In the wake of China’s ICO ban, what befalls the entire world of cryptocurrencies?
The greatest event in the cryptocurrency world recently was the declaration of the Chinese authorities to shut down the exchanges where cryptocurrencies are traded. Consequently, BTCChina, one of the largest bitcoin exchanges in China, said that it could be ceasing trading activities by the conclusion of September. This news catalysed a sharp sell-off that left bitcoin (and 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 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 probably 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 the Dutch ‘tulip mania’ of the 17th century, recognised while the world’s first speculative bubble)… which will blow up” ;.He goes to the extent of saying he would fire employees who have been stupid enough to trade in bitcoin.
Speculation aside, what’s actually going on? Since CashTab China’s ICO ban, other world-leading economies are going for a fresh explore how the cryptocurrency world should/ could be regulated inside their regions. As opposed to banning ICOs, other countries still recognise the technological great things about crypto-technology, and are considering controlling industry without completely stifling the growth of the currencies. The major problem for these economies is to figure out how to achieve this, as the alternative nature of the cryptocurrencies do not allow them to be classified under the policies of traditional investment assets.
Many of these countries include Japan, Singapore and the US. These economies seek to establish accounting standards for cryptocurrencies, mainly to be able to handle money laundering and fraud, which have been rendered more elusive as a result of crypto-technology. Yet, most regulators do recognise that there appears to be no real benefit to completely banning cryptocurrencies as a result of economic flows which they carry along. Also, probably because it’s practically impossible to shut down the crypto-world for so long as the web exists. Regulators can just only focus on areas where they could manage to exercise some control, which appears to be where cryptocurrencies meet fiat currencies (i.e. the cryptocurrency exchanges).
While cryptocurrencies seem ahead 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 organization received “a large number of inquiries from blockchain project founders based 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 is only going to fuel their GPU sales, while the ban will probably increase the demand for cryptocurrency-related GPUs. With the ban, the only way to acquire cryptocurrencies mined with GPUs is to mine them with computing power. As such, individuals looking to acquire cryptocurrencies in China will have to acquire more computing power, rather than making straight purchases via exchanges. In essence, Nvidia’s sentiments is that isn’t a downhill spiral for cryptocurrencies; in reality, other industries will get a boost as well.