China Banning Crypto Proves it Works
If youre watching right now and you arent aware theres been a dip in the market for bitcoin and it appears to be directly related to the outlawing of all crypto transactions in china, of course, were gon na get into the details. As far as even some speculation surrounding the real estate market in china, according to rs technica right after a word from our sponsor todays sponsor, is myself to support the channel click. The join button below the video and you will get access to our privately hosted rocket chat. Selecting the 199 option will get you access and, after that, you need to head over to the membership tab scroll down and expand out. Your membership perks find the section for connecting on social media, and in that section there will be a secret registration url to join rocketchat, where you can sign up to enjoy talking with other cryptocurrency enthusiasts and miners without spammers, scammers or bots. Welcome back so the original article, or the way i found out about this particular situation with china banning cryptocurrency, was on the daily beast and if we hop into the article here, you can see that it states, basically in the title, that china outlaws all crypto transactions And bitcoin mining – this is written by rachel, oldling or olding and is the who is the breaking news editor. So the articles very short and sweet says in a bombshell move that sent the value of bitcoin tanking friday, china, outlawed all cryptocurrency transactions and issued a national ban on crypto mining.
The energy intensive process of creating new bitcoins chinas crackdown is fueled by concerns that crypto attracts money laundering and fraud and that crypto mining uses up so much power. It will dent the nations efforts to cut greenhouse gas emissions. China has the most crypto miners in the world, but few speculators, given its increasingly strict regulations in early trading friday, bitcoins value dropped more than seven percent on the news. Weve had larger swings just from the wind blowing differently in cryptocurrency than seven percent. So if you guys are worried about the seven percent drop, i dont know that id be worried about it too much should we be worried about maybe a little bit further down the line. As this starts getting enforced, the dip of cryptocurrency continues uh further. Possibly, that would probably be more likely remember. We had this thing earlier this year, where basically, the chinese government was talking about banning cryptocurrency mining. We didnt see it right away. The power was still being shown on the charts as being from china and it took a while before the restrictions actually hit and miners started getting shut off. I presume nothing is different here there may be a little bit of you know: speculation right here with that. Seven percent dip, but the realization of this uh effect on cryptocurrency and the price of it i dont think has you know, come about or come to pass yet so keep in mind that we probably will see how this actually affects the market here in the future.
Not necessarily today is going to be. You know the take home for you guys. So obviously what weve heard from china and the government is that its power intensive and criminals use it. The same old arguments weve heard about cryptocurrency in the past all over the place and my arguments against that are the same arguments that have lost. I guess every single libertarian argument in the past decade, and that would be just because its used for something bad doesnt mean that you should take that right away from the people now chinas a little bit different because they dont have the rights that we have in The united states, however, the right to you know some financial freedom here that is provided by cryptocurrency is going to be a point of contention as it starts getting regulated more and more heavily, and what we need to keep in mind is that the original intent of Bitcoin, in particular, that kind of comes over into the rest of cryptocurrency is that its supposed to be a peer to peer system that eliminates third parties such as banks and governments, so obviously, banks and governments arent going to like it. This is kind of expected. The reasoning is a little bit of a false flag. In my humble opinion, i dont think that it is because its being used for illegal activities or because the energy is so high because, as weve seen in the past as well, the energy consumption of traditional banking systems way outweighs any of the cryptocurrency mining power consumption.
As it currently sits so its kind of a silly argument to say that it uses a lot of power when the banking system uses more so lets go ahead, and talking talk about some of the reasons why this may be happening right now, and the real reasons Behind it, at least according to an article by rs technica, that i found pretty interesting, so this article, written by tim de champ at 11 11 am today on the 24th of september 2021, reads: bitcoin outlawed in china, as country bans all cryptocurrency transactions. What we want to take a look at here in particular, is this domino effect where tim dechan here points out that real estate represents almost a third of chinas gross domestic product and developers have borrowed heavily to ride the wave. But in recent years the chinese communist party has turned on the sector after president xi jinping. If i said that correct, i hope i did said in 2017 that houses are for living in not for speculation. This type of rhetoric is going to get very popular. I think, even in western countries and its going to be the idea of not owning any property, theyll use it as a guise, probably in terminologies like this like saying houses are for living in and not for speculation, it its a little disingenuous because what its saying Is you know, or at least what the poorer classes will see it, as is oh yeah, that makes sense its just to live in these people? Shouldnt be buying and selling property to make money off of it right, but what its really saying is that they dont want anybody to own said property, and this is kind of a sneaky way of saying that and the reason they dont want people to own.
