At a virtual roundtable for the Richard Nixon Foundation, Peter Thiel shared his concerns that the Chinese government may be using bitcoin to undermine the US dollar and government. It was certainly a surprise given Thiel's libertarian leanings, skepticism towards centralization, and previous positive comments about bitcoin.

Thiel's Concern

Thiel believes that China is elevating bitcoin to make it a competing reserve currency against the U.S. dollar. The U.S. derives considerable privilege and benefits from issuing the world's reserve currency, and he believes China is determined to undermine this advantage by boosting bitcoin and making it an alternative reserve currency.

Of course, there was significant pushback against Thiel's comments from the bitcoin community. China has limited the ability of its citizens to buy bitcoin. Additionally, the entire core philosophy of bitcoin undercuts the Chinese government's desire to have tight control on capital inflows and outflows in the country. In fact, many attribute bitcoin's early strength due to rich Chinese people buying it, so they could move their money out of the country without tipping off regulators.

Others are skeptical that bitcoin could ever become a competing reserve currency against the US dollar due to its volatility. Bitcoin is up more than 500% over the past year but also down by more than 20% over the past couple of weeks. This makes it more of a vehicle for speculation rather than as a currency for banking reserves and commerce.

Thiel's Background

Thiel is one of the most successful entrepreneurs and investors in Silicon Valley. He also has a knack for contrarian thinking and being ahead of the curve on anticipating technological trends. He started his career by founding Paypal (PYPL  ) and eventually sold it to eBay (EBAY  ) in 2002 for $1.5 billion. Today, Paypal has a market cap of over $300 billion and is worth more than 7x eBay.

He then plowed these proceeds into a variety of Silicon Valley startups and early-stage companies that also went on to much success like Facebook (FB  ), Tesla (TSLA  ), LinkedIn, etc. He also helped these founders retain control of their companies even after they went public, using his experience from Paypal and other companies where founders would be pushed out.

Given this track record of success, Thiel is considered a thought leader in Silicon Valley, and his opinions carry considerable weight. So, while bitcoin has many characteristics that he has an affinity for, it's also consistent with Thiel's contrarian nature that he retains a skeptical stance towards it.