Trump Embraces Bitcoin: Election Strategy or a Sign of Dollar Collapse?

Trump Embraces Bitcoin: Election Strategy or a Sign of Dollar Collapse?On July 27th, at the Bitcoin 2024 conference in Nashville, Tennessee, former US President and Republican presidential candidate for the 2024 election, Donald Trump, delivered a striking speech announcing that he would include Bitcoin as a strategic reserve asset for the United States. This move has sparked widespread attention and discussion

Trump Embraces Bitcoin: Election Strategy or a Sign of Dollar Collapse?

On July 27th, at the Bitcoin 2024 conference in Nashville, Tennessee, former US President and Republican presidential candidate for the 2024 election, Donald Trump, delivered a striking speech announcing that he would include Bitcoin as a strategic reserve asset for the United States. This move has sparked widespread attention and discussion.

During his speech, Trump claimed that the US government is one of the largest Bitcoin holders, possessing nearly 210,000 Bitcoins, accounting for 1% of the total supply. He stated that if elected, he would continue to hold all current and future Bitcoins as the "core of the strategic national Bitcoin reserve."

More surprisingly, Trump also revealed himself as the "first major party candidate to accept cryptocurrency donations," claiming to have raised $25 million, a significant portion of which came from Bitcoin, cryptocurrencies, and other asset forms.

Trump's stance on cryptocurrency has undergone a 180 turn. During his presidency, he explicitly stated that he was "not a fan of cryptocurrencies," describing Bitcoin and other cryptocurrencies as having value "based on thin air." However, in recent years, his attitude towards cryptocurrency has become increasingly "friendly," and he even launched his own NFT project.

This shift has led to speculation about Trump's motivations. Some believe that his current embrace of cryptocurrency is a preparation for a future dollar collapse.

Professor Xiong Jie, Director of the Global South Research Center at the School of International Communication, East China Normal University, has a different perspective on Trump's statement. He believes that Trump's move is more driven by current election needs, particularly to attract voters who hold cryptocurrency.

In an interview with The Observer, Professor Xiong Jie stated that after the US's previous unlimited quantitative easing policy and the "throwing money at the problem" during the pandemic, many Americans used this money to buy cryptocurrency. He believes that this behavior might be psychologically driven, as it was "windfall money," and it's understandable for gamblers to invest it in high-risk markets.

According to his data, 40% of American adults own cryptocurrency, with 60% of them wanting to buy more. As US Vice President Kamala Harris's stance on cryptocurrency remains unclear, Professor Xiong Jie believes that Trump's statement is likely an attempt to garner support among the 40% of cryptocurrency holders.

Furthermore, Professor Xiong Jie believes that Trump's move might be related to campaign finance. Some have suggested that if Trump is elected, he will use cryptocurrency in significant ways to address a potential future dollar collapse, thereby maintaining financial development.

However, Professor Xiong Jie disagrees with this view. He points out that if the dollar interest rates decrease, capital withdraws from US Treasuries, the dollar's international status declines, and diversified currency structures accelerate, it doesn't directly relate to a heavy investment in Bitcoin. Therefore, he believes Trump is primarily driven by his current electoral needs.

Professor Xiong Jie also approaches the nature of cryptocurrency with caution. He notes that for Bitcoin and other cryptocurrencies to become effective currencies, they need mechanisms to regulate the market. Bitcoin's decentralized design inherently prevents it from achieving this.

He explains that Bitcoin's design aims for decentralization. Theoretically, if someone controls over 50% of the computing power, they could manipulate it to become centralized, but this is difficult in reality. On the other hand, stablecoins like USDT and USDC, though pegged to the dollar, are still affected by dollar fluctuations, rendering them ineffective in maintaining the dollar's dominance.

Moreover, Bitcoin's design limits its total supply, which constantly decreases, making it essentially an "antique." This design prevents it from becoming a true currency.

Professor Xiong Jie prefers to view data as a new factor of production. He believes data assets will become the foundation of credit and potentially represent a significant breakthrough in economic history.

He compares the value of data to the oil and petrochemical industry. Data is like crude oil that requires collection and "extraction" through specific methods. Subsequent data mining, refinement, storage, and further development can be compared to various stages of the petrochemical industry chain. Especially in the AI era, data can be refined into different industry models, enhancing overall industry efficiency and societal operations.

Professor Xiong Jie emphasizes that Western nations lag in this area. They lack the entire industry chain, both physical economic landing scenarios and related infrastructure. Therefore, the current market capitalization of leading tech companies rests on the imagination of monopolizing data industries or specific aspects of artificial intelligence, which is different from the virtual-physical integration path in China or the Global South.

He believes that the US government lacks long-term planning and is unwilling to invest heavily in infrastructure development, preventing them from truly transforming data into a new oil and petrochemical industry.

Professor Xiong Jie further elaborates on the possibility of data assets becoming the credit foundation for legal tender. He believes that incorporating data as the fifth factor of production and including it in balance sheets can reflect the value of data assets.

He notes that the "Provisions on the Accounting Treatment of Enterprise Data Resources" issued by the Ministry of Finance in 2023 provided clear guidance on accounting for data assets, demonstrating the inevitable outcome of institutional innovation following technological innovation.

Professor Xiong Jie believes that incorporating data assets as a new credit foundation benefits "Global South" nations while being detrimental to the US. Major US internet companies are reluctant to clearly quantify data assets because it reveals that user-generated data is the source of their value, while capitalists reap most of the benefits.

For "Global South" nations, the realization of data asset value can help them break free from dependence on US internet companies and achieve economic development through data asset appreciation.

Professor Xiong Jie believes that data assets as a new factor of production represent a potential breakthrough in economic history, but the US, due to its institutional shortcomings, finds it hard to keep up. He notes that Western countries rarely pay attention to data as a new factor of production, and even when discussing it, they bring ideological biases, potentially causing them to miss crucial economic advances.

He believes that the limitations of the US system prevent them from imagining using data assets for societal benefit, such as leveraging data to establish interconnected mechanisms in areas like transportation, security, and healthcare, enhancing societal efficiency and public service levels.

Professor Xiong Jie uses the Xiong'an New Area as an example to illustrate how data assets as a new factor of production can create numerous new application scenarios. He believes that aggregating data from an entire city and allowing state-owned enterprises to own and operate it unlocks immense possibilities. For instance, combining traffic and security data can facilitate more effective urban management and social governance.

Professor Xiong Jie emphasizes that data as a new factor of production has the potential to spawn an entirely new academic discipline, with far-reaching implications.

Trump's embrace of Bitcoin has sparked reflection on cryptocurrency, data assets, and future economic development models. This debate transcends political decisions and touches upon the trajectory of future economics.