It is because, if somebody owns a piece of property outside of taxing that piece of property, its hard to generate revenue on right, so the there is this – i guess idea that eventually the lower classes will essentially always be having to pay for somewhere to live. This seems like kind of a sneaky way of saying that, and while you may agree with it on the face of it, you need to see what the intentions are behind. It just kind of a quick note, because i thought that was a really interesting statement, so z may not simply be motivated by ideology. Here, as migration to cities has slowed and birth rates have fallen, the country has become riddled with unfinished or unoccupied housing. The rhodium group estimates that the markets excess could house as many as 90 million people. Local governments have slowed land sales substantially down 90 percent year over year, since they rely on land sales. For about a third of their revenues, the loss could have a domino effect. Reducing local governments abilities to repay the 8.4 trillion in debt theyve issued in august beijing attempted to further reign in the sector, demanding that developers lower the ratio of debt they hold to assets they own real estate. Companies are often highly leveraged selling debt to build and market developments, relying on sales to pay down that debt. The nations second largest developer ever grand has been caught flat footed by the communist partys new demands before the decree.
It was already in trouble as property sales have slowed, evergrand hasnt been able to generate the cash required to finish projects and without finishing those projects it wasnt, generating cash to pay interest and principal on its outstanding debts. The government has prevented evergrand from issuing new bonds to pay off its near term debt, and the company now runs a very real risk of default. Some observers are comparing the evergrand crisis to liam brothers, the american brokerage firm that went belly up in 2008. At the outset of the subprime mortgage crisis, others dont think that the community party will allow an ever grand default to create the same ripple effect, but the investors are nonetheless spooked. If ever grand woes do send shockwaves through the chinese economy, investors may attempt to move their money elsewhere out of china. So this is how it affects – and this is important because thats basically the basis for or the foundation of the argument for this affecting, of course, chinas policy on cryptocurrency, and it makes a lot of sense here so capital outflows. All of that brings us to where the continued cryptocurrency crackdown comes in. The chinese government has long restricted the flow of capital outside the country, preferring that investors keep it circulating within the nations economy, but cryptocurrencies are more challenging to control, given their somewhat anonymous nature and the relative ease with which they can be converted into other countries. Currencies the crypto crackdown in china is not just because bitcoin mining has been drawing too much power which it had been, is according to rs, technica or because it was commonly used in illicit transactions which it was.
But weve talked about that as well its because the chinese government likely recognizes the risks posed by an over leveraged real estate sector and its attempting to limit the fallout when the correction comes. Cryptocurrencies are simply caught in the crossfire, so this is really important. Weve talked about this before weve talked about what is cryptocurrency, should you be purchasing it in hopes to increase? Of course, your net wealth or net income blah blah blah, and the answer to that is really no. What its there for is to protect from these exact situations when and why bitcoin was created, is that some prime subprime mortgage crisis that happened in the us in more than likely as if you look at the white paper for bitcoin, appears to be directly impacted by That bitcoin, in particular, is a store of value to protect, of course, the individual against the inflation of fiat currencies and if you are about to have a real estate crisis that affects and sends ripples through your economy, you cant have an easy way for the public Or the individual to protect themselves from the bad decisions of the government and the banking systems, because if you have that, then the the individual doesnt have the incentives to basically continue to participate within your particular fiat currency. So the reason bitcoin was created is exactly how its being used and exactly why we are seeing so much regulation and exactly why we are seeing it getting banned in china, which means bitcoin works, thats.
The moral of the story at the end of the day, bitcoin works thanks for watching, be sure to leave a like comment subscribe down below, and i will see you next tuesday. If you enjoyed this video be sure to subscribe, to see more also, you can check out this playlist for more content.