”
“In one possibility that economists have discussed, a central bank could program
its digital currency to slowly lose value so that consumers are encouraged to spend it immediately.”
Great! I hate wasting all my money on savings.
Well gosh, how long until we can have that in the United States?!
A bunch of countries are experimenting with a national digital currency,
“Yet no major power is as far along as China.
Its early moves could signal where the rest of the world goes with digital currencies.”
The New York Times always manages to fill me with hope.
You know, the Chinese Communist Party has for years been trying to weaponize
its currency and defeat the US dollar. And now some say the digital yuan could help.
But will the yuan be able to defeat the dollar as the global currency? That’s a whole
nother episode. Let me know in the comments below if you’d like to see us do that one.
And now it’s time for me to answer questions from a member of the China Uncensored 50 Cent Army,
fans who support China Uncensored on the crowd funding website Patreon.
James Wallberg asks, “Chris when the CCP falls do you think China will stay a single country
or split up into several smaller ones? To quote Romance of the Three Kingdoms.
"That which is divided must unite, that which is united must divide."
First of all James, Romance of the Three Kingdoms is one of my favorite books,
and definitely my favorite of the four Chinese classics.
I highly recommend reading it if you haven’t. Or at least play Dynasty Warriors.
But what happens after the CCP falls is a very good question.
China has existed for thousands of years. Despite so many different dynasties,
over the last two millennia there has always been something that eventually unified people
into the country we call China. That will surely continue even after the CCP falls.
However, regions like Inner Mongolia, Xinjiang, Tibet—places that have not always been
historically part of China—they might become their own independent countries again.
Thanks for your question James.
And thank you for watching. Once again I’m Chris Chappell, see you next time.