Cryptocurrency’s Rugged Streets: China’s ICO Prohibit
In the wake of China’s ICO ban, what befalls the world of cryptocurrencies?
The biggest event in the cryptocurrency world recently was the declaration of the Chinese authorities to power down the exchanges on which cryptocurrencies are traded. As a result, BTCChina, among the largest bitcoin exchanges in China, said that it will be ceasing trading activities by the end 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 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 cure the recent falls. Josh Mahoney, a market analyst at IG comments that cryptocurrencies’ “past experience tells us that [they] will more than 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 forex trading “is really 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)… which will blow up” ;.He visits the extent of saying that he would fire employees who have been stupid enough to trade in bitcoin.
Speculation aside, what is actually going on? Since China’s ICO ban, other world-leading economies are having a fresh look into how the cryptocurrency world should/ could be regulated within their regions. As opposed to banning ICOs, other countries still recognise the technological benefits of crypto-technology, and are looking into controlling industry without completely stifling the growth of the currencies. The big problem for these economies is to work out how to do this, as the alternative nature of the cryptocurrencies do not allow them to be classified underneath the policies of traditional investment assets.
Some of these countries include Japan, Singapore and the US. These economies seek to establish accounting standards for cryptocurrencies, mainly in order 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 fully banning cryptocurrencies due to the economic flows which they carry along. Also, probably because it’s practically impossible to power down the crypto-world for provided that the web exists. Regulators can only just concentrate on areas where they might be able to exercise some control, which seems to be where cryptocurrencies meet fiat currencies (i.e. the cryptocurrency exchanges).
While cryptocurrencies seem in the future 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 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 how many Chinese clients registering on the platform.
Looking slightly further, companies like Nvidia have expressed positivity from the event. They claim that ICO ban will simply fuel their GPU sales, since the ban will more than likely boost the demand for cryptocurrency-related GPUs. With the ban, the only path to acquire cryptocurrencies mined with GPUs is to mine them with computing power. As a result, individuals looking to acquire cryptocurrencies in China will have to acquire more computing power, in place of making straight purchases via exchanges. Essentially, Nvidia’s sentiments is that isn’t a downhill spiral for cryptocurrencies; actually, other industries will get a boost as well.