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Beijing swooped on the South Korean based cryptocurrency exchange called PlusToken and has seized a huge volume of bitcoin and other cryptocurrencies. The seizure by the Yancheng Intermediate People’s Court has moved the vast amount of digital currency to the control of the nation’s treasury. Bitcoin pioneer Max Keiser has claimed this decision allows China to “own one percent of all bitcoin”. However, the exact details of how Beijing will use the assets in accordance with the nation’s laws has yet to be announced. China has not made public the exact figures on how many of the seized coins are still held by the state. But, if they hold onto the recent haul, it would point to a longer term strategy by the politburo to acquire bitcoin.
Mr Keiser discussed how the US dealt with the bitcoin they seized from the Silk Road website, and although it is not known what China plans to do with its huge haul of cryptocurrency, some analysts claim the communist politburo may hold on to their new asset as they see a potential for future gains.
Mr Keiser said: “The United States seized bitcoin when they nabbed the leaders of the Silk Road black market, but the US auctioned off their bitcoin.
“A move that history will see as foolish as Gordon Brown selling half of Britain’s gold.”
There has been a huge increase in bitcoin mining in China and a general interest from the leadership in digital currencies.
Speaking to Express.co.uk Mr Keiser added: “This could be the year China starts to dominate the global economy thanks to bitcoin.”
China could use its bitcoin assets and mining capacity to break the hegemony of the US dollar, Mr Keiser also claimed.
He said: “If China holds onto their bitcoin and they continue building their mining capacity, it may be game over for the US dollar as the world reserve currency.
“The window of opportunity for the US to avoid bitcoin-irrelevancy is closing fast.”
The China based bitcoin mining industry has increased its capacity, thanks to cheap renewable electricity.
The Chinese mining industry controls between 30-65 percent of the global output.
However, the bitcoin mining pools in China have input from foreign participants, so it i still difficult to assess the true capacity and the percentage is constantly changing.
When asked about this Max Keiser said: “The mining concentration number is important but ultimately miners don’t control Bitcoin, the nodes do, as we learned during the Block Size War of 2017.
“In any case, China is the furthest along the Bitcoin learning curve of any nation and for Americans and Brits should be worrying.”
The Chinese state also has the ability to take control of these mining operations at any time.
The US is the second-largest bitcoin mining nation globally, contributing 7 percent.
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However, this is a fraction of China’s capacity.
The British government has yet to show firm interest in holding cryptocurrency assets.
Max Keiser predicts the UK’s reluctance to take an interest in bitcoin coupled with the combination the coronavirus pandemic and the risk of a no deal Brexit could lead Britain to seek another International Monetary Fund bailout in the future.
“The general picture remains strongly bullish making a new bitcoin all-time high still highly probable before the end of the month.”
Last week there were reports the US Secretary of the Treasury Steven Mnuchin was planning to rush out new regulation regarding self-hosted cryptocurrency wallets.
In response, Max Keiser said: “The price drop is reflecting the Mnuchin news.
“Governments are beginning to realise bitcoin poses an existential threat to their existence and they are starting to fight back.
“Bitcoiners have been preparing for this all along and we will ultimately triumph, but not without some volatility.
“Now with the Mnuchin rumour the battle edges up a notch and the confrontation with central banks is part of bitcoin’s journey.
“The death of central banks will be messy, but it’s necessary if we want to continue as sovereign people.”
Speaking to Express.co.uk, Soravis Srinawakoon, CEO and Co-Founder of Blockchain data provider Band Protocol said: “I think this bitcoin sell-off is healthy for the market which has been over-heated and very optimistic for some time.
“This pullback is expected and provides a welcome cooling-off period for investors that is likely to be met with relief as opposed to despair.
“As we saw in 2017, nothing can go up in a straight line.”
Meanwhile, Gunnar Jaerv, COO at First Digital Trust, a Hong Kong-based digital asset custody provider, told Express.co.uk: “When the price of bitcoin fluctuates from $4,000 (£3,000) to $19,000 (£14,200) over just nine months, it is not unusual to see a correction.
“This recent leg up was driven by the derivatives market as evidenced by the fairly high funding rate, leading to a small long squeeze.
“While the all-time high price of bitcoin reached in 2017 has not been surpassed, the total market capitalisation of bitcoin is much higher as there are significantly more bitcoin in circulation than ever before.”
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