Then came the year 2009 and we saw a rise of a new concept of money – a cryptocurrency called Bitcoin. With the invention of cryptocurrency, we’ve stepped in a brand new world. The first cryptocurrency Bitcoin revolutionized the whole concept of money, the way to transact it without the need of a third-party and a trustless system.
With the unprecedented rise of Bitcoin’s value in the past decade, the countries around the world started noticing the remarkable effect of cryptocurrencies on the global economy. That opened a new gate – the fight for Bitcoin dominance. Hence the hash wars. To understand what hash rate is, basically it’s a measure of the processing power of the Bitcoin network. So, whoever has more processing power on the Bitcoin blockchain network has more dominance over Bitcoin and it’s future.
Therefore the so-called hash war continues over the future of bitcoin. Since the birth of Bitcoin in 2009, digital currencies have become commonplace with millions of traders mining and trading the cryptocurrency. Digital currencies keep soaring high as the world continues to venture into the digital age with the global revenues for e-payment, reaching a record of $1.9 trillion so far.
As the digital currency continues to soar higher, it has given way for more long, complex, and multifaceted forms of warfare, the emergence of economics and conflicts, which means that the hash war on cryptocurrency cannot be ignored.
There have been ongoing rumors that Bitcoin will hit $500,000 because of the expert’s belief that the United States might start a hash war with Iran and Venezuela for the control of digital currency.
In a TV episode in June, Max Keiser predicted that the Trump administration might embrace BTC due to Tehran and Venezuela’s dominance in the control of the Bitcoin Hash rate. It is believed that Iran has already got 3% of the global hash rate with Keiser of the opinion that Venezuela will get 3% – 5%. It seems to have triggered the United States in the fight over the control of Bitcoin.
Going one step ahead, Iran has also made plans to sell electricity to crypto miners straight from their power plants. According to a report published by Tehran Times, Iran’s government has given the nod to its biggest Thermal Power Plant Holding Company (TPPH) to let crypto miners buy electricity from three of its power stations.
Ongoing Hash War Between Powerful Nations
The past few decades have seen fierce battles over the control of the global economy between powerful nations. Great power competitions pit the United States of America, China, and Russia against one another – with each nation-state competing for more influence and power against one another.
The evolution of digital currency has reshaped this fight, with each country creating a separate state-backed cryptocurrency to challenge another economically. It seems to be apparent with the look of the ongoing competitive trade advantages via global market manipulations, the potential for economic vulnerability due to the reliance on digital currencies, and even the use of digital currencies specifically for illicit activities.
Top Contenders of Hash War
The adverse effect of the Covid-19 on different economies has led to many countries considering or already developing state-backed digital currencies – with the United States of America, China, Russia, and to a lesser extent Iran among those at the top of the process. These countries’ developments have led to a cold hash war giving the fierce ongoing military conflicts and the fact that digital currencies have the potential to become the backbone of individual nation’s economies.
As per the data available until April this year, China has been leading the hash power race with a control over 65% of monthly share of hashrate. All of the world is lagging far behind China when it comes to the total hashing powers of nodes on the Bitcoin network. The only close contenders are the United States, Russia, and Kazakhstan all three of them controlling less than 7.5% of monthly share each.
Is there an Ongoing Hash War in Europe?
Europe and the United States are the largest markets for exchange activities, with the majority of the world stock of bitcoin and others being held in the region.
If you take a closer look at the European cryptocurrency market, you will see different pictures. We witnessed the crash of cryptocurrency in the spring. However, the BTC/EUR rebound has been sluggish so far, and such sluggish behavior is not only on BTC. Other popular currencies like Ethereum and Litecoin are also having a hard time rebounding from the initial crash.
According to experts, sluggish behavior can be attributed to European investors’ less interest in investing in cryptocurrency, unlike their American counterparts. It means that there is a low demand for crypto in Europe.
Another possible explanation is the high cost of mining bitcoins in the EU due to higher energy costs and strict regulations. It is also notable to say that the EU is more cautious when it comes to cryptocurrency than the USA. During the last fall, the EU set up 400 million euros fund to boost crypto and blockchain capabilities across the continent. However, even at that, the cryptocurrency performance in the EU has been more sluggish, reducing the interest of any cryptocurrency hash war between the EU and other nations.
Hash War in Asia
East Asia is the world’s largest cryptocurrency market – accounting for 31% of all cryptocurrency-related transactions in the last 12 months. According to demographics by Chainalysis, East Asia has received $107 billion worth of cryptocurrency over the previous 12 months, with China controlling 65% of Bitcoin’s global hash rate.
Hashrate is the measurement of how much computing power goes towards mining Bitcoin. It means that the majority of all newly mined Bitcoin starts at Asia based addresses, thereby ushering the market a vast liquidity boost.
Although East Asia is soaring high in Bitcoin mining, it is also crucial to note some fierce hash wars going on in different countries in Asia.
There have been notable restrictions by different Asian countries to control the cryptocurrency market. In China, there have been issues of regulation which has created confusion among crypto enthusiasts. Although Beijing has given support for digital currency and has gone as far as developing a digital currency, it is worthy of note that a ruling last year recognized BTC as a virtual currency instead of declaring BTC as a legal currency. It means that using BTC as a legal currency could land users into trouble.
We also see another twist in India concerning cryptocurrency. There was a controversy when the country’s reserve bank declared that banks would be stopped from serving crypto-focused companies. A move that experts believe would affect so many exchanges. However, the Indian Supreme Court repealed the reserve bank’s ban by declaring it as disproportionate and unconstitutional. Although some exchanges are back in business trading cryptocurrency, it is imperative to note that the bill might be revisited in the future as it is still on ice in parliament.
In Vietnam, there has been a hardline adopted by the government concerning cryptocurrency. According to reports, cryptocurrencies like BTC have been banned in the country as a legal means of payment. According to the Vietnam government, fraud and scam activities relating to crypto-assets opens the door to money laundering, tax evasion, and terrorism financing. However, 2020 has seen the government approve few exchanges, which opens the door for the possibility of a soft landing for traders in the future.
In Thailand, the government has created guidelines and laws that protect consumers while ensuring that the country is soaring high on the global stage. The country has put measures in place, which will enable crypto firms to get a license to operate in the country. However, those who flaunt the order risk jail sentence or fine.
There is no cryptocurrency regulation in Japan, which means that regulators allow people to pay for goods and services using BTC. However, crypto exchanges are licensed and undergo constant audits.
Due to the various regulations by different governments in Asia, it is difficult to understand how the regulatory landscape will look like in a year in Asia. Some countries are making laws that are favorable to cryptocurrency, whereas others are making laws that prevent the use of cryptocurrency. But in everything, Asia remains the most prominent cryptocurrency market.
Only the time will tell which country will dominate the Bitcoin network, but regardless of that we hope that the world will be a better place with the rise of unconventional currencies, decentralized financial systems, and a trustless system.
Written by Narender Charan