In 2008 following the money crisis, a paper titled "Bitcoin: A Peer-to-Peer Electronic Money System" was printed, detailing the ideas of a payment system. Bitcoin was born. Bitcoin gained the eye of the world for its use of blockchain technology and as another to fiat currencies and commodities. Dubbed the following best technology after the web, blockchain offered solutions to issues we tend to have failed to deal with, or ignored over the past few decades. I can not delve into the technical facet of it however here are some articles and videos that I advocate:
How Bitcoin Works Below the Hood
A gentle introduction to blockchain technology
Ever surprise how Bitcoin (and alternative cryptocurrencies) truly work?
Fast forward to these days, fifth February to be precise, authorities in China have just unveiled a brand new set of regulations to ban cryptocurrency. The Chinese government have already done therefore last year, but several have circumvented through foreign exchanges. It's now enlisted the almighty 'Great Firewall of China' to dam access to foreign exchanges during a bid to prevent its voters from winding up any cryptocurrency transactions.
To know a lot of about the Chinese government stance, let's backtrack a pair years back to 2013 when Bitcoin was gaining popularity among the Chinese citizens and prices were soaring. Concerned with the price volatility and speculations, the People's Bank of China and 5 alternative government ministries revealed an officer notice on December 2013 titled "Notice on Preventing Monetary Risk of Bitcoin" (Link is in Mandarin). Several points were highlighted:
one. Due to numerous factors like limited provide, anonymity and lack of a centralized issuer, Bitcoin is not a official currency however a virtual commodity that cannot be utilized in the open market.
a pair of. All banks and monetary organizations don't seem to be allowed to offer Bitcoin-connected financial services or engage in trading activity related to Bitcoin.
three. All companies and websites that provide Bitcoin-connected services are to register with the required government ministries.
- Due to the anonymity and cross-border options of Bitcoin, organizations providing Bitcoin-connected services ought to implement preventive measures like KYC to forestall money laundering. Any suspicious activity together with fraud, gambling and money laundering ought to to be reported to the authorities.
five. Organizations providing Bitcoin-connected services ought to educate the general public regarding Bitcoin and also the technology behind it and not mislead the public with misinformation.
In layman's term, Bitcoin is categorized as a virtual commodity (e.g in-game credits,) which will be bought or sold in its original kind and not to be exchanged with fiat currency. It can't be outlined as money- one thing that serves as a medium of exchange, a unit of accounting, and a store of worth.
Despite the notice being dated in 2013, it is still relevant concerning the Chinese government stance on Bitcoin and as mentioned, there is no indication of the banning Bitcoin and cryptocurrency. Rather, regulation and education concerning Bitcoin and blockchain can play a job in the Chinese crypto-market.
A similar notice was issued on Jan 2017, once more emphasizing that Bitcoin is a virtual commodity and not a currency. In September 2017, the boom of initial coin offerings (ICOs) led to the publishing of a separate notice titled "Notice on Preventing Monetary Risk of Issued Tokens". Soon after, ICOs were banned and Chinese exchanges were investigated and eventually closed. (Hindsight is twenty/20, they have created the right call to ban ICOs and stop senseless gambling). Another blow was dealt to China's cryptocurrency community in January 2018 when mining operations faced serious crackdowns, citing excessive electricity consumption.
Whereas there is no official clarification on the crackdown of cryptocurrencies, capital controls, illegal activities and protection of its citizens from financial risk are a number of the main reasons cited by specialists. Indeed, Chinese regulators have implemented stricter controls like overseas withdrawal cap and regulating foreign direct investment to limit capital outflow and ensure domestic investments. The anonymity and simple cross-border transactions have conjointly made cryptocurrency a favorite means that for money laundering and fraudulent activities.
Since 201one, China has played a vital role within the meteoric rise and fall of Bitcoin. At its peak, China accounted for over 95percent of the world Bitcoin trading volume and three quarters of the mining operations. With regulators stepping in to manage trading and mining operations, China's dominance has shrunk considerably in exchange for stability.
With countries like Korea and India following suit in the crackdown, a shadow is now casted over the longer term of cryptocurrency. (I shall reiterate my point here: countries are regulating cryptocurrency, not banning it). Without a doubt, we tend to can see more nations be a part of in in the coming months to rein in the tumultuous crypto-market. Indeed, some reasonably order was long overdue. Over the past year, cryptocurrencies are experiencing worth volatility unheard of and ICOs are happening literally each alternative day. In 2017, the whole market capitalization rose from 18 billion USD in January to an all-time high of 828 billion USD.
Nonetheless, the Chinese community are in surprisingly good spirits despite crackdowns. Online and offline communities are flourishing (I personally have attended quite some events and visited some of the corporations) and blockchain startups are sprouting everywhere China.
Major blockchain corporations such as NEO, QTUM and VeChain are getting huge attention within the country. Startups like Nebulas, High Performance Blockchain (HPB) and Bibox also are gaining a truthