Bitcoin is Controlled by China, Ripple CEO Tells Bloomberg

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Ripple CEO Brad Garlinghouse in a Monday interview with Bloomberg suggested that China is controlling bitcoin.

The passing remark appeared as Garlinghouse discussed how Ripple’s core business model is different than other blockchain projects. The CEO explained that they are following the regulations that exist already for the entire banking system. Others, meanwhile, were attempting to challenge the system. By “others,” he meant Facebook, which announced a cryptocurrency called Libra, and decentralized assets like Bitcoin and Ethereum. Excerpts:

“Facebook is a consumer company. They think about the problem they are solving are consumer-oriented problems. What Ripple is doing is at an institutional level […] David Marcus came out and said: “it’s the end of Western Union.” That’s an assault on the financial sector. We’ve taken an opposite approach. We are working with the system.”

As for Bitcoin and Ethereum, Garlinghouse believes China runs them. He was pointing at the large concentration of mining in the Asian country, which practically gave them a monopoly over their otherwise decentralized structures.

Repeated Statements

In retrospective, mining refers to a complex process of solving mathematical equations on the bitcoin network. Miners whose machines solve those problems get new bitcoin tokens as a reward. In the middle of these two processes lie recordkeeping and anti-counterfeiting. When someone makes a sale or purchase using bitcoin, bitcoin miners add these transactional data to a public ledger called blockchain.

Miners practically replace centralized banking mechanisms when it comes to recording and processing transactions between two parties. That is how bitcoin attains value against a fiat system.

Nevertheless, if these miners, say, cooperate and start controlling more than 51 percent of the network, then it means they can manipulate data on the blockchain. Furthermore, they can also duplicate bitcoins, an attack known as “double-spending.”

Such a seizure has never been attempted on the bitcoin blockchain. But Garlinghouse fears or wants people to worry about its prospects if they put their money in the cryptocurrency.

“Bitcoin is really controlled by China. There are four miners in China that control over 50% in bitcoin. How do we know that China won’t intervene (in controlling bitcoin)? How many countries want to use a Chinese-controlled currency? It’s just not going to happen,” he told audiences at the 2018 Stifel Insight Cross-Sector Conference in Boston last month.”

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