2013-08-19 Bitcoin Magazine: Bitcoin and China: More than Meets the Eye?

[BitGo]

http://bitcoinmagazine.com/bitcoin-and-china-more-than-meets-the-eye/

"China saw its first major interaction with the Bitcoin community when the One Foundation, the largest independent charity in China, started accepting Bitcoin donations for a disaster relief campaign, and received 230 BTC (then $30,000) within two days. Two weeks after that, China became the first country to overtake the US in BitcoinQt client downloads, and keeps a position of second place to this day."

"for China, encouraging the growth of Bitcoin business is an opportunity to tread the waters with increased economic freedom without compromising its social and economic regulatory structure as a whole."

"general censorship and surveillance in China remains rampant. However, anything that allows the Chinese government to honestly say “we’re better than the United States”, no matter how small, represents an opportunity to frame the debate in China’s favor and improve the country’s highly authoritarian reputation."

BUT "So far, there is still almost no evidence that the Chinese government actually intends to be lax on Bitcoin in the future,"

"perhaps, China’s Bitcoin-friendliness is still simply the result of government blindness, and a crackdown is due to come in two or four months. We don’t know. But with every passing week the alternative hypothesis is becoming increasingly likely; perhaps China’s Bitcoin acceptance has more behind it than meets the eye."

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[jinni]

I doubt China's political leadership is not aware of Bitcoin, China seems to be quite well informed in technical matters. However, that doesn't make it impossible for leaders to make foolish decisions.

But China differs from the US in one major point - in China, tax evasion is widespread already. China gets a measly 17% of GDP in tax revenue, whereas the US gets a whopping 27% of GDP in tax revenue.

With a land value tax Chinese authorities would still be able to collect taxes in a way that taxes the wealthy cities while leaving the impoverished countryside virtually untouched by taxation. Whereas the US would have a lot harder time raising possibly twice as much (if you count the US deficit) only basing itself on a land value tax. Hence the Chinese state is much better set to tackle the transition to a Bitcoin economy than the US is.

In addition the US heavily reliant on an overgrown financial industry, which would be the one of the hardest hit industries from the transition to a Bitcoin economy. Furthermore, the USD is the world reserve currency, and Bitcoin threatens that position.

A transition to a Bitcoin economy would lead to: (a) the US having to cut it's gov't budget meaning less military expenditure, (b) the US financial industry's dominance would be shattered and (c) it's economic dominance through issuing the reserve currency would be shattered too.

Relatively, China has much more to gain from transitioning to a Bitcoin economy compared to the US.

Bitcoin is one of those things China could use to leapfrog the West, while avoiding the rut that most of the West is stuck in at the moment. Double, triple, quadruple win for China.

I'd be hard pressed to imagine China's leaders would fail to realise such a gargantuan strategic opportunity. 

[Carlton Banks]

I doubt China's political leadership is not aware of Bitcoin, China seems to be quite well informed in technical matters. However, that doesn't make it impossible for leaders to make foolish decisions.

But China differs from the US in one major point - in China, tax evasion is widespread already. China gets a measly 17% of GDP in tax revenue, whereas the US gets a whopping 27% of GDP in tax revenue.

With a land value tax Chinese authorities would still be able to collect taxes in a way that taxes the wealthy cities while leaving the impoverished countryside virtually untouched by taxation. Whereas the US would have a lot harder time raising possibly twice as much (if you count the US deficit) only basing itself on a land value tax. Hence the Chinese state is much better set to tackle the transition to a Bitcoin economy than the US is.

In addition the US heavily reliant on an overgrown financial industry, which would be the one of the hardest hit industries from the transition to a Bitcoin economy. Furthermore, the USD is the world reserve currency, and Bitcoin threatens that position.

A transition to a Bitcoin economy would lead to: (a) the US having to cut it's gov't budget meaning less military expenditure, (b) the US financial industry's dominance would be shattered and (c) it's economic dominance through issuing the reserve currency would be shattered too.

Relatively, China has much more to gain from transitioning to a Bitcoin economy compared to the US.

Bitcoin is one of those things China could use to leapfrog the West, while avoiding the rut that most of the West is stuck in at the moment. Double, triple, quadruple win for China.

