Edward Snowden: “China ban just made bitcoin stronger”

By Raffaele Redi

10 days after China announced crypto ban, bitcoin price bounces back

Books by Edward Snowden on sale at a store in Berlin.                                 
Edward Snowden says China's bitcoin ban just made the crypto stronger – Photo: Shutterstock

Edward Snowden, the whistle-blower behind US surveillance revelations, has tweeted: “China banned it but it just made bitcoin stronger”.

Just 10 days after The People’s Bank of China announced a ban on cryptocurrencies, the bitcoin price bounce back to around $47,714 – the value of a bitcoin on 24 September, the day of the Chinese announcement.

As central banks affirm that cryptos are not a threat to the US dollar but can be considered as an investment asset, Currency.com's bitcoin price chart shows that bitcoin's adoption by El Salvador and its possible negative impact on the economy scared investors the most. The price of the leading crypto dropped drastically the day after El Salvador's Bitcoin Day.

“Sometimes I think back to this and wonder how many people bought bitcoin then. It’s up tenfold since, despite a coordinated global campaign by governments to undermine public understanding of, and support for, cryptocurrency,”  tweeted Snowden. “China even banned it, but it just made bitcoin stronger.”

Worries about cryptos lessen

Worries about cryptos seem to be lessening as central banks and institutional investors are considering them as “investment assets”, Tobias Adrian, director of monetary and capital markets at the International Monetary Fund, told the recent Global Fintech Fest.

Talking about central bank digital currencies (CBDC), he suggested modelling CBDCs as “bitcoin assets”.

“CBDCs are designed to be very stable, stable in value, low transaction cost and backed by the central bank for added consumer confidence – very different from bitcoins which fluctuate in value and are more like an investment asset,” he said.

“CBDCs could indeed be somewhat similar… to bitcoin assets, could be based on blockchain technology, could be available in wallets. It depends on the design – whether it is based on existing payment systems or using very powerful blockchain technologies.”

However, he warned cybersecurity could be a major challenge for CBDCs. “You need to make sure that the system is resilient against cyberattacks.”

He said the interaction between people and technology was a key factor. CBDCs might also undermine existing banks, so banks would need to upgrade their technologies to compete, while not all mobile phones were able to transact CBDCs.

Cryptos are not a threat to USD

During the last recent ECB Forum on Central Banking, ECB chairman Christine Lagarde and Jerome Powell, head of the US Federal Reserve, both agreed that crypto assets are not a threat to the US dollar as the world's reference currency.

However, stablecoins are becoming a source of concern for monetary policymakers. “Stablecoins can be very popular and they exist mostly outside of the regulatory perimeter,” said Powell, who warned that CBDCs may take several years to develop.

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