Cryptocurrencies and De-Centralisation of Finance: Another reason the US Elite fear China

Apparently big banks around the world are terribly concerned about the influence of cryptocurrency markets. China is undoubtedly part of the reason for this, but only part of it.

While it is true that there's an enormous amount of hype in crypto, huge fortunes have also been made by millennials and generation Y. This seems only right and fair given the impossibility of housing markets and the financial stresses facing most people in the West age 20-50.

There is also a lot of hype about the risks of cryptocurrency, and a lot of this is propaganda driven by big banks with influence over politicians and regulators, two sets of influences which are highly ethically questionable.

Furthermore, it is true that there is enormous volatility in cryptocurrency markets and a lot of risk. But - so what? There's always been enormous risk in ALL sharemarket speculation and everyone knows this. Even with heavy regulation there are enormous risks to be had and losses to be made in futures, FOREX, and commodities trading.

All trading of, and investment in, financial instruments in trading exchanges involves risk and volatility. The entire day-trading profession and industry, with their short-selling speculation, are built upon this very volatility. It is why funds are diversified, and brokers and exchanges have stop-loss features built into trading systems.

One of the primary fears of large banks, gover-business, and established financial institutions is the implications of DeFi, or decentralised finance. This is exactly what it sounds like: large financial markets, transactions, and movements of capital without any centralised control. It's a user-centric financial system that cuts out the middle man.

(In Australia, you can easily experiment with cryptocurrency (carefully!) at Coinspot.)

Certainly new risks are introduced with DeFi, but equally terrible (perhaps worse!) older well known risks are eliminated - like banks and credit institutions that go bust from bad practice and destroy the lives of hundreds of thousands of people. With crypto and DeFi - such institutions don't even have a point of entry. They do not exist in the marketplace!

No wonder they do not like it.

What has DeFi got to do with cryptocurrency? Everything. Most people are aware that there are many different kinds of cryptocurrency. What many people are not aware of is just how easy it is for programmers - or anyone significantly computer literate - to both create and launch a new cryptocurrency using existing blockchain technology.

New cryptocurrencies and their blockchain technologies and binding protocols form the basis of DeFi. DeFi coins are literally a family of cryptocoins or cryptocurrencies and supporting technology with special decentralising features in their protocols and blockchain integration. These features often involve the ability to work with multiple kinds of blockchain and providing exchange mechanisms for a wide variety of cryptocurrencies and digital assets like differently constructed non fungible tokens.

Digital Renmibi

Of course, China is ahead of the curve with respect to very large, very new crypto currency solutions. The digital Yuan, or Digital Renmibi, is not just 'tethered' or linked to Chinese official currency for stability. It's not just a kind of stablecoin. It is intended to be a major evolutionary change in the nature and basis of the entire currency. It will give the Chinese currency all of the advantages of DeFi, with with centralised high visibility to the #CPC. The can control it, but they don't have to unless it becomes absolutely necessary. Most of the time it can be left to perform and compete as a full DeFi.

The equivalent of this is difficult to achieve in the West without lots of messy, litigiously fraught, and anti-free-market regulation and stricture. It is difficult for the West's free market economies and their regulatory bodies to come up with a similar system without having to fight or bruise their own market structures, existing cryptocoin businesses, fiscal and market ideology, and even economy.

Western stablecoins like Tether have different structures and are not designed to change the nature of the USD currency (and other things like commodities) that they are stabilised by. The digital Renmibi is much differently configured and far more closely and systematically integrated with the national currency: it's not stabilised by the Yuan as much as it is intended to become the new version of the Yuan.

This means it is easily possible Digital Renmibi/Yuan could become the biggest cryptocurrency AND currency in the world very fast, competing with and possibly displacing Bitcoin. Western financial institutions and regulators could try to ban it from Western crypto exchanges like the UK's HitBC, Coinbase and Kraken in the US, and Coinspot in Australia but that would be an unprecedented and anti-free-market move similar to banning the Yuan from all foreign exchanges. It's extremely aggressive, and would be tantamount to a declaration of an effective total economic sanction against China.

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