In the wake of China’s ICO ban, what befalls the entire world of cryptocurrencies?
The biggest event in the cryptocurrency world recently was the declaration of the Chinese authorities to power down the exchanges where cryptocurrencies are traded. Consequently, BTCChina, one of the largest bitcoin exchanges in China, said so it will be ceasing trading activities by the finish of September. This news catalysed a sharp sell-off that left bitcoin (and other currencies such as Etherium) plummeting approximately 30% below the record highs that have been reached earlier this month.
So, the cryptocurrency rollercoaster continues. With bitcoin having increases that surpass quadrupled values from December 2016 to September 2017, safe trading some analysts predict so it can cryptocurrencies can recover from 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 likely to work” and so it “is a fraud… worse than tulip bulbs (in mention of the the Dutch ‘tulip mania’ of the 17th century, recognised since the world’s first speculative bubble)… that will blow up” ;.He visits the extent of saying that 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 consider the way the cryptocurrency world should/ may be regulated inside 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 problem for these economies is always to work out how to do this, as the alternative nature of the cryptocurrencies do not allow them to be classified under the policies of traditional investment assets.
Several of those countries include Japan, Singapore and the US. These economies seek to determine accounting standards for cryptocurrencies, mainly to be able to handle money laundering and fraud, which were rendered more elusive due to the crypto-technology. Yet, most regulators do recognise that there seems to be no real benefit to completely banning cryptocurrencies due to the economic flows they carry along. Also, probably because it’s practically impossible to power down the crypto-world for as long as the web exists. Regulators can only focus on areas where they might have the ability to exercise some control, which seems to be 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 been driven from the mainland to the city. Aurelian Menant, CEO of Gatecoin, stated that the company received “a lot of inquiries from blockchain project founders located 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 ICO ban is only going to fuel their GPU sales, since the ban will likely boost the demand for cryptocurrency-related GPUs. With the ban, the only method to obtain cryptocurrencies mined with GPUs is always to mine them with computing power. Therefore, individuals looking to obtain cryptocurrencies in China will have to obtain more computing power, in place of making straight purchases via exchanges. Basically, Nvidia’s sentiments is that isn’t a downhill spiral for cryptocurrencies; in fact, other industries will get a boost as well.