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Recent insights have come out that Chinese individuals are investing in cryptocurrencies to avoid fallout from the US-China trade war and a possible coming currency devaluation by the Chinese government.
China currently restricts its citizens from transferring more than the equivalent of $50,000 USD outside the country per year, but there have been reports that lower amounts are being denied as the trade war intensifies. One story says an elderly many was denied trying to purchase $20,000 USD to pay for a family vacation. Thus, some researchers believe that the recent spike in cryptocurrency prices is coming from Chinese individuals looking for ways to secure their wealth as the United States and China engage in a trade war and possibly a coming currency war. As RT points out, cryptocurrencies serve as a flight to safety during periods of big uncertainty when the volatility of cryptocurrency is relatively lower.
“Despite the volatility, its been a great hedge against against other assets classes and we’ve see the flight to Bitcoin several times before; Brexit, the Lira crisis, and now the trade war.”
However, this also comes as other companies, such as Facebook and J.P. Morgan, are releasing their own digital currencies that illustrate the growing interest in cryptocurrencies. However, these coins still lack the decentralized and censorship-resistant features. Investigative journalist and former Dash DAO funded reporter, Ben Swann, talked about the difference between the two.
“It’s not a cryptocurrency. It is a digital currency, as you rightly called it. The Globalcoin that Facebook is looking to putting out is like a very high tech Western Union.”
He went on to describe how these digital currencies want to be pegged to the USD and since “anytime you’re pegged to any kind of currency, you’re going to vastly change the ability of that currency to kind of move beyond what money has done in the past. That’s kind of the point of cryptocurrency, the point of digital currency, is to not recreate existing systems, but to create entirely new financial systems”.
Manipulating centralized currencies
China previously devalued its currency in 2015 in a surprise to investors that many saw as an attempt to boost growth as exports declined. China defended the devaluation as a move towards more market-oriented reforms, but others still see China’s currency as a managed float. The fear is that if China does a surprise devaluation again, many investors may suddenly find themselves with different wealth distributions.
Cryptocurrencies can help mitigate this risk by enabling consumers to separate political motivations to manipulate the economy from their personal finances. However, as Ben Swann mentioned, the centralized digital currencies, which are increasing in popularity, do not actually solve that problem since the central companies behind them can easily choose to manipulate the supply, change the code, or restrict access without consensus nor allowing a fork of the currency just like governments and central banks currently do with fiat currency.
Dash positioned to help with decentralization and usability
Simply being able to hear from Ben Swann is a testament to the decentralized powers within the Dash community. Swann got funded by the DAO Treasury to do his investigative journalism with Dash as the main sponsor. However, after a couple months, the community did not see enough value in the project and decided to defund Swann, which speaks to the decentralized community’s power. The decentralization of Dash is able to fund various projects to advance Dash, an advantage that many centralized coins have, but still not be able to restrict users or manipulate the currency supply like the disadvantage of centralized digital currency.
Additionally, since an interest in purchasing items, easily sending money, and preserving wealth to spend independent of governments or large private corporations is one of the major reasons that cryptocurrency is seeing renewed mainstream interest again, Dash is uniquely qualified to satisfy these wishes. Dash enables consumers to directly spend their money at around 5,000 merchants and growing around the world rather than only storing wealth and making the consumer move into yet another currency to actually be spendable to purchase goods/services, their end goal.