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. Due to this fact, BTCChina, one of many largest bitcoin exchanges in China, said that it would 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 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 could cryptocurrencies can recover from the recent falls. Josh Mahoney, market analyst at IG comments that cryptocurrencies’ “past experience tells us that [they] will likely 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 Dutch ‘tulip mania’ of the 17th century, recognised as the world’s first speculative bubble)… that may blow up”. He goes to the extent of saying that 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/ can be regulated in their regions. Rather than banning ICOs, other countries still recognise the technological benefits of crypto-technology, and are looking into controlling the marketplace without completely stifling the growth of the currencies. The big issue for these economies would be to figure out how to do that, because the alternative nature of the cryptocurrencies do not allow them to be classified beneath the policies of traditional investment assets.
Many of these countries include Japan, Singapore and the US. These economies seek to determine accounting standards for cryptocurrencies, mainly as a way 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 seems to be no real benefit to totally banning cryptocurrencies due to the economic flows they carry along. Also, probably because it is practically impossible to shut down the crypto-world so long as the internet exists. Regulators can only focus on areas where they may be able to exercise some control, which is apparently where cryptocurrencies meet fiat currencies (i.e. the crypto currency exchanges).
While cryptocurrencies appear 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 already been driven from the mainland to the town. 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’s 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, because the ban will likely increase the demand for cryptocurrency-related GPUs. With the ban, the only method to acquire cryptocurrencies mined with GPUs is to mine them with computing power. Therefore, individuals seeking to obtain cryptocurrencies in China will have to obtain more computing power, as opposed to making straight purchases via exchanges. Essentially, Nvidia’s sentiments is that isn’t a downhill spiral for cryptocurrencies; in fact, other industries will receive 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 later on of the technology, or think that it is a “fraud… that may blow up”, the cryptocurrency rollercoaster is one worth your attention.