The world has seen several rivalries between nations. Be it between France and Germany, India and Pakistan, North Korea and South Korea, the UK and Ireland, and the United States and Russia, history has shown us some fierce struggles for power. Thankfully, times have changed, and physical wars are over, at least for the time being.
However, rivalries remain, but they’re more economical in nature, and the recent trade war between the US and China is a classic example. The top two economies of the world are leaving no stone unturned in getting the upper hand on each other, which has created a lot of economic trouble in the world.
One thing common between these modern-day rivals is their hesitation on cryptocurrencies. US President Donald Trump and Chinese President Xi Jinping, both have criticized unregulated cryptocurrencies like Bitcoin, have maintained a hostile attitude towards the crypto space. This has severely dented the growth prospects of crypto companies in these two potent countries, which have forced them to shift their focus on emerging markets like Africa, the Middle East, and Latin America.
While the world is moving towards the adoption of crypto and validating the legitimacy of the industry, there are still hindrances in the US and China, which has kept the countries behind even of some low-profile countries like South Africa and Australia. Especially, after Facebook launched its ambitious crypto project Libra, the lawmakers in the United States and elsewhere have shown grave concerns towards the crypto industry, accusing it of facilitating anti-social activities like terrorism, money laundering, piracy, etc.
China, although behaving strictly with private cryptocurrencies, is working on a state-owned digital coin, which is, to say the least, alarming for the United States. The Dragon is apparently working on ways to ease its dependence on the US Dollar, like what other US rivals like Russia are doing. Despite this, the US remains a much bigger market for cryptocurrencies and blockchain technology than China is now. But can this change? Can the Dragon takeover the Bald Eagle? Let’s find out:
What’s the Current Market Scenario?
The crypto market, overall, is on a slump, which is almost half of the yearly peak of this year. 2018 was a disastrous year for the crypto industry, with the Bitcoin nose-diving from around $20,000 in December 2017, to as low as $3,500 in January 2019. Things started to improve since February, and there was a good run till August. However, since June, the market is consistently falling. Bitcoin is the epitome of cryptocurrencies, and hence, the state of BTC indicates the state of the entire crypto industry. Therefore, now, any country witnessing considerable growth in the crypto space would be uncommon.
However, things in the blockchain segment are quite different, with the industry proliferating as countries that are passive towards crypto are also accepting DLT as a possible solution to various challenges. For instance, India has stringent policies in place for crypto but is rapidly growing in the blockchain technology. Blockchain start-ups are mushrooming throughout the globe, and the trend is expected to grow in the foreseeable future. Therefore, countries that have a competitive edge in terms of blockchain implementation will have the upper hand over the others.
No matter what President Trump or members of the Congress or Senate say, the United States is the biggest market for cryptocurrencies with the highest number of users in the world. This makes it ready for the next level crypto boom if there’s anything like that. Major crypto companies like Binance, Ethereum, TRON, Ripple, Coinbase, etc. have a stronghold in the country, and therefore the crypto industry is dependent a lot on America.
On the other, China is quite the opposite, as it has strict regulations in place. The country’s central bank, the People’s Bank of China, has made crypto trading or engaging in crypto transactions forbidden for banks and other financial institutions, and due to this, prominent crypto companies from China were forced to move their bases in other countries. For instance, Binance, arguably the largest cryptocurrency exchange in the world, was a Chinese company but subsequently had to move its base to Japan due to strict policies.
However, both the US and China are somewhat equally matched in terms of blockchain adoption. Blockchain solutions have been a tremendous success in both countries, and there’s also a great deal of support from the respective governments. The Chinese President himself has praised the technology several times, and the implementation is growing at a rapid pace. What gives China an edge is a fact that the Chinese have a much bigger scope of blockchain adoption in the future, given their population and rapidly growing digitalization. If the society at large begins to use blockchain, especially in terms of payments and money transfers, the number of blockchain users in China will surpass the number of users in the US by a big margin. This could shift the interest of blockchain companies towards China, and therefore the US needs a comprehensive approach to increase blockchain adoption by discovering new use cases and expanding the currently available ones.
What Makes Crypto Successful?
Every cryptocurrency is based on the prevailing ethos of privacy, independence, decentralization, and liberty. Any digital currency which doesn’t offer any of these features will not appeal to a wider audience. Bitcoin became successful because people felt liberated from the clutches of a corrupt monetary system controlled and run by the elites. If any government creates its own crypto, it will no longer be independent, as the officials themselves would be able to track transactions and control the token, and that’s precisely what Satoshi Nakamoto didn’t want to happen. This is what differentiates the US and China. While both governments have a hostile attitude, the US is trying to regulate the existing tokens, while the latter is trying to create an all-new one which they can control. Due to this, the approach of the US seems to be relatively more liberal than China, and therefore, the US can remain the most significant crypto market.
That said, China’s policy could seriously affect international trade. If countries like China, Russia, Turkey, Venezuela, Iran, etc. start their trading with their native cryptocurrencies, the value of the US Dollar could be dented, and that’s the matter of concern for Washington. The USD is one of the most crucial tools through which America maintains its international dominance in terms of politics and economics. If the demand for USD decreases, its value would come down. Besides, if implemented successfully, the model could be adopted by other countries, especially those who have the technology to do so, like Japan, Germany, India, etc.
The US and China are evenly matched in terms of blockchain technology; however, China has a better potential for growth, which may or may not happen. On the other hand, the US is sounder technologically with all the major blockchain companies in the world offering services in the nation. In fact, Ripple is considered one of the biggest blockchain solutions provider in the financial world.
The crypto scene is quite different, as, on the face, the US is much more powerful and has more significant potential too. However, what is dangerous is China successfully uses crypto for international trade, causing a massive setback for the USD as a globally accepted currency.