Satoshi Nakamoto has a greater contribution to economics than Robert Mundell: PBoC Vice governor

Lu Lei, vice-governor of the People’s Bank of China (PBoC), has just offered an unexpected tribute to Satoshi Nakamoto by putting Nakamoto above Nobel laureate Robert Numdell in terms of his contribution to monetary economics.

Many think that this incident has once again shown China's softening stance when it comes to Bitcoin, from a country that was so well known for its restrictive stance on cryptocurrencies in the past.

China risks being obsolete if it doesn't adapt to the digital age

The Chinese official has named Satoshi Nakamoto and Robert Mundell as the two people who stood out to him for their contribution in the field of monetary economics, but he has also alluded that while Mundell's vision of a utopian society based on a unified global monetary system centered around the dollar remained a concept until the day he died, Satoshi's vision of bitcoin flourished and gradually ascended to the status of an extraordinarily valuable digital asset.

This transformation has diverged sharply from its original purpose as a widely circulated currency. What was once conceived as a decentralised alternative to traditional fiat currencies, Bitcoin has increasingly become a speculative vehicle, drawing the attention of investors seeking to capitalize on its price volatility.

Lu Lei also argues that China could risk being obsolete if the country doesn't adapt to the digital age. He argues that the China is pivoting towards a future that balances both technological innovation while retaining monetary sovereignty.

Bitcoin's revolutionary journey from idea to a premium digital asset has raised critical questions about its future role in the financial system and how it is here to stay.

The Chinese Central bank has also started to recently push its digital currency, showing that china is slowly but surely starting to accept digital assets as an inevitable part of tomorrow's economy.

Bitcoin could jump following China's 1.4 trillion stimulus package

Economists are suggesting that China is on the verge of rolling out a massive $1.4 trillion stimulus package, which could revive its economy and spark a significant rise in Bitcoin and crypto prices.

The recent economic data from China paints a worrying picture. The consumer price index (CPI) rose just by 0.6% in August, while the GDP of the country only grew by 4% after accounting for the inflation.

Hence, the Chinese government is hoping that this 1.4 trillion package would be able to revive the Chinese economy, which could increase with the reelection of Republican party Presidential candidate Donald Trump, anonymous sources familiar with the matter.

If approved, the yuan debt would be raised over the following three years, with the proceeds used to help local governments address debt risks.

Arthur Hyaes, the co-founder of BitMEX speculates that the potential debt could increase interest in Bitcoin's status as a hedge against monetary debasement among traders in mainland China. This could be a great buying opportunity Hayes wrote in a blog post

"The fact economists are bearish on the size and scale of the stimulus so far presents a great buying opportunity. Because when the average wealthy coastal living Zhou decides they must have Bitcoin at any yuan price, the upside price volatility will harken back to August 2015."

Hayes prediction comes shortly after Bitcoin surpassed $70,000 for the first time since June 10, bolstered by the growing anticipation of the US presidential election on Nov 5.

Bitcoin's reaction to China's debt increase

Hayes predictions are based on Bitcoin's previous reaction to China's national debt increase.

Bitcoin saw a five fold increase in 2014 when the People's Bank of China (PBOC) executed three consecutive devaluations of the Chinese yuan, which lost over 3% of its value.

"In August 2015, Bitcoin went from $135 to $600-an almost 5x pump in under three months after a shock yuan devaluation."

Investors like MicroStrategy's Michael Saylors have described Bitcoin as the best hedge against inflation and fiat currency devaluation.