Davos: What’s Bitcoin’s Role in Trump and China’s ‘New World Order’?
According to Investec CEO Hendrik du Toit, despite U.S, President Donald Trump and China’s President Xi Jinping not coming face to face at Davos this week, the event is still encapsulated by their simmering economic battle.
The chief of the global investment firm suggested that Davos represents a thrashing out of the coming ‘new world order’ – with the U.S. and China fighting for a seat at the head of the table.
Amid these talks some still found time to throw FUD on Bitcoin and cryptocurrency in general. But putting aside price predictions for the moment, just what is crypto’s role in this new world order? The answer probably has nothing to do with its role as a digital currency.
New World Order at Davos
Du Toit told was quoted as telling CNBC reporters on Thursday morning that:
“The big uncertainty is the U.S.-China trade negotiation which is not really about trade, it’s about a new world order.”
Henrik also made allusions to China’s recent slump in GDP growth, which just hit the thirty year low of 6.6%. As many former communist nations have discovered in the past thirty years, it’s easier to record growth when you don’t have much to begin with. Now China is up in the big leagues, and it’s not entirely clear how the country will adapt to its new surroundings. Du Toit continued:
“And if we get a dysfunctional world order having come from a space which was very, very good business over the last 20, 30 years since communism fell, then there may be some big hits along the way and there may be some big challenges.”
China’s GDP growth rate is still almost three times that of the U.S, and the trade deficit between the two nations saw China record a $350 billion surplus at the end of the year in 2018. Exports to the U.S. rose 11.3% last year, compared to the measly 0.7% increase in U.S. goods shipped to China.
However, few statistics tell the whole story, and according to financial analyst Gary Shilling, the trade deficit is a clear sign of American dominance, as he recently posited:
“The thing is…we (the U.S) are the buyer, and they’re the seller – and when you’ve got plenty of goods and services, it’s the buyer who has the upper hand. And besides, where would China sell all this stuff if it wasn’t to American consumers?”
Shilling went so far as to say that Donald Trump currently has the upper hand in the trade war, and that U.S. economic dominance would continue to eclipse China – specifically due to Trump’s ‘America first’ policies.
“I think ultimately we’re going to see more imports of American goods into China; they are going to be less aggressive on exports; they’re going to steal less technology, they’re going to demand less technology for the cost of doing business in China. I think it’s going to shift in America’s favour, but the transition is rough.”
Shilling’s take encapsulates a best-case scenario – one where the growing number of Chinese troops terraforming the South China sea, and the constant theft of U.S-patented technologies don’t cause global tensions to boil over.
But if they did boil over there’s every reason to assume that cryptocurrency, and Bitcoin in particular, would have a major role to play. However, that role may be its last on the world stage.
Estimates towards the end of 2018 placed over 80% of Bitcoin’s mining power in China. Given the Chinese government’s tendency to simply take things they like, any conflict between them and the U.S. would likely see Bitcoin weaponized, and its ‘distributed’ ledger commandeered.
A recent Forbes article suggested as much, and claimed that China’s Bitcoin’s dominance posed a real threat to American tech, finance and economy. Furthermore, many nations have already taken steps to curb that dominance:
“While U.S. regulators are wrapped up in their own turf wars, other nations are moving fast to create a welcoming regulatory environment for cryptocurrency.”
That includes the U.K and the European Union, both of which have taken steps to increase the popularity of cryptocurrency and blockchain within their respective regions. It might terrify the banksters to see blockchain spread around the Western world, however, the shadowy figures at the levers of governmental control are already attempting to leverage blockchain technology in their favour.
How much would it be worth to China and the U.S. to gain control over Bitcoin’s ledger? In the previous century we saw the world’s nations sacrifice not only money and resources, but also a majority of their male adult populations for a slice of whichever pie was being baked at the time.
While many major cryptocurrencies can be commandeered for just a few thousand dollars per hour, Bitcoin would cost $261,379 per hour to control according to independent data. The Ethereum Classic blockchain can currently be bought for $4,275 per hour via cloud-mining marketplaces like Nicehash, but control of BTC wouldn’t be sought in that way.
More likely both nations would get to work on building the largest mining farms they could, made up of as yet unseen super-computers from various R&D labs hidden around the country. A digital battle for control of Bitcoin would ultimately be decided by which nation could develop their computational tech the quickest.
Such a scenario would see the sharpest minds in silicon valley employed as government agents in much the same scenario as mathematicians and codebreakers during the second world war. By the end, the Bitcoin blockchain would be illegitimate and abandoned; and the lasting legacy of BTC would be as a bit-part player in the much larger engagement that was World War 3.
Not all the noises coming out of Davos this week were so ominous. The CEO of Nasdaq, Adena Friedman, recently offered the possibility that cryptocurrency could still be the global currency of the future.
Meanwhile, Circle CEO, Jeremy Allaire, suggested that if humanity is to survive the digital age, it will require the resilient and decentralized tools which crypto and blockchain provide.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.