In a previous article I presented the possibility that a government crackdown in the U.S. could result in creating a similar situtation to what happened here during Prohibition. By making an extremely unpopular law the US government saw where people regularly and routinely ignored the law and speakeasies and other illegal but commonly used means were used to go around it. Eventually, as we all know, the government was basically forced to admit their mistake and repealed the law.
Bitcoin is not alcohol however. A case can be made about the detrimental effects of alcohol that few would refute. Drunk driving, disease, alcoholism are just a few, But no such charge can be levied against Bitcoin, yet the Chinese propoganda machine is still trying. In this story the headline reads “Chinese Government-Backed TV Program Bashes Bitcoin, Outrages Community”. So what is the reaction of the Chinese people and how can it be measured?
One way to gauge what is going on in any country when it relates to Bitcoin is the website http://fiatleak.com/. There you can see, in real time, how much of a country’s fiat money is being converted to Bitcoin. I’ve been watching it fairly regularly since before the government clampdown. China still out purchases and invests in Bitcoin at a rate of 5 to 40 times that of the U.S. And since the site measures the currency exchange rather than the nationality of the purchaser there is no way to tell whether or not the U.S. dollars flowing into Bitcoin are U.S. citizens or foreign holders. The Federal Reserve reports that between one half and two thirds of U.S. Dollars are held outside the country so it would seem reasonable that at least some of those reported dollars are Chinese residents also.
The Chinese Communist government may be inadvertantly fueling a real life lesson for their people to learn the power of Civil, Non-Violent Disobedience. Since the flow of their Yuan into Bitcoin continues at a very high rate will they try to escalate their attacks further? To what level are they willing to go? And what justification will they try to use?
If we were talking about alcohol or drugs the Chinese Communist government could defend their actions by claiming they were doing so for the well-being of a victim but with Bitcoin there is no victim. Those few that they used in their propoganda against Bitcoin because they bought and sold at the wrong time are grossly outnumbered by those who have profitted by investing in Bitcoin. Buying high and selling low is not a problem with Bitcoin. The same thing happened with some who invested in Facebook at it’s IPO and watched it drop in value. Those that sold then lost. Those that held recovered their losses. Those that bought at the dip made better returns than anyone else. Such is life “in the fast lane” and if the Chinese invester is too immature then either their government needs to let them grow up or just blame their own system for that failing.
No one, especially in Communist China, was ever forced to buy Bitcoin but did so by their own free will. The same cannot be said about fiat money. Is China’s excercise in propoaganda just a lesson for the rest of the world’s governments (including the U.S.) on how to surpress freedom? It may be but they may be unleashing a firestorm of backlash by the people for their freedom too, and with a tool that the governement is poorly equipped to fight even by force.
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