Sunday, January 22, 2017

Bitcoin Volatility and China

I  found this fascinating YouTube Channel the other day.  It is called ADV China.  

They cover a huge number of topics that Americans have great misunderstandings when it comes to China.

Cultural, Economic, Social issues are discussed all the while the guys are traveling along roads with a HD GoPro camera view of the Real China.

I myself have visited China.  Admittedly it was a very short day trip, however I would count it as one of the defining points of my life.

I was in Shenzhen and looking around, I thought to myself, that Americans had absolutely no clue as to what is coming at them.

I was in this city that really looked a lot like the new parts of Phoenix Arizona.  As Phoenix I would consider to be the newest infrastructure and developed city in the US.  (to include Tempe and the surrounding areas).

I looked for the people on bicycles, and all the usual propaganda memes and saw very little.  It was a free for all place.

Anyway going back to Bitcoin.  If you watch the video, they explain Chinese money controls.  One thing that Americans do not understand with the rest of the world and the trade imbalance is that not only are these massive lopsided tariff rates in these trade agreements that make US exports unfordable (Thank you enemy US dept State), bt there are also currency restrictions.  This means that if a Chinese guy wanted to buy a case of top of the line US made carbide milling machine bits, he would not be able to purchase more than $5000 worth without jumping through all sorts of bureaucratic hoops.

Now combined with the Chinese economy plateauing, the Chinese are looking for every sort of means to export money and store it somewhere other than China.  This is because the traditional Chinese store of wealth (real estate) is in a massive bubble and amounts to pissing away your wealth.

The Chinese have recently discovered bitcoin and are now jumping into the market.  Since the Chinese stock market has dies (and because Chinese are gamblers at heart) Bitcon seems poised to be the next Chinese speculation fad.

As a way to make money.. Yea if I was a gambling guy it might be interesting to dabble in.  However Bitcoin at present is largely supported by international gambling rings so it remains to be seen how this will work out in the end.

No comments: