Central banks are “blocking” bitcoin because its liquidity has surpassed that of many countries’ fiat currencies

Not only has China released signals of strict regulation of bitcoin, but the European central banks, the Federal Reserve, the Bank of Canada or the Treasury have also issued policies to strengthen regulation of bitcoin, showing a “containment” trend.

Central banks are "blocking" bitcoin because its liquidity has surpassed that of many countries' fiat currencies

On May 18, three major associations – the China Internet Finance Association, the China Banking Association and the China Payment Clearing Association – jointly issued an announcement requiring financial institutions and payment institutions not to conduct business related to virtual currencies. This was followed by a heavy voice from the State Council’s Financial Committee to crack down on bitcoin mining and trading practices. Subsequently, bitcoin and other crypto coin quotes dived sharply and the market fluctuated dramatically.

In fact, not only did China signal strict regulation of bitcoin, but the European central bank, the Federal Reserve, the Bank of Canada or the Treasury also issued policies to strengthen regulation of bitcoin, presenting a “siege” situation.

Why is bitcoin being “blocked” by central banks in many countries? What are the considerations behind the release of signals from many countries to accelerate the layout of digital currency? On May 28th, Baidu Finance invited Cai Weide, director of Beihang Digital Society and Blockchain Lab, Tsinghua Changjiang Chair Professor and founder of Tiande Chain, Wan Zhe, professor of Beijing Normal University and former chief economist of China Gold Group, and Huang Zhen, director of the Institute of Financial Law of Central University of Finance and Economics to hold an online forum to discuss the future direction of Bitcoin and the prospect of central bank digital currency development.

The first is the crime of money laundering and fraud, the second is the huge amount of resources consumed in mining and trading, and the second is the “carbon dioxide peak”. “The third is that it has actually interfered with the normal development of the financial market by its property of surging and falling in the financial market. However, the main reason for the recent central bank “siege” of bitcoin is that its market liquidity has exceeded the liquidity of many countries’ fiat currencies.

“Some analysts say that Bitcoin’s market liquidity was ranked 6th in the world in October 2020 and has even shot up to 3rd since then. There is a very famous area in digital currency called the digital currency area, and there is a very important theory in the digital currency area that the volume of transactions is one of the important factors in determining the status of this world’s reserve currency. If you think about it according to this theory, in November 2020 Bitcoin would no longer be challenging energy, no longer challenging money laundering, and no longer challenging plummeting spikes, but directly challenging the world’s fiat currencies. For example, in March of this year, the Federal Reserve publicly acknowledged for the first time that Bitcoin was challenging the U.S. dollar.” Cai Weide said to.

The Securities Daily reporter noted that according to the December 2020 statistics in a research report on Deutsche Bank’s official website, there are now only four national fiat currencies left in the world that can outperform bitcoin in terms of liquidity: the U.S. dollar, the yuan, the euro and the yen, while 98% of the world’s national fiat currencies have been beaten by bitcoin in terms of liquidity. And in March 2021, research data shows that bitcoin’s liquidity has surpassed that of the Japanese yen.

For why many countries are releasing signals to accelerate the layout of digital currency? Huang Zhen said that there is a core concept difference between digital currency and crypto digital coins. That is bitcoin and crypto digital coins have a de-nationalization and decentralization concept, which is a manifestation of their anarchism. Based on this fundamental difference, the cryptocurrency digital coin is a complete departure from our nationalized centralized currency and the digital currency that is now being issued. It is also here that they both have irreconcilable contradictions, and central banks are reluctant to recognize Bitcoin as a currency, or digital currency.

On the other hand precisely because it is de-nationalized and decentralized, it doesn’t care if there are laws to guarantee its legal solvency, so it is simply relying on the so-called code as a so-called new type of coin experiment, seeing it as a vision of code as law. And our current digital RMB or digital currency is to rely on the state to make laws to protect its legal and legal compensation, which is also a big difference.

Huang Zhen believes that the central bank now wants to launch its own digital currency is to resist the impact of Bitcoin, especially the impact of the concept of denationalization and decentralization. If this concept can be further penetrated through the digital currency, the future governments will face a great impact and influence, for national governance will also face a very big test.

Cai Weide further analyzed that we can treat bitcoin as the world’s largest bank or the world’s most frequently traded asset, but not as a currency. At the same time, bitcoin is not likely to be zeroed out anytime soon, because if it is zeroed out, we will face some other financial problems. So for now, we have to make peace with bitcoin and bring it into regulation.

In closing, Wade Tsai also expressed an extremely interesting point. He said, “A lot of people think that bitcoin is easy to launder, but I take the opposite view. In fact, the world’s dark networks are now rejecting bitcoin. Because the U.S. government has been able to use some high tech to track every single bitcoin transaction now, so the largest dark networks in the U.S. world are now rejecting bitcoin because if this goes on, bitcoin enters the dark web and the dark web is no longer dark.”

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/central-banks-are-blocking-bitcoin-because-its-liquidity-has-surpassed-that-of-many-countries-fiat-currencies/
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