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Global Issues Project

The requirements for this project were to create a multi-genre project based on research relating to the Global Studies Program themes and skills.

I have produced a newspaper-style article with supporting infographics addressing the topic: "In what ways are governments utilizing cryptocurrency technology,  and what could this mean for the future?"

As the world has become more familiar with blockchain cryptocurrencies such as Bitcoin, China has banned their use and created its own. Experts around the world are skeptical of this currency, voicing concerns of security, transparency, and the potential for China to take excessive control over its private sector. Chinese officials argue, however, that this move will decrease carbon emissions and offer better economic opportunities to its people. Countries like El Salvador and the Bahamas have also pursued cryptocurrencies in other unique ways, prompting the question: “what obligations do nations have to control the global use of cryptocurrencies?


Blockchain cryptocurrencies rely on a decentralized network of individuals and companies that buy, sell, and “mine” (earn) them. No single person or government has direct control over the value of these intangible currencies, nor can they access the identities of the people trading them. Instead, to ensure that transactions are secure and accurate, miners complete complex math equations that add to the blockchain. The blockchain is a long ledger of transactions that is verified by the calculations of all of the users, rather than how a centralized authority like a bank might keep records. For this work, which typically requires many “brute-force” computer calculations, they are rewarded with some of that currency into their anonymous (untraceable back to them) digital wallet. From these wallets, users can buy and sell crypto for cash or other cryptocurrencies through exchanges (similar to those for physical currencies), or use them as payment for goods and services just like traditional currencies. They may also choose to store them and sell them at a later date, presumably when supply and demand and other factors increase their current value (somewhat like stock trading). Cryptocurrencies are therefore independent of other markets, meaning that their value often fluctuates more than fiat currencies like the US dollar. 

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China, which has gone on to ban blockchain transactions, sees a variety of weaknesses in this type of technology. In 2017, two thirds of bitcoins were estimated to have been mined in China, causing the government to further investigate how this process was taking place and what detrimental effects it may present. One of its findings involved several instances of stolen power being used to fuel warehouse-sized buildings full of server racks packed with ASIC cards (specialized mining devices) and top-tier consumer level graphics cards (used in desktop computers).The electricity used by both these and more legitimate operations has also sparked a conversation about mining’s effect on climate change, although recent studies have determined the overall emissions to be minor. Others worry about the long-term value of investing in cryptocurrencies. As a result of the volatility of blockchain crypto, there have been several-month long periods in the past where the value of major currencies is less than the cost of the electricity needed to mine them, leaving many of these unregulated “factories” to go vacant.


While these may be important flaws of the global crypto market, China appears to be most concerned with its inability to monitor or influence cryptocurrencies. As previously noted, China is unable to track large mining operations as it has no way to de-anonymize the transactions that they create; no identifying information such as names or locations are ever associated with their digital wallets. The total crypto market is worth about $2 trillion and represents a growing threat against traditional economies. This combination of substantial financial support and elusive independence from any governing body has caused China and other countries to draft laws which prevent citizens from partaking in the overall process, from mining, to buying goods with cryptocurrencies, or even purchasing crypto as an investment. The US, which currently leads worldwide cryptocurrency mining, has banned specific types of transactions in order to reduce money laundering and illegal item sales which utilize the payment method. Meanwhile, China has entirely banned crypto use, even going so far as to name major currencies Ethereum and Bitcoin in its policies.


China’s various bans over the past nearly decade have paved the way, if nothing else, for its own official cryptocurrency. The Digital Yuan, which entered trials in late 2020, is a class of cryptocurrency known as a “stablecoin.” Contrast to blockchain-based crypto, stablecoins are backed by fiat currencies or “stable” goods such as oil. China has full control over the creation and issuance of Digital Yuan, just as it would paper Yuan. Tether, a coin based on the US dollar (but not issued by the United States government) proves that the stablecoin market is a strong one to enter, as it is the third-largest cryptocurrency with a $78 billion current market cap. It is important to note that stablecoins like these are also restricted in China, but Digital Yuan will reproduce many of their qualities attractive to users, such as ease of use in international purchasing and overall stability.

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Digital Yuan’s goal is not necessarily to be an enticing investment platform, rather it aims to be deeply integrated into China’s society. It will be used in conjunction with traditional Yuan, eventually removing the need for normal credit cards and challenging private online payment companies. As of 2019, Alipay and WeChat were responsible for about $50 trillion in online transactions, accounting for over 90% of total online payments in China. China believes that by implementing digital Yuan in this space it can increase reliability and sustainability, looking to avoid issues such as when Alipay missed payments to the government and was required to pay a $3 billion fine in 2021. It also plans to incorporate special debit cards that can be used at stores when there is no internet connection available, implying the ability to completely replace paper currencies at some point in the future.


