In the wake of China’s ICO bar, what befalls the world of cryptocurrencies?
The greatest event in the cryptocurrency world lately was the declaration of the Chinese regulators to shut down the exchanges which cryptocurrencies are traded. As a result, BTCChina, one of 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 (and other foreign currencies such as Etherium) plummeting approximately 30% below the record highs that were reached earlier this month.
Therefore , the cryptocurrency rollercoaster continues. Along with bitcoin having increases that surpass quadrupled values from December 2016 to September 2017, some analysts predict that it can cryptocurrencies can recover from the recent falls. Josh Mahoney, a market analyst at IG comments that cryptocurrencies’ “past encounter tells us that [they] will likely brush these latest challenges aside”.
However , these sentiments may 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 reference to the Dutch ‘tulip mania’ of the 17th century, recognised as the world’s first speculative bubble)… which will blow up”. He goes to the particular extent of saying that he would flame employees who were stupid enough to trade in bitcoin.
Speculation apart, what is actually going on? Since China’s ICO ban, other world-leading economies are taking a fresh look into how the cryptocurrency world should/ can be regulated in their regions. Rather than banning ICOs, some other countries still recognise the technological benefits of crypto-technology, and are looking into controlling the market without completely stifling the particular growth of the currencies. The big issue for these economies is to figure out how to try this, as the alternative nature of the cryptocurrencies do not allow them to be classified under the policies of traditional investment possessions.
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 have been rendered more elusive due to the crypto-technology. Yet, almost all regulators do recognise that there appears to be no real benefit to completely banning cryptocurrencies due to the economic flows that they carry along.
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Also, probably because 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 work out 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, like events do benefit some nations like Hong Kong. Since the Chinese ICO ban, many founders of cryptocurrency projects have been driven from the landmass to the city. Aurelian Menant, CEO of Gatecoin, said that the company received “a high number of inquiries from blockchain project founders based in the mainland” and that there has been an observable surge in the number of Chinese clients signing up on the platform.
Looking slightly further, companies like Nvidia have indicated positivity from the event. They declare that this ICO ban will only fuel their GPU sales, as the ban will likely increase 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 a result, individuals looking to obtain cryptocurrencies in China now have to obtain more computing strength, as opposed to making straight purchases via exchanges. In essence, Nvidia’s sentiments is the fact that this isn’t a downhill spiral regarding cryptocurrencies; in fact , other industries may receive a boost as well.