PayPal cofounder and venture capitalist Peter Thiel has said bitcoin could be a Chinese financial weapon designed to hurt the United States and the dollar. He has asked the US government to adopt tighter regulations on cryptocurrencies, even though he has significant investment in virtual currency ventures.
Thiel, who describes himself as 'pro-crypto' and 'pro-Bitcoin maximalist', however, says that bitcoin threatens fiat money, especially the US dollar.
"I do wonder whether at this point, Bitcoin should also be thought [of] in part as a Chinese financial weapon against the U.S. ... It threatens fiat money, but it especially threatens the U.S. dollar." He added: "[If] China's long Bitcoin, perhaps from a geopolitical perspective, the U.S. should be asking some tougher questions about exactly how that works," Thiel said.
He made the comments while speaking at a virtual event held for members of the Richard Nixon Foundation.
Thiel also denounced the blockchain enabled version of Yuan which China launched recently. "That's not a real cryptocurrency, that's just some sort of totalitarian measuring device," Thiel said.
What is Thiel's Argument?
Thiel's theory is an extension of the long-held view in certain financial circles that China wants to undermine the US dollar as the reserve currency of the world. China has indeed tried to stitch together a global alliance against the dominance of the US dollar as the default reserve currency.
Thiel says that Thiel instead of dollar being the single reserve currency, China wants two reserve currencies. China, which doesn't want its yuan to assume that role, had tried to make the euro the reserve currency. Since that effort did not succeed, China is promoting bitcoin in that role, says Thiel.
Who is Peter Thiel?
Thiel, 53, became was on of the early investors in Facebook. Apart from PayPal. he had also cofounded big data startup Palantir. Thiel emerged as a big ticket Silicon Valley billionaire after selling most of his stake in Facebook.
According to Investopedia, the majority of Thiel's wealth comes from his stake in data firm Palantir, which recently hit $20 billion valuation. Other sources of his wealth are the transactions involving PayPal Holdings and Facebook.
Is There Merit in What Thiel Says?
It's not clear how Thiel would prove his argument, but in a separate development last year, the Director of US National Intelligence wrote to the Securities and Exchange Commission (SEC) expressing concerns about China's dominance in of digital currencies.
The senior official reportedly said that more than half of the global cryptocurrency mining power was held by China, a factor that would put the US in a sport of disadvantage.