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Russia, China Could Use Bitcoin Politics

News broke on Feb. 4 that Russian President Vladimir Putin had sent a letter to the people of China, published by a local news agency, detailing ongoing trade between the two countries and mutually beneficial infrastructure projects. Chinese President Xi Jinping and Russian President Vladimir Putin also met in Beijing ahead of the opening of the 2022 Winter Olympics, which will take place in Beijing, and dropped a heavy conversation on the wire. Following that meeting, leaders issued a joint statement reaffirming Russia’s support for China in its disputes with Taiwan; expressed concern about a defense alliance led by Australia, the UK and the US; and criticized, among other things, the expansion of NATO. Neighbors Facing Sanctions Can Turn to Bitcoin Russia and China have been in the crosshairs of many tense political issues, and have both recently been the target of economic sanction threats, making it unsurprising that the two neighbors are seeking alliances on trade and scientific development. “We are consistently expanding settlements in national currency and creating mechanisms to offset the negative impact of unilateral sanctions,” Putin wrote in his letter to the Chinese people. “An important milestone in this work was the signing of an agreement between the government of Russia and the government of China on payments and settlements in 2019.” This follows threats to cut Russia off from the SWIFT system just days before. Russia is particularly well positioned to evade sanctions, given the wealth of forex reserves it holds, which were valued at more than $600 billion just five months ago. Do these actions signify interest in a strategy of wider Bitcoin adoption by one or both superpowers? It doesn’t seem like a distant reality. The Russian Central Bank had proposed a ban on Bitcoin, and Putin (backed by other members of the government) pushed back, suggesting that Russia would reap benefits from bitcoin and mining, as reported by Bitcoin Magazine late last month. Tangentially, Belarus has expressed an interest in maintaining its liberal approach to bitcoin just one day earlier. Reading Between The Lines To further increase the likelihood of implicit interest in bitcoin, we need to start reading between the lines. China has been under pressure during this energy crisis, along with members of the EU. Of particular concern is the drought that has occurred in China this winter, triggering warnings of unusual and unannounced water supply cuts. with Yunnan Province in particular being weighed down by reduced hydropower output due to the drought, affecting a major energy supplier to Guangzhou, the capital of Guangdong. Guangdong is heralded as a “powerhouse” of China in terms of trade activity. If the power supplier for such an important trade source for China has a problem, President Xi has a problem. In this context, another part of Putin’s letter is particularly telling: “A mutually beneficial energy partnership is being formed between our countries. In addition to long-term oil and gas supplies to China, we have plans to carry out a number of large-scale joint projects. The construction of four new power plants in Chinese nuclear power plants with the participation of Rosatom State Corporation, which was launched last year, is one of them. All of this greatly enhances the energy security of China and the Asia region as a whole.” benefits by providing a use case for flare gas. In addition, bitcoin has likely proven desirable in its censorship resistance potential in the face of threats from Western countries hoping to shut down Russia. of the SWIFT system. And last but not least, there is the basis of the decentralization of the network. The number of reachable Bitcoin nodes around the world is fast approaching a daunting 15,000 in number. Strikingly, these are only the nodes that are not are being obfuscated via Tor or other privacy tools, meaning we have no idea what the concrete number is, but it is likely to be higher than this estimated total.Bitcoin continues to prove its worth to the world, and it seems safe to say that we can expect more countries to announce interest in the future. Lock up Bitcoiners, we are only just getting started with the two the month of the year. This is a guest post by Mike Hobart. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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