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 shut down the exchanges on 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 particular news catalysed a sharp sell-off that will left bitcoin (and other foreign currencies such as Etherium) plummeting approximately 30% below the record highs which 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 experts predict that it can cryptocurrencies can recover from the recent falls.
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Josh Mahoney, a market analyst at IG comments that cryptocurrencies’ “past experience tells us that [they] will likely brush these latest problems aside”.
However , these sentiments avoid come without opposition. Mr Dimon, CEO of JPMorgan Chase, said that bitcoin “isn’t going to work” and that it “is a scams… worse than tulip bulbs (in reference to the Dutch ‘tulip mania’ of the 17th century, recognised since the world’s first speculative bubble)… that will blow up”. He goes to the extent of saying that he would fire place employees who were stupid enough in order 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 within their regions. Rather than banning ICOs, additional countries still recognise the technical benefits of crypto-technology, and are looking into managing the market without completely stifling the particular growth of the currencies. The big concern for these economies is to figure 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 resources.
Some of these countries include Japan, Singapore and the US. These economies look for to establish accounting standards for cryptocurrencies, mainly in order to handle money laundering and fraud, which have been rendered even more elusive due to the crypto-technology. Yet, nearly all 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 since 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, such 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 associated with 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 spike in the number of Chinese clients registering on the platform.
Looking slightly further, companies like Nvidia have portrayed positivity from the event. They claim 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 get cryptocurrencies mined with GPUs is to mine them with computing power. Therefore, individuals looking to obtain cryptocurrencies in China now have to obtain more computing strength, as opposed to making straight purchases through exchanges. In essence, Nvidia’s sentiments is that this isn’t a downhill spiral with regard to cryptocurrencies; in fact , other industries will receive a boost as well.