The biggest event in the cryptocurrency world recently was the declaration of the Chinese authorities to turn off the exchanges on which cryptocurrencies are traded. Consequently, BTCChina, among the largest bitcoin exchanges in China, said that it would be ceasing trading activities by the end of September. This news catalysed a sharp sell-off that left bitcoin (along with other currencies such as 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 could cryptocurrencies can get over the recent falls. Josh Mahoney, a 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 going to work” and that it “is a fraud… worse than tulip bulbs (in mention of the Dutch ‘tulip mania’ of the 17th century, recognised as the world’s first speculative bubble)… that 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’s actually going on? Since China’s ICO ban, other world-leading economies are going for a fresh look into the way the cryptocurrency world should/ could be regulated in their regions. Rather than banning ICOs, other countries still recognise the technological benefits of crypto-technology, and are looking into 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 do not allow them to be classified beneath the policies of traditional investment assets.
Some of these countries include Japan, Singapore and the united states. These economies seek to establish accounting standards for cryptocurrencies, mainly in order to handle money laundering and fraud, which were rendered more elusive as a result of crypto-technology. Yet, most regulators do recognise that there is apparently no real benefit to completely banning cryptocurrencies as a result of economic flows they carry along. Also, probably since it is practically impossible to shut down the crypto-world for as long as the internet exists. Regulators can only focus on areas where they may be able 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. Because 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 amount of Chinese clients registering on the platform.
Looking slightly further, companies like Nvidia have expressed positivity from the event. They claim that this ICO ban will only fuel their GPU sales, because the ban will likely increase the demand for cryptocurrency-related GPUs. With the ban, the only method to acquire cryptocurrencies mined with GPUs is to mine them with computing power. Therefore, individuals seeking to obtain cryptocurrencies in China will have to obtain additional computing power, as opposed to making straight purchases via exchanges. Essentially, Nvidia’s sentiments is that isn’t a downhill spiral for cryptocurrencies; in fact, other industries will receive a boost as well.
In light of all the commotion and debate surrounding cryptocurrencies, the integration of the technology into the global economies seem to be materialising hastily. Whether you believe down the road of the technology, or think that it is a “fraud… that may inflate”, the cryptocurrency rollercoaster is one worth your attention.