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  • On this episode of China Uncensored,

  • is China gaming bitcoin?

  • Hi, welcome to China Uncensored,

  • I'm your host Chris Chappell.

  • Bitcoin!

  • The money of the future.

  • Maybe.

  • Or it could all crash and burn.

  • Depends who you ask.

  • For those of you unfamiliar with it,

  • Bitcoin is a peer-to-peer cryptocurrency.

  • Which is not how this guy pays you for dinner.

  • Cryptocurrency uses cryptography

  • to secure its transactions

  • and to create more of the currency.

  • Cryptography secures information in code,

  • like the famous Enigma machines

  • used by the Nazis during World War II.

  • Nowadays, cryptography is done by computers

  • using incredibly complex math.

  • Which unlike the Enigma code,

  • can't be solved by Britain's greatest minds,

  • Sherlock Holmes and Elizabeth Swann.

  • Modern cryptography lets Bitcoin

  • operate independently from a central authority,

  • like a government or a bank,

  • because you don't need a third party

  • to validate the Bitcoin transaction.

  • And transactions can be done anonymously.

  • Bitcoin has been described as

  • the world's most democratic currency.

  • So obviously it's been thriving in

  • you guessed it

  • China.

  • According to Coin Telegraph,

  • the majority of Bitcoin trading,

  • estimated from 50 percent to 98 percent,

  • takes place in China.”

  • This creates a problem.

  • In theory, Bitcoin can't be controlled

  • by any government.

  • But in practice,

  • the Chinese Communist Party can have

  • a huge influence

  • on the global price of Bitcoin.

  • So if you own Bitcoin,

  • well, the value of your money can

  • be heavily influenced by the whims

  • of the world's largest authoritarian regime.

  • Take that, democratic currency!

  • Take what happened in 2013 as an example.

  • In early September that year,

  • one Bitcoin was worth around 100 US dollars.

  • By late November,

  • that price had skyrocketed

  • to more than 1,000 dollars per Bitcoin.

  • And then overnight,

  • it came crashing down.

  • China's central bank,

  • the People's Bank of China,

  • told financial institutions in China

  • to suspend trading in Bitcoin

  • because itdoesn't have 'real meaning'

  • and lacks legal protections.”

  • Funny that those same things

  • didn't stop the Chinese regime

  • from encouraging people to speculate

  • in China's stock markets.

  • But back to Bitcoin.

  • In two weeks,

  • Bitcoin lost over half its value.

  • It took a full year

  • before the price bottomed out.

  • Something similar happened again

  • in February this year.

  • The People's Bank of China met with

  • three of China's biggest Bitcoin exchanges,

  • BTC China, Huobi, and OKCoin.

  • The exchanges then stopped Bitcoin withdrawals

  • for four months.

  • The exchanges recently lifted the ban,

  • but during the suspension,

  • the global price of Bitcoin

  • dropped again,

  • though not as much as in 2013.

  • So why has the Chinese regime

  • been targeting Bitcoin?

  • Besides it being a democratic currency?

  • There are a few reasons.

  • First, Chinese people can use Bitcoin

  • to get their money out of China.

  • You see, the Chinese regime has limits

  • on the amount of foreign currency

  • people in China can buy

  • because they're worried about

  • rich Chinese people

  • moving their money out

  • and then fleeing the country.

  • But Chinese investors can buy Bitcoin in China,

  • and then later exchange that for foreign currency

  • in any amount they want.

  • Huge fortunes that might have been made through,

  • I don't know,

  • corruption,

  • could be safely stored out of reach

  • of pesky Chinese investigators.

  • And that was why China's central bank

  • started investigating Bitcoin exchanges

  • back in February,

  • and threatened to shut down exchanges

  • that violated rules on

  • foreign exchange management,

  • money laundering,

  • and payment and settlement.”

  • But it's unclear how much money

  • is actually being moved out of China

  • through Bitcoin.

  • Bitcoin transactions in China

  • are not anonymous,

  • since you have to link

  • a Chinese bank card

  • to your Bitcoin account.

  • You could move a few hundred

  • thousand yuan into Bitcoin,

  • but larger amounts would attract attention.

  • So why is there so much

  • Bitcoin trading in China?

  • Well, that brings us to the second reason

  • the Chinese regime is so interested

  • in Bitcoin.

