The biggest event in the cryptocurrency world recently was the declaration of the Chinese authorities to turn off the exchanges which cryptocurrencies are traded. As a result, BTCChina, among the largest bitcoin exchanges in China, said that it might be ceasing trading activities by the end of September. This news catalysed a sharp sell-off that left bitcoin (and other currencies such as for example Etherium) plummeting approximately 30% below the record highs which were reached earlier this month.
So, the cryptocurrency rollercoaster continues. With bitcoin having increases that surpass quadrupled values from December 2016 to September 2017, some analysts predict that it can cryptocurrencies can get over the recent falls. Josh Mahoney, market analyst at IG comments that cryptocurrencies’ “past experience tells us that [they] will likely brush these latest challenges aside”.
However, these sentiments don’t come without opposition. Mr Dimon, CEO of JPMorgan Chase, remarked that bitcoin “isn’t likely to work” and that it “is really a fraud… worse than tulip bulbs (in mention of the Dutch ‘tulip mania’ of the 17th century, recognised because the world’s first speculative bubble)… which will blow up”. He goes to the extent of saying he would fire employees who were stupid enough to trade in bitcoin.
Speculation aside, what is actually going on? Since China’s ICO ban, other world-leading economies are taking a fresh look into how the cryptocurrency world should/ could be regulated in their regions. Instead of banning ICOs, other countries still recognise the technological benefits of crypto-technology, and are looking at controlling the market without completely stifling the growth of the currencies. The big issue for these economies would be to figure out how to do this, because the alternative nature of the cryptocurrencies don’t allow them to be classified beneath the policies of traditional investment assets.
A few of these countries include Japan, Singapore and the US. These economies seek to determine accounting standards for cryptocurrencies, mainly as a way to handle money laundering and fraud, which have been rendered more elusive because of the crypto-technology. Yet, most regulators do recognise that there seems to be no real benefit to completely banning cryptocurrencies as a result of economic flows that they carry along. Also, probably because it is practically impossible to shut down the crypto-world so long as the internet exists. Regulators can only focus on areas where they may be in a position to exercise some control, which is apparently where cryptocurrencies meet fiat currencies (i.e. the cryptocurrency exchanges).
While cryptocurrencies seem to come under more scrutiny as time progresses, such events do benefit some countries like Hong Kong. Since the Chinese ICO ban, many founders of cryptocurrency projects have already been driven from the mainland to the city. Aurelian Menant, CEO of Gatecoin, said that the business received “a high amount of inquiries from blockchain project founders based in the mainland” and that there has been an observable surge in the number of Chinese clients registering on the platform.
Looking slightly further, companies like Nvidia have expressed positivity from the function. They claim that this ICO ban will only fuel their GPU sales, because the ban will likely raise the demand for cryptocurrency-related GPUs. With the ban, the only method to obtain cryptocurrencies mined with GPUs would be to mine them with computing power. As such, individuals looking to obtain cryptocurrencies in China will have to obtain additional computing power, as opposed to making straight purchases via exchanges. Essentially, Bitcoin Cash Token is that isn’t a downhill spiral for cryptocurrencies; in fact, other industries will receive a boost as well.
In light of all commotion and debate surrounding cryptocurrencies, the integration of the technology into the global economies seem to be materialising hastily. Whether you believe in the foreseeable future of the technology, or think that it is a “fraud… that may blow up”, the cryptocurrency rollercoaster is one worth your attention.