China’s first trial in October, 2020 distributed about $30 to each of 750,000 randomly selected citizens to spend at a large range of stores. Consequent trials have allowed participants to openly spend money on other types of services, and have focused on educating students and the elderly about the currency. The trials have been considered successful, with over $5 billion in transactions occurring by the end of 2021. Much of the private sector has adapted the stablecoin, such as retail giant JD which takes advantage of the currency for most of its internal payments and banking.


The next step for Digital Yuan is international trade. With its unmatched ease of use, the currency will soon become integrated into global supply chains, encouraging foreign trade relations and potentially reducing the costs of goods. Digital Yuan is also extremely efficient at creating loans, bypassing many tedious processes that traditional money gets stuck in, such as banks and long waiting periods. China has already begun to ramp up its foreign investment over the last decade, and crypto can make it much easier to send money to countries that the US, IMF, or other agencies have banned aid for, such as Iran in 2010. Loans can also now be limited to certain types of spending or have expiration dates, giving China much more control over money-lending.  In the case of an economic crisis, China’s government will now have the ability to send out financial relief to its citizens within hours. This technology can also be used to reduce poverty, especially through the increased financial information they can obtain from tracking transactions made with the currency.

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Critics of Digital Yuan believe that it conflicts with Western beliefs of freedom and serves to strengthen the Chinese government at the expense of its citizens. Once the online currency is fully implemented the CCP will have far greater access to the spending habits of individuals and businesses. This may be used to track citizens’ locations (and predict future behaviors) better than current surveillance systems. It also grants the ability to easily gain full access to anyone’s bank account at any time, including transferring money back to the government. In the future China could prevent all trade using international currencies, as it has done with crypto locally, to force people in other countries to complete transactions using Digital Yuan, pushing this overreaching system worldwide.


Some nations have taken an opposite approach to China’s by embracing traditional cryptocurrencies. El Salvador is the first country to instate Bitcoin as a form of legal tender, encouraging its use in loans and general purchases. President Bukele began his program in a similar way to China; giving citizens the equivalent of $30 USD in bitcoin and encouraging them to buy more through the subsidized no-fee transfer process. Unfortunately, only about 7% of citizens claim to support the program and adoption has been very slow since early trials in 2019. The government has also set aside $150 million worth of bitcoin for its public investment programs, although it is unclear what it has been spent on. Bukele’s primary incentive in this project was to stimulate the economy via an increase in local transactions, as well as to invite foreign investment. Unlike China, El Salvador has no control over the cryptocurrency’s value, with frequent price fluctuations making it risky to rely on for government funding. Experts are concerned that this investment will not pay off over the next several years, and that people who do not understand the ramifications of such a volatile currency may make uninformed, dangerous investments. Even worse, due to poor reporting on how it has been spent, questions have begun to surface about El Salvador’s government potentially using bitcoin for money laundering or other corrupt behaviors. 


The Bahamas have taken a different approach to crypto investment altogether by focusing on business, in addition to making their own coin. The “Sand Dollar” functions similarly to Digital Yuan, though it does not track and influence transactions, instead acting only as an easier online payment system. Most of the Bahamas’ revenue has actually come from crypto exchanges such as FTX, which moved its headquarters there from Hong Kong after it increased regulation. Binance, another of the largest exchanges in the world, left China in 2017 to create several local operations around the world. The Bahamas has vowed to not restrict exchanges like these, making it a prime location for established businesses and startups alike to flourish. Contrast to El Salvador implementing a single cryptocurrency, the Bahamas has achieved significant financial growth by attracting the “upstream” crypto players instead of pushing a system on its people.


Cryptocurrencies, as a 21st century (largely) borderless investment and payment medium, will inherently be adopted in several different capacities by nations, businesses, and individuals worldwide, with varying levels of success. While it hasn’t been more than a decade since governments have begun creating large-scale policies about crypto; and no more than three years since any has created its own, there is still lots of experimentation ahead. It is yet to be seen, as these projects grow, whether countries like the United States will interject in China’s plans for Digital Yuan or perhaps even introduce its very own currency. Fifty years from now, will crypto become a freer market, or a more protected one? It continues to experience technological and political innovation far beyond basic finance, bestowed with an unprecedented power to potentially evolve in so many different directions.


Infographics created using

Works Cited

Hajjar, Alamira. “Digital Yuan: China's Attempt to Replace Cryptocurrency / USD.” AIMultiple, 8 Oct. 2021,

Hayes, Adam. “What Is Stablecoin?” Investopedia, Investopedia, 16 Feb. 2022,

Kurmanaev, Anatoly, et al. "El Salvador Foists Bitcoin on a Skeptical Public." New York Times, 8 Oct. 2021. Accessed 23

    Feb. 2022.

Lau, Angie. "Digital Yuan…" Newsweek, vol. 177, no. 2, 30 July 2021. Accessed 23 Feb. 2022.

Qin, Amy, et al. "China Bans Transactions Using Crypto." New York Times, 25 Sept. 2021. Accessed 23 Feb. 2022.

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