The biggest event in the cryptocurrency world recently was the declaration of the Chinese authorities to turn off the exchanges 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 finish 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 which 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 could cryptocurrencies can recover from the recent falls. Josh Mahoney, 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 really a fraud… worse than tulip bulbs (in reference to the Dutch ‘tulip mania’ of the 17th century, recognised because the world’s first speculative bubble)… that may 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 is actually going on? Since China’s ICO ban, other world-leading economies are taking a fresh look into the way the cryptocurrency world should/ could be regulated in their regions. Instead of banning ICOs, other countries still recognise the technological benefits of crypto-technology, and are looking into controlling the market without completely stifling the growth of the currencies. The big issue for these economies is to figure out how to do this, because the alternative nature of the cryptocurrencies do not allow them to be classified beneath the policies of traditional investment assets.
A few of these countries include Japan, Singapore and the united states. These economies seek to determine accounting standards for cryptocurrencies, mainly to be able to handle money laundering and fraud, which were rendered more elusive due to the crypto-technology. Yet, Bitcoin mining hardware do recognise that there seems to be no real benefit to totally banning cryptocurrencies because of the economic flows that they carry along. Also, probably since it is practically impossible to turn off the crypto-world for as long as the internet exists. Regulators can only just focus on areas where they may be able to exercise some control, which is apparently 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 countries like Hong Kong. Since the Chinese ICO ban, many founders of cryptocurrency projects have been driven from the mainland to the town. Aurelian Menant, CEO of Gatecoin, said that the company received “a high amount of inquiries from blockchain project founders located in the mainland” and that there has been an observable surge in the amount of Chinese clients registering on the platform.
Looking slightly further, companies like Nvidia have expressed positivity from the event. They claim that this ICO ban is only going to fuel their GPU sales, as the ban will likely raise the demand for cryptocurrency-related GPUs. With the ban, the only method to obtain cryptocurrencies mined with GPUs would be to mine them with computing power. Therefore, individuals seeking to obtain cryptocurrencies in China now have to obtain additional computing power, as opposed to making straight purchases via exchanges. In essence, Nvidia’s sentiments is that this isn’t a downhill spiral for cryptocurrencies; in fact, other industries will get a boost as well.
In light of all commotion and debate surrounding cryptocurrencies, the integration of the technology into the global economies appear to be materialising hastily. Whether or not you believe in the future of the technology, or think that it is a “fraud… that may inflate”, the cryptocurrency rollercoaster is one worth your attention.