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article imageOp-Ed: Bitcoin hits the fan? Digital Chinese yuan incoming

By Paul Wallis     Mar 5, 2021 in Business
Beijing - A Chinese initiative to create a digital version of its basic yuan currency unit could be a big hit for Bitcoin. It’s also a strategic move which could make the Chinese currency the world leader.
The Chinese move isn’t entirely unexpected. There have been official mutterings about it for a while. China’s semi-instinctive move towards a digital currency, however, could smash the cryptocurrency market.
The yuan, unlike Bitcoin, is a real currency. It’s backed by a government and regulated. This is the virtual antithesis of the original cryptocurrency idea to get away from the big central banks, and it’s antimatter in the crypto market.
According to Phillip Gillespie, an expert interviewed by Bloomberg, the more likely scenario for Bitcoin is panic selling – with reason. The crypto market is volatile enough without a gigantic new player coming onboard.
There’s a big, expensive, irony here. China’s inscrutable (because they’re un-scrutinizable) political and trade positions. China’s conscientious efforts to antagonize the world won’t help the digital yuan get market traction, even if they insist on trade partners using it. Alternative cryptocurrencies are inevitable, and the hostile Chinese market is as good an incentive as any for them.
That’s not likely to help the cryptos in the short term, though. Alternative digital currencies don’t happen overnight. The existing cryptos will become the equivalent of speculative commodities, and that, any trader in any financial market can tell you, ain’t good for bottom line trading.
The fallout is likely to be brutal, at best. If the crypto market hits the fan, a lot of real money goes with it. That could have downsides nobody’s even heard of yet. Nobody quite knows who’s got what where in this not-very-visible market, or what sort of debts they may have to own Bitcoins.
The ripples could be large and deadly in some sectors. Not to overstate Bitcoin as a major market – Bitcoin isn’t super-huge in terms of volume in theory, but it’s a hit to an extremely sensitive market, exactly when it doesn’t need one. The Bitcoin market moves thousands of dollars each way, and moving straight down will be traumatic, to say the least.
Time to hit the fallout shelters? Yes, but remember this type of “radiation exposure” goes a long way.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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