  • Earlier I mentioned people speculating

  • in China's stock markets,

  • and since those markets

  • have cooled down,

  • guess where people

  • are putting their money now?

  • You see, in China,

  • there's not a lot of places

  • people can invest their money.

  • Which leads to things like

  • real estate bubbles.

  • Stock market bubbles.

  • And, naturally,

  • fish bladder bubbles.

  • It's like Chinese investors looked at

  • the Dutch tulip bulb craze,

  • and thought,

  • what a great idea,

  • but it needs more fish bladders.

  • Putting your money in an online cryptocurrency

  • stored on something called a blockchain

  • that can do something called forking

  • doesn't seem so crazy

  • now, does it?

  • Hmmm...Bitcoin or fish bladders?

  • Which will be the money of the future?

  • Anyway, speculation,

  • no matter the medium,

  • has the same result.

  • And many of the same things

  • that led to China's stock market collapse

  • are now happening in China's Bitcoin exchanges:

  • People dipping in and out

  • to make a quick buck,

  • leading to wild market fluctuations,

  • and risky margin trading.

  • Which is to say,

  • this will all end really well.

  • One of the Bitcoin investors

  • interviewed in this article

  • even says he can't lose money on Bitcoin

  • the same way he did on the stock market,

  • because Bitcoin's not controlled

  • by the Chinese regime.

  • Uhhhh....about that.

  • The third reason the Chinese Communist Party

  • has been targeting Bitcoin is control.

  • You see, the CCP is not out to kill Bitcoin

  • at least not right now.

  • They just want to bend Bitcoin to their advantage.

  • But first, let's talk about Bitcoin mining.

  • Simply put,

  • people can run powerful computers

  • to solve complex math problems

  • that validate Bitcoin transactions--

  • that's the cryptography

  • I was mentioning earlier--

  • and they're rewarded with Bitcoins.

  • This is how new Bitcoins are created.

  • But nowadays Bitcoin mining

  • requires powerful computers,

  • custom chips,

  • and lots of electricity.

  • And it turns out

  • China is home to 50 to 70 percent

  • of the world's Bitcoin mining operations.

  • The Chinese government could, of course,

  • restrict Bitcoin mining,

  • but it doesn't.

  • Quite the opposite.

  • In many instances

  • the government is actively supporting it.

  • According to Bitcoin Magazine,

  • major Bitcoin mines in China's northwest

  • are being given, “access to government-supported,

  • low-cost wind and solar electricity.”

  • Powering the computer servers

  • is one of the biggest financial challenges

  • to Bitcoin mining.

  • The People's Bank of China

  • could also be showing favor to Bitcoin.

  • A senior banking official

  • just recently published a detailed editorial

  • about all the advantages Bitcoin

  • can offer China.

  • Because if you look at it,

  • since China can have a huge impact

  • on the price of Bitcoin,

  • why wouldn't the Chinese regime

  • use its influence over the market

  • to its advantage?

  • Here's what the CCP could do.

  • Let's say the Bank of China makes it known

  • they'll be investigating

  • some major Bitcoin exchange.

  • Prices plummet.

  • Chinese officials then buy up Bitcoin

  • while the market is down.

  • And then they release a statement

  • that the Chinese government supports Bitcoin,

  • and the market skyrockets.

  • Again, that's hypothetical,

  • but very possible.

  • Following China's investigation earlier

  • this year,

  • the price of Bitcoin, “more than [doubled]

  • to about $2,900 over the last three months.”

  • And on top of that,

  • the Chinese regime has

  • the ultimate Sword of Damocles

  • over all Bitcoin operations in China.

  • According to CNN,

  • Chinese regulators could clamp down on bitcoin

  • by classifying it as a foreign currency,

  • which would effectively limit

  • individual Bitcoin transactions

  • to $50,000 per year.”

  • So a lot of people feel they should buy

  • as much Bitcoin as they can right now.

  • Which will, of course, further drive up the price.

  • Possibly making some officials very rich.

  • Of course, China is not the only influence

  • on the Bitcoin market,

  • and there are also new cryptocurrencies like Ethereum,

  • that are gaining market share.

  • But the Chinese regime

  • still has a pretty big effect

  • on the global price of Bitcoin.

  • Which makes me think,

  • maybe the fish bladder market

  • is the way to go.

  • What do you think?

  • Leave your comments below.

  • And as you know,

  • China Uncensored is made possible

  • almost entirely through viewer contributions

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