Asia is the most active region in the world when it comes to cryptocurrencies. About 80% of all Bitcoin and Ether mining is done in China (Ripple is a different elephant). There are good reasons for that. Electricity is cheap there, and most of the specialized hardware you need to create new blocks for the chain is manufactured there.
China and crypto
This could become a problem in the future because while the Chinese government has been friendly towards digital assets in general, it’s been hostile to Bitcoin in particular. Remember this: mining is what keeps the network going. It’s the new blocks produced by miners that enable the system to keep working.
So, if something goes wrong in China, if the government turns the switch off, then the Bitcoin network would be in huge trouble. As hinted above, Ripple is a different elephant – which means, its native cryptocurrency, XRP, doesn’t rely on mining. Coming back to Bitcoin and China, at the very least it could slow down drastically, in such a way that even the Lighting network won’t be able to help.
The worst-case scenario is that the system becomes useless. It could never be shut down entirely because there are miners outside China too, but if it becomes slow under a certain threshold, it could become as good as inexistent.
How likely is this to happen? Not very much. Bitcoin is creating income for China, and the government always likes that. But it’s good to be aware, nevertheless.
The Trump administration
Enter the Trump administration. The current POTUS won his elections by attacking everybody, but China was first on the list. It’s been renegotiating its trade agreements because he thinks that China is always taking unfair advantage of the US.
So with this Sinophobic attitude from the president permeating the whole administration, it’s no wonder that some officials are worried about Bitcoin. And they worried about it just because China dominates the network (thus Ripple could find their love if the US government considers using crypto to battle China’s BTC dominance).
So, for them (the US), China should never be able to control anything. It’s not that they care about cryptocurrencies. The chances are that they don’t and that they don’t have the first clue about them. But since it seems to be in China’s hands, then the Chinese position must be undermined at all costs. They don’t really care to win; they just want China to lose.
And that’s why, taking some fresh rumors into account, according to Corey Johnson, Ripple’s chief market strategist, the White House is considering to adopt XRP as a counteracting measure to China within the crypto-verse. Ripple’s official said to Brakermag that Ripple has been conducting conversations with Trump administration officials about XRP adoption. Those officials include both politicians and regulators. Mr. Johnson says he’s found a lot of open-minded people who are looking for an authentic solution to this so-called problem.
The Trump administration possible preference for XRP could be just because Ripple is an American private company. The thing is that Ripple and XRP are different entities.
XRP is the third-largest cryptocurrency by market capitalization. But for Ripple’s XRP to compete with Bitcoin, it would have to reach a capitalization level similar to Bitcoin’s. Only then could China’s dominance could be challenged. But Bitcoin’s capitalization is about 12 times than that of the native cryptocurrency of Ripple.
If the US Government really adopts Ripple, just to try and mess China up, it would still be good news for XRP and the crypto-verse. But that would need an injection of USD 187 billion in XRP alone.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.
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