You are thinking of investing in crypto… Bitcoin, Ethereum or one of the many other “Proof-of-Work” (PoW) cryptocurrencies.

This first and most important question about any investment is: “What stands behind it”?

If all you do is listen to people who have a serious stake in an investment, then the first thing you should NOT do is buy any before you look behind the curtain. This is what Ponzi schemes are made from.

So what does stand behind Bitcoin and all other PoW (“Proof Of Work”) based cryptocurrencies?

The short of it is China.

For those who may not know, you may have heard the word “decentralized” bandied about. Often this is followed by a nearly messianic message about how this feature disallows any manipulation or intervention by any of fallible or corrupt human institutions, whether it be governments, criminals, evil Wall Street banks, the US Federal Reserve, etc.

What you don’t hear and (many of you, probably) don’t know is that the entire infrastructure down to the design and manufacture of the computer chips used to “mint” crypto is effectively entirely in the hands of China. Yes, that China.

Currently, 66% of all crypto is mined and remined by China. A remaining 30% is mined (in order of portion) Mongolia (under the control of Chinese companies) and Russia. But the “centralization” doesn’t quite stop there. 99.8% of the technology (everything from design to manufacture of the computer chips to the design and build of rigs and the rig farms) is owned by China.

But there is one American company that has a piece of this: BloxRoute. This is an American company that has designed software and networking infrastructure that connects all the above-mentioned mining operations into a single “mind”. The original intention of this was to accelerate the adding and updating of the blocks that crypto is used to create the “chain”, as in blockchain. And, yes, it does that.

But it also does much more. With effectively a private networking loop, this permits those in the physical private network to observe number and (to a lesser extent) source of changes on the chain. In turn, this gives them the ability to determine volumetrics at any given time for the overwhelming majority of crypto transactions. This information, along with observation of price trends on major crypto exchanges, permits anyone with access to the volumetrics to easily profit from and/or manipulate the prices.

As crypto becomes more widely held by both regular people and large corporations (eg, Tesla, MicroStrategy, large hedge funds and high net worth individuals, et al.) bear in mind what might happen to your “investment” in the future. If the Chinese government is displeased with policy of one of these companies or the behavior of democratic countries, a mention of or an actual flip of the switch is all that’s needed.

I have to state that China, its culture, its people and what its institutions have achieved are amazing. China is an amazing place. With that being said, it is still a totalitarian system of government. Even if the Chinese government were less abusive of individual rights and suppression of dissent, its system of government is inimical to democratic forms of government. And this is most apparent in its disregard for how other people in other countries are treated by their governments. And this is the central problem.

Bear that in mind the next time you trade crypto or advocate for “decentralization”. If the largest and most centralized system of government on earth is in control of crypto, then that is what you are buying into. And “decentralization” is just a lie.