Is China banning Bitcoin… again?
The question on everybody’s mind in the cyptocurrency world is a big one: Is China going to kick Bitcoin when it’s down? While the recent market correction is already showing rapid improvements, leading many to look at is as just another blip on the radar of blockchain technology’s success story, we’re not out of the woods by any means.
The market dive has been attributed to South Korea and China talking about banning crypto exchanges, Chinese New Year influencing the market, the Bitconnect disaster – there are a number of theories, and in all likelihood, the cause is a mixture of all those factors and more besides.
The worry we now face is that major geopolitical players, who may have been working to crash the market in the first place, will take advantage of its more vulnerable state and try to do some real damage. When China took a stance against cryptocurrency last year, the shockwaves were felt by investors, platforms, and miners alike. In September 2017, Bitcoin was labeled a form of “unapproved illegal public financing” that “raises suspicions” of fraud and criminal activity.
Perhaps it was the success and growth of China-based Bitcoin and Ethereum trading platforms Bitfinex, OkCoin, and BTCC that prompted authorities to take action. At the time of the 2017 crackdown, these three platforms accounted for an enormous 45% of the global market share, making the threat from China to shut them down all the greater. The (temporary) downfall of Bitcoin in China was also influenced by a number other technical factors.
China put a ban on new ICOs in 2017 which lead to slower transaction processing times across the board. However, the country is still one of the largest sources of Bitcoin mining in the world, an irony that is not lost on the global community. While P2P transactions will be allowed, talks to ban OTC platforms in China have coincided with a huge market correction that has left investors spinning and the world looking for answers.
The People’s Bank of China (PBOC), which trialed their own digital currency not so long ago, cracked down on mining this year and the government is even moving to prevent Chinese companies from avoiding the ban by mining abroad. All firms and businesses are prohibited from trading, leaving individuals unscathed for now. However, officials intend to block domestic access to mobile apps that trade in cryptocurrency as the net tightens around the Chinese market as a whole, leaving investors with nowhere to turn as the government continues to clamp down on trading, a position sure to have wide-reaching effects around the world.
So is Bitcoin banned or not?
Not yet. Bitcoin and other cryptocurrencies can be traded at OTC (over the counter) exchanges, but the rates of transaction are so slow that the market is already being affected. This type of transacting increases risk significantly, as a trade that takes place on a price one day could have a totally different value if it takes hours or days to go through.
Why the hostility?
Chinese authorities have cited a number of reasons, such as the incredibly high electricity requirement for mining. While the electricity usage is certainly something to be monitored carefully to avoid waste and keep cryptocurrency as green as possible, the general sentiment is that it’s not about the electricity. Another issue raised by authorities is cryptocurrency’s alleged association with organized crime, a stigma long held in the eyes of the public in many countries.
Crypto is often regarded as a suspicious, secretive, nefarious way to do business, associated with drug dealing and other criminal activity. Certainly, there have been numerous scams and underworld figures taking advantage of the anonymity of cryptocurrency. Zero-proof technology offers anonymity to those wishing to hide their transactions for any reason, something that has appealed to criminals as much as it has to firm believers in the protection of privacy for its own sake.
Of course, by far the most widely used form of currency in criminal dealings in every country in the world is, without down, the local fiat – cash is every bit as anonymous as cryptocurrency when the serial numbers aren’t being monitored, which doesn’t lend much strength to the argument that cryptocurrency should be shut down for the safety and well-being of law-abiding citizens.
It is, of course, the idea of the government losing control of money to the public that has always had world leaders running scared. One can imagine few threats greater to the status quo than cryptocurrency becoming stable and widely used as the predominant form of currency, decentralized and controlled by everybody. In a country with a particularly hands-on approach to domestic policy, it’s no surprise that China is doing everything in its power to curb the success of Bitcoin while simultaneously developing government-backed digital currencies to replace it.
Is China banning Bitcoin again?
It’s too early to say whether they will be successful, but yes, they’re certainly moving against Bitcoin and other unregulated cryptocurrencies in a major, coordinated way. Cryptocurrency represents a threat to the establishment and perhaps a legitimate infrastructural problem as well that, when expanding too suddenly, adds an unwanted element of uncertainty for the government trying to predict and control the Chinese economy.
However, despite the best efforts of the Chinese and other governments, Bitcoin marches on, bruised but not broken. Even if what is widely regarded as the pioneer of peer to peer digital currency is weakened, it has paved the way for more to follow, and as the movement continues to spread and grow throughout the world, it looks like no matter what the governments do to try to shut it down, cryptocurrency is here to stay.
Conor Maloney is a content writer and an advocate of decentralized public control of finance. Follow him @WrittenCraft for more crypto news.
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