Bitcoin is stretching its tentacles ever wider into the global financial system. In just the past week, several British companies joined the American march to turn themselves into Bitcoin holding companies, hot on the heels of German and Japanese companies which have done the same. All are emulating the strategy pioneered by Michael Saylor at MicroStrategy, a company whose sole raison d’être is to hold Bitcoin. And all, like MicroStrategy, are reaping rich dividends from this conversion, with some seeing their share values surge 700% or more in a matter of months.

These corporate re-inventions follow moves by regulators in several jurisdictions, including Britain and the European Union, to follow the lead of the Trump administration in loosening restrictions on crypto trading, thereby allowing established financial firms to begin dabbling in them. And the trend is spreading. South Korea this week ended a 14-year ban on so-called kimchi bonds, allowing investors to buy locally issued US bonds, which are then converted into Korean won. The move was prompted by the craze among Koreans to buy stablecoins, crypto-coins backed by US dollars.

The fact that most of the companies turning themselves into crypto hoards were previously small firms on the brink of extinction, and are suddenly flush with cash, might raise eyebrows. But they are in fact beating a well-trodden path. MicroStrategy was one of the dotcom detritus from the 2000 crash; its founder, Michael Saylor, was once charged by the Securities and Exchange Commission with fraud for overstating revenues (a lawsuit later settled out of court).

Ever adept at spotting opportunities, Saylor revived MicroStrategy in 2020 by purchasing Bitcoin — then using it as collateral to secure loans, which he used to buy even more Bitcoin. Using the firm’s Bitcoin holdings as its chief asset, he has been able to sell more shares, using the proceeds to buy more Bitcoin, in an upward spiral which sees both MicroStrategy’s share value and the value of its Bitcoin holdings drive each other upwards. In a relatively illiquid market, MicroStrategy’s aggressive buying all but guarantees a rise in Bitcoin’s price, which in turn guarantees rises in the company’s share price, which has tripled in just the last year.

Market old-timers can’t help but watch all this through their fingers. Despite being on a one-way street upwards, crypto’s advocates have yet to make a convincing case why it exists. But even if this party does end badly, it might not happen for a while. The US administration is putting its weight behind crypto, partly due to the close ties Donald Trump forged with the industry during last year’s election campaign, and partly because the promotion of stablecoins serves his administration’s goal of repressing interest rates by raising demand for US Treasury paper.

And with that American underwriting, fund managers everywhere are coming under pressure from their clients, who don’t want to miss out on the riches being mined. Fund managers, in turn, press their regulators to let them join the rush, lest their businesses lose clients to American rivals. Finally the regulators don’t want their jurisdictions to turn into backwaters, so they do what’s necessary to stay on the frontlines of global finance.

And somewhere Satoshi Nakamoto, the original creator of Bitcoin, must be smiling. Given that it was originally created to undermine the existing fiat-money system, its penetration of the temples of finance presage that very takeover. But whether crypto is the basis of a whole new financial system, as the Saylors of the world say, or a sleeper device that will one day explode the system, we wait to see.

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John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a Religion (Simon & Schuster, 2017).

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China is trying to catch up with America on artificial intelligence. The Wall Street Journal has reported that Zhipu AI — one of China’s six “AI tiger” LLMs — has released a new model that can rival leading US systems, including Anthropic’s Mythos, in cybersecurity tasks such as pinpointing security bugs. While this marks a milestone in China’s drive to catch up with Western AI capabilities, strong performance on a single benchmark does not mean it has taken the lead. Chinese models still lag behind their Western counterparts in broader capabilities, such as autonomous operation. Skepticism is therefore warranted before resorting to hysterical conclusions, but complacency about the geopolitical implications of China’s AI advances would be an even greater mistake.

On the infrastructure side, Chinese AI is still constrained by access to advanced chips, with American labs way ahead in computing capacity as well as investment. Analysis from earlier this year suggests that Chinese models are likely to be at least a few months behind those in the US. But they are still continuing to make progress, or that the geopolitical importance of AI will be decided only by whose LLM has ventured deeper into the technological frontier. The practical applications of AI, countries’ to capture foreign markets, and the application of AI into the real economy will matter just as much.

Here, China may hold an advantage. As with its dominance across many critical supply chains, Beijing may not need to produce the most advanced AI systems — only those that are affordable and widely deployable. In doing so, it could consolidate global influence by supplying functional, low-cost AI at scale.

Beijing seems to be pursuing exactly that path, developing an AI “open-source” strategy that offers affordable, widely available AI models for companies and individuals to use and modify as they wish. The production of the DeepSeek AI model, which matched the performance of Silicon Valley tools such as ChatGPT at a fraction of the cost for users, created goodwill among Chinese models with developers.

The four most popular models on OpenRouter, an AI hardware platform for developers, are now all Chinese. The goal for China is not only to win the frontier-model race, but to make its systems the default layer of AI adoption across industries and global markets. For most economies, the choice is increasingly between an affordable tool they can deploy now and a more robust one that may be out of reach.

And while the countries adopting Chinese models may be exposed to political pressure and cyber threats from Beijing, safer and more capable alternatives matter little if they are unaffordable. American AI companies are already under pressure to monetize products whose operating costs are rising. If Chinese open-source models become the cheap default for startups, universities, governments and businesses across the developing world, then America’s AI lead will be eroded from below.

Perhaps more concerning for America in the long run is how AI can give Chinese manufacturing even more strength, through the ongoing integration of AI as a general-purpose technology. China’s new Five-Year Plan mentioned AI more than 50 times and includes an “AI+” action plan aimed at spreading AI across the economy.

Beijing has been pioneering automation of its critical infrastructure for years, with promising recent results in increasing warplane production capacity. In that regard, China’s open-model strategy and manufacturing dominance will reinforce each other. Cheap, adaptable models accelerate deployment across the real economy while those deployments generate real-world data and use cases that can feed back into further model improvement.

The United States should not dismiss the importance of its lead in the AI race. That lead worries Beijing, not least because a more automated Chinese economy would also become more vulnerable to AI-generated cyber threats. But nor should Washington assume that China cannot catch up with American capabilities over time.

This AI competition represents part of a broader struggle over tech supply chains and geopolitical influence. Decisions over whether to adopt US or Chinese models could produce a more fragmented global reality, with different regions relying on different cloud providers, chips and security structures. The result will likely be a global economy which is divided into competing spheres, rather than one which produces a single winner.

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Miquel Vila is a political and geopolitical risk consultant focusing on industrial strategy, critical infrastructure and global supply chains.

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