Ray Dalio may not have the right reasons, but the notion of outlawing crypto has the precedent, among other places, China. Why is that interesting? Read on:
China currently accounts for 66% of Bitcoin mining/block creation and as large or larger shares for practically every other coin requiring PoW cryptographic algorithms to build blocks. If you include Mongolia and Russia, you get close to 90% of mined crypto. Even if the location of the rigs was more evenly distributed, China still has a stranglehold on the technology. NVIDIA’s GPUs used to have a dominant position as the supplier of rig ICs, but now they are insignificant. The supply of mining rigs via the Chinese companies Bitmain and Canaan Creative covers north or 90% of the market. And, lastly, on the technical side, an American company, BloxRoute, supplies the Chinese and border countries a private networking infrastructure that can enable the miners the ability, at a minimum, to observe volumetrics and transaction sources.
Trump’s policies had some effect on accelerating China’s project to in-source all this. But even without Trump, China has a stated long-term policy objective of freeing itself entirely of dependence on US/European tech and, more than anything, the dollar-based world economic system. In other words, western liberal democratic control of things.
As of October 2019, no Chinese citizen (in or outside China) is permitted to buy or sell any crypto and have an account with any crypto exchange. In addition, Chinese citizens were not barred from owning in perpetuum any crypto they possessed at the time these laws were passed. That has created an enormous and permanent store of crypto (BTC, mostly) that can be used to manipulate markets without any trace.
China is still a totalitarian society that is openly inimical to western liberal democracy and, most of all, the west’s dominance of world financial systems. The economic and technological power that is increasingly given to China via Crypto gives pause. Once Crypto is in a large enough number of bank accounts and investment portfolios in the West, there is the ability for China to wield influence or even threaten the viability of some financial institutions. This is very much in line with their stated long-term goals.
Some people argue that because of PoW (Proof Of Work) supported PBFT (Practical Byzantine Fault Tolerance) and the game-theoretic implications, there’s no way the miners or the rig suppliers would shoot (economically) themselves by undermining/destroying their businesses if the Chinese Communist Party ordered them to do it. There are ample reasons to think otherwise, starting with the example of Jack Ma and Hong Kong.
