Here Is The Reason Why Bitcoin Plunges to $7,000
As blockchain technology has gained huge momentum in China, it brings many changes to financial system and decentralization may be the first feature of that change. Cao Heping, an economics professor at Peking University, said in an recent interview with Sina Finance that blockchain is absolutely not the decentralization, and the reason for bitcoin’s drop below $7000 is the cryptocurrency poses a direct threat to central banks’ business.
As for the definition of blockchain, Cao said blockchain “is absolutely not equal to decentralization, it’s a partially decentralized platform. Every participant on the chain is a center”. Cao said.
And he believed bitcoin is capable of weakening the position of the central bank. “bitcoin tells us for the first time that blockchain technology has the potential to create an alternative currency, and to replace M0, the amount of cash in circulation. Why does bitcoin dive below$7,000 now? It is because bitcoin can be seen as M0, it poses a direct threat to central banks, thus governments want to limit bitcoin’s development.”Cao said.
In his opinion, blockchain is a strategic technology. “ The technology addresses some problems that cannot be solved by commercial banks, bringing down a huge amount of costs. If blockchain will be integrated into the management of universities, hospitals and hotels, we will see great stories,” Cao said.“Blockchain is a strategic technology that is more powerful than the combination of AI, VI and VR.”
When it comes to the current stage of blockchain development, Cao asserted that blockchain industry is undergoing an adjustment. “A group of smart people are aware that if some cryptocurrency projects want to snatch M0 business from the central bank, and snatch M1 business from commercial banks, it’s like a moth to a flame. If blockchain technology can be applied to logistics parks, the medical bills or the upgrade of enterprise resource planning, both central banks and commercial banks will be excited to see this situation. Thus blockchain has the power to boost the development of smart digital economy. ” He said.