The biggest event in the cryptocurrency world recently was the declaration of the Chinese authorities to shut down the exchanges which cryptocurrencies are traded. Consequently, BTCChina, one of many largest bitcoin exchanges in China, said that it would be ceasing trading activities by the finish of September. This news catalysed a sharp sell-off that left bitcoin (along with other currencies such as for example Etherium) plummeting approximately 30% below the record highs that 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 recover from the recent falls. Bitcoin Cash , 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 likely 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 may blow up”. He would go 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 going for a fresh look into the way the cryptocurrency world should/ can 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 marketplace without completely stifling the growth of the currencies. The big issue for these economies is to figure out how to do that, because the alternative nature of the cryptocurrencies don’t allow them to be classified under the policies of traditional investment assets.
A few of these countries include Japan, Singapore and the united states. These economies seek to establish accounting standards for cryptocurrencies, mainly so as to handle money laundering and fraud, which have been rendered more elusive because of the crypto-technology. Yet, most regulators do recognise that there is apparently no real benefit to completely banning cryptocurrencies due to the economic flows they carry along. Also, probably because it is practically impossible to shut down the crypto-world for as long as the internet exists. Regulators can only just focus on areas where they might be able to exercise some control, which appears to be where cryptocurrencies meet fiat currencies (i.e. the cryptocurrency exchanges).
While cryptocurrencies appear 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 town. Aurelian Menant, CEO of Gatecoin, said that the company 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 event. They declare that this ICO ban will only fuel their GPU sales, as the ban will likely raise the demand for cryptocurrency-related GPUs. With the ban, the only way to obtain cryptocurrencies mined with GPUs would be to mine them with computing power. As such, individuals looking to obtain cryptocurrencies in China now have to obtain additional computing power, instead of making straight purchases via exchanges. Essentially, Nvidia’s sentiments is that is not a downhill spiral for cryptocurrencies; actually, 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 down the road of the technology, or believe it is a “fraud… that will blow up”, the cryptocurrency rollercoaster is one worth your attention.