I'd be hard pressed to imagine China's leaders would fail to realise such a gargantuan strategic opportunity. 

Replace "China" in that analysis with just about any other country in the world, and alot of it still stands up. I think we're witnessing (in Bitcoin) a significant symptom of one seriously titanic geopolitical power struggle. Einstein said the 4th World War would be fought with sticks and stones, but is the Third World War a monetary one (or electronic...), being fought behind closed doors and not with atomic weaponry?

[jinni]

Replace "China" in that analysis with just about any other country in the world, and alot of it still stands up.

I think you are missing the point a little. Very few countries have both an interest in and enough power to manage standing up to the US. Quite a few countries would like to, but cannot stand up properly to the US (i.e. Equador, Bolivia, India(?), Brazil, Japan(?), the Eurozone(?), Pakistan, etc.) . Then you have a few like DPR Korea, Iran, Cuba and Venezuela that barely are able to muddle on against the full economic and diplomatic pressure of the US government (and these countries are technological backwaters that would struggle to adopt Bitcoin with the speed that China could). China is a country that increasingly looks like it can stand up to the US with it's back straight (that's why so many American politicians are panicking about China). You could of course point out Russia, and although it has some clout, that is still mainly based on its oil crutch.

And that's the point, that if the US tries to make a War on Bitcoin in terms of regulation, propaganda and other hurdles, China would have enough power to resist and provide a billion-people market for Bitcoin whereas most other countries would struggle to go against US will on this.

[Carlton Banks]

Replace "China" in that analysis with just about any other country in the world, and alot of it still stands up.

I think you are missing the point a little. Very few countries have both an interest in and enough power to manage standing up to the US. Quite a few countries would like to, but cannot stand up properly to the US (i.e. Equador, Bolivia, India(?), Brazil, Japan(?), the Eurozone(?), Pakistan, etc.) . Then you have a few like DPR Korea, Iran, Cuba and Venezuela that barely are able to muddle on against the full economic and diplomatic pressure of the US government (and these countries are technological backwaters that would struggle to adopt Bitcoin with the speed that China could). China is a country that increasingly looks like it can stand up to the US with it's back straight (that's why so many American politicians are panicking about China). You could of course point out Russia, and although it has some clout, that is still mainly based on its oil crutch.

And that's the point, that if the US tries to make a War on Bitcoin in terms of regulation, propaganda and other hurdles, China would have enough power to resist and provide a billion-people market for Bitcoin whereas most other countries would struggle to go against US will on this.

Sorry, I should have worded it to emphasize the "alot of your analysis still stands up" part, I guess "alot" is a tiny little word to easily slip past the eyes.

I would broadly agree with your perception, and add that the Western press is filled with negative stories about China and the Chinese people, not just biased reporting of actual political developments, but the also the more insidiously biased editorial decisions too. "CHINESE BABY FOUND IN SEWAGE PIPE" was a propaganda classic IMO. Equally appalling treatment of children is  happening in other countries, the US not least, and yet it was difficult not to chance across that story amongst the more prurient tabloid press (replete with photo of the unfortunate sprog). You'd assume that the Chinese papers are full of these horror stories, that's all that ever happens in China, right? Strangely not, but the Chinese don't have a free press, of course (whisper it only, "just like us").

I also find interesting your question marks (?) after states that should be defending against the US, but are too weak to do so. Pakistan is a fascinating one, quite clearly heavily influenced by the US in it's politics, but is more than happy to trade with Iran, probably one of the more implacable enemies of Uncle Sam. If you want to paint Pakistan as a US client state, as some do, how on earth do you explain that? I sometimes wonder if large amounts of these world "events" are nothing more than an elaborate state run puppet show, with the occasional genuine stand-off when someone stops reading from the script. That's too worrying a reality, and it's difficult to explain some elements of the ostensible "script" throughout the past 100 years, but some variation of this is not impossible either.

[p2pbucks]

China performs much better than US on bitcoin issue .... at least now

[jinni]

Replace "China" in that analysis with just about any other country in the world, and alot of it still stands up.

I think you are missing the point a little. Very few countries have both an interest in and enough power to manage standing up to the US. Quite a few countries would like to, but cannot stand up properly to the US (i.e. Equador, Bolivia, India(?), Brazil, Japan(?), the Eurozone(?), Pakistan, etc.) . Then you have a few like DPR Korea, Iran, Cuba and Venezuela that barely are able to muddle on against the full economic and diplomatic pressure of the US government (and these countries are technological backwaters that would struggle to adopt Bitcoin with the speed that China could). China is a country that increasingly looks like it can stand up to the US with it's back straight (that's why so many American politicians are panicking about China). You could of course point out Russia, and although it has some clout, that is still mainly based on its oil crutch.

And that's the point, that if the US tries to make a War on Bitcoin in terms of regulation, propaganda and other hurdles, China would have enough power to resist and provide a billion-people market for Bitcoin whereas most other countries would struggle to go against US will on this.

Sorry, I should have worded it to emphasize the "alot of your analysis still stands up" part, I guess "alot" is a tiny little word to easily slip past the eyes.

I would broadly agree with your perception, and add that the Western press is filled with negative stories about China and the Chinese people, not just biased reporting of actual political developments, but the also the more insidiously biased editorial decisions too. "CHINESE BABY FOUND IN SEWAGE PIPE" was a propaganda classic IMO. Equally appalling treatment of children is  happening in other countries, the US not least, and yet it was difficult not to chance across that story amongst the more prurient tabloid press (replete with photo of the unfortunate sprog). You'd assume that the Chinese papers are full of these horror stories, that's all that ever happens in China, right? Strangely not, but the Chinese don't have a free press, of course (whisper it only, "just like us").

I also find interesting your question marks (?) after states that should be defending against the US, but are too weak to do so. Pakistan is a fascinating one, quite clearly heavily influenced by the US in it's politics, but is more than happy to trade with Iran, probably one of the more implacable enemies of Uncle Sam. If you want to paint Pakistan as a US client state, as some do, how on earth do you explain that? I sometimes wonder if large amounts of these world "events" are nothing more than an elaborate state run puppet show, with the occasional genuine stand-off when someone stops reading from the script. That's too worrying a reality, and it's difficult to explain some elements of the ostensible "script" throughout the past 100 years, but some variation of this is not impossible either.

Pakistan is a state that would love to stand up to the US about illegal drone strikes killing hundreds of Pakistani civilians - but they can't. By any standard that's more than good enough a reason to declare war after being attacked by a hostile foreign state. With regards to Iranian-Pakistani relations and trade, well the US is working on making the most pro-Iranian country in the world stopping trade with Iran. Already, the US has derailed the IPI pipeline project until further notice and are now threatening Pakistan with an embargo.

It looks like Pakistan is pretty desperate for support from China with a whole set of different projects, but at the moment it looks like China is sitting on the fence to avoid angering its biggest neighbour India (and by inference, the US). So until China jumps on board, it looks like the weak Pakistani state is still pretty much a client of the US.  Whether or not the Pakistani state manages to impose the US's wishes on its population remains to be seen - regardless, Pakistan is not the first place for Bitcoin to be widespread since most of the population is still living in grinding poverty (though cheap Nokia's, an M-PESA-like Bitcoin system like Kipochi and support from a Bitcoin-powered China could help change that).

Otherwise, I put the question marks there for some of the countries because I believe that some of the traditionally US-friendly countries are getting increasingly fed up with their hegemon but are still situated squarely within US influence and has no choice for the time being than to follow Washington's decrees.

Many people, Chris Hedges, among others, writes about "Empire" when considering the US. Oliver Stone's "The history of the US" is another hegemony-oriented one. If one lists the abuses of the US since the start of WW2 and the foreign civilian lives that can be credit to the US it is hard not to draw comparisons to the Soviet Union or Nazi Germany - I'm of course not blaming ordinary Americans, but their leaders. Another critic of the American Empire is Patrice Ayme who writes long rants, often bringing in comparisons with the Roman empire and the US empire. But judging whether the US is an empire or a hegemony with puppet states, or simply an independent country with more power than others will be up to history-scholars a hundred years from now. My bet is on the former.