If, less than five years ago, it was seen that governments of major economic powers, like China, were building their own cryptocurrencies after seeing what Bitcoin could do – the cryptocurrency community would have been beaming.
This is now coming to fruition as Bitcoin, and the entire blockchain and cryptocurrency industry has captured the imagination of enterprises and governments looking at the next evolution of payment.
The issue is, however, the iterations coming from the likes of China, Venezuela, Iran, even Wells Fargo, and JPMorgan, are not homages to Bitcoin, rather a direct threat and competition. The fact that these governments are creating their own versions is to create something that they can control that works better than Bitcoin can – for them.
It has been seen through the evolution and uptake of cryptocurrency and blockchain by governments and enterprises; they do not have an issue with the technology, rather its decentralized control. For a government to allow a financial system to run itself; or for a company to allow a supply chain to have no mediation and intermediaries, does not sit well.
However, the technology is so user-friendly, so open-sourced and simple to implement that these entities have realized they can create their own blockchains – and more importantly, their own cryptocurrencies.
For this reason, it is important to discuss if the evolution of the Chinese digital currency, and even others that are in discussion or evolution, are a real threat to Bitcoin? In many respects, they are, but not because it will be a better system to Bitcoin, but rather because governments will fight to kill off the Bitcoin threat.
Here, many will step in and say that the government cannot shut down Bitcoin – its decentralized nature makes it immune. This is true, but what governments can do is shut down the access and proliferation of cryptocurrencies.
China succeeded in limiting Bitcoinls proliferation through the country with its policies – this saw global Bitcoin transactions go from 90 percent emanating from China to just 1 percent.
More so, John McAfee, who is a big believer in Bitcoin’s power to bypass the government and its control over the financial system, does point out its one key weakness – and that is the centralized exchanges that form most of users’ primary interaction with crypto.
“My problem with the centralized exchange is that they are our weak point in the crypto universe. Governments with the threat – and China has already done it – can shut them all down, governments can hold that over the heads of the centralized exchanges, which they are already doing. They can demand more access, more intrusiveness, more control,” he told The Daily Chain
“This is what governments want. If we allow this, this technology, the blockchain, which is the first technology, the first world-changing technology that has come from the people in the last 75 years.”