Posted on 03-10-2020.
In our recent piece we’ve talked about the COVID-19 epidemic shaking both crypto and traditional markets. The apparent recession got to the levels unseen in years, and in some cases—decades. It isn’t yet clear when the situation will get back to normal and what comes next. To follow up, here is an expert opinion on the matter from trader and analyst Tone Vays, who talked to Max Bit about the situation in China and the rest of the world, as well the consequences of these events for Bitcoin and its price. Max Bit: Should we expect a drop in Bitcoin hashrate, given the situation in China? Tone Vays: Importantly, miners have largely left China. People just don’t want to believe it. Some people keep talking about this concentration of mining power in the country and that Bitcoin Is centralized because of China. They will say anything to lower the Bitcoin price and pump their own coin. Despite the virus situation, Bitcoin hashrate is growing, which only proves that Bitcoin mining isn’t concentrated in China, and the first crypto isn’t as centralized as people might’ve thought. Max: Still, the chips and parts for mining equipment are mostly manufactured in China. Why such disruption in this part of the ecosystem doesn’t affect Bitcoin? Tone: I can’t say the exact figures and locations, but these aren’t very large operations. Moreover, some parts of China were less affected by the virus. With the right approach, your business can continue working even in such conditions. Max: Why didn’t the Chinese government use the digital yuan but simply exchanged the banknotes in circulation for new ones? Tone: Governments understand that the economy needs cash, otherwise there may be problems. They are just not ready to let physical cash go yet. The Chinese government wants to collect taxes and monitor transactions, but they don’t want to cause panic, which is hard. They talk a lot about going digital, but the same government and the people in it need cash. They may want to get the money out of the country. This shift from physical cash will take at least ten or twenty years. Max: The epidemic seems to have allowed the Chinese government to test some of its new monitoring tech, such as QR-codes that restrict citizens’ travel, drones, etc. How is this situation beneficial for Bitcoin? Tone: It is beneficial because if you use your Bitcoin right, nobody will be able to take away your money. That’s why one of my conferences is called “Unconfiscatable.” With such an approach, China will never become the most developed country in the world. The only technology that’s being developed is surveillance technology. Meanwhile, many smart people will just leave the country. Max: The price for gold has been growing, but Bitcoin hasn’t. Why did people reinvest in gold and not in Bitcoin in this time of crisis? Tone: I’m not really sure why gold went up when the market went down. Typically gold follows the moves of the rest of the market. I don’t think the gold price increased because of the virus and the related demand. Max: The virus virtually killed offline meetups and conferences. Will this affect the crypto-industry? Tone: There will be some effect. More people will be interested in remote jobs that would allow them to travel. I notice more and more people who want to be able to work from anywhere in the world. I think this is a good thing. The bad thing is that now it’s getting more complicated to cross borders. Still, in such conditions, more people will want to get paid in crypto, since they won’t need a bank account in each country they want to live in. The full interview is available in Russian on ForkLog YouTube channel. Follow us on Twitter and Facebook and join our Telegram channel to know what’s up with crypto and why it’s important.