Bitcoin: Taiwan’s Shield Against a Chinese Embargo

After several years of hostility towards bitcoin, Taiwan seems to want to reconsider its point of view given its precarious geopolitical situation.

Bitcoin: The Ultimate Safe Haven

The China-Taiwan relationship is an explosive geopolitical knot. Beijing claims the island as an integral part of its territory, while Taipei, supported by Washington, defends its autonomy, all while considering strategic investments in bitcoin .

As in Ukraine, the risk of a proxy war is not impossible if trade tensions escalate between Washington and Beijing. Such a conflict would threaten the global economy since Taiwan’s industrial crown jewel (TSMC) produces the majority of the semiconductors needed for the high-tech industry.

China could easily decree an embargo and implement a total blockade of Taiwan. The country’s economy would collapse immediately, as would its currency. This would result in immediate hyperinflation.

That is why the country holds nearly $300 billion in reserves . No country has larger greenback reserves relative to its population size (excluding tax havens). These reserves are a way of buying protection from the United States.

But in the event of an invasion, Washington will freeze these $300 billion along with the $750 billion in reserves that China holds. Russia knows this well since half of its reserves, mainly euros, are frozen.

The millions of Taiwanese who try to flee the country will be able to take nothing with them. They will be ruined. Unless they have bitcoins. It is easier to board a plane with twelve words in mind than with suitcases of gold or dollars in the hold. Bitcoin allows you to leave your country with your entire fortune.

Taiwanese lawmakers have recently taken up the matter, calling bitcoin a “store of value as well as a safe haven”:

In the Wake of the United States

Taiwanese lawmaker Ko Ju-Chun asked the government last weekend to add bitcoin to its foreign exchange reserves.

“Bitcoin has been working for over 15 years. Its total supply is fixed, it is decentralized, and resistant to censorship. It cannot be subjected to an embargo,” he declared.

The lawmaker based his argument on the recent creation of a strategic bitcoin reserve by the US government. “The state of New Hampshire has just authorized that 5% of public funds can be invested in bitcoin, and 28 other states might soon follow,” he added.

Furthermore, the former Taiwanese prime minister considers “that even if it’s not a currency, bitcoin is digital gold allowing protection against inflation.”

Huang Zhifeng, president of the Foreign Trade Association, believes that “the decentralized nature of bitcoin allowed avoiding monetary risk in a geopolitically sensitive region like Taiwan.”

We are not saying bitcoin is the solution to everything. We suggest placing a small part of our reserves into bitcoin. As the former dean Chen Chong said, bitcoin is the gold of the digital age.

Ko Ju-Chun, Taiwanese lawmaker

Ultimately, the whole world will follow if the United States makes bitcoin their reserve currency. Especially since Donald Trump aims to reduce the trade deficit. The world will therefore have to find a new international reserve currency.

Stateless, uncensorable, and finite in quantity, bitcoin can claim the lion’s share of global reserves. On this subject, don’t miss our article: Are the USA ready to abandon the “exorbitant privilege” for Bitcoin?