United States Threatened By Advancements In China’s Cryptocurrency Industry, And Risks Losing Innovation Opportunities
Blockchain and digital asset technology are becoming an integral part of the economy within the United States. Regulators are establishing nationwide and statewide laws, as new companies arise with Bitcoin ETF application to the SEC. The technology alone is changing the way that the financial industry sends money internationally. While these advancements seem like good news, the restrictions that crypto is facing could push them out of the way, in lieu of other countries’ developments.
The main cause of getting left behind is none other than the battle against government entities that are all but decentralizing the marketplace. The SEC, CFTC, Department of Treasury, and the Federal Reserve are all fighting amongst themselves for the right to decide exactly how the assets should be governed. Furthermore, the discussion of how to classify the tokens (commodities, securities, etc.) is one more battle in a losing fight.
Lately, there is been little comfort in the uncertain future of the US. Even the government sees the major issues in how the regulations are actually keeping the industry from pivoting forward, while other countries are already running smoothly with theirs. Most of the recommendations that have been proposed to this industry are not even in effect. Furthermore, national security could even be at risk, if regulators are not careful to form a balance between local and foreign platforms, since it could strengthen ties against the nation.
There are three mining pools from which the Bitcoin network is made, which gives 51% control. Plus, three miners are responsible for an even higher percentage of the weekly cap offered by Ethereum. China is already controlling much of the Bitcoin blockchain, as 81% is centralized in that country, which is surprising when investors consider the ban on these assets in the first place. Basically, that means that China has the control of two of the biggest cryptocurrency platforms and tokens in the entire industry.
When faced with the worst-case scenario, it is possible that Bitcoin and Ethereum miners on their blockchains could decide to attack the network, considering their 51% control. This decision would allow fraud to happen and would seemingly “break” the network. Even though this catastrophic option seems far-fetched, the Bitcoin Gold blockchain has already been through it, resulting in a theft of no less than $18 million, which stretched across multiple online exchanges. Based on these statistics with whole mining pools, what could happen if the three miners of Ethereum in China were controlled by a specific government regime?
The fact is, the United States is fighting and destroying the potential progress of cryptocurrency on their own ground, and other countries are laying out a friendly path. America could easily lose dominance in the global economy, the financial industry, and technological advancements. Every other country has seemed to work overtime to address concerns that have come with crypto and blockchain technology. The UK government created a technique to make blockchain widespread, while the whole of Europe’s regulators has launched efforts to make blockchain and digital assets stronger in their continent. Even Japan has been working to make themselves “The New Heart of Bitcoin” with their clear and simple regulations.
It is ignorant for the United States to expect the rest of the regulations around the world to hold their spot in the crypto industry when they cannot seem to settle on anything themselves. The framework that they establish will need to support innovation, defend national security, eliminate the threatening forces, and maintain authority. However, it seems to be at a standstill until the country can decide which sector of the government has the right to establish these regulations. As the citizens of the United States wait, the rest of the world will continue on with their progress and will not wait for these regulations to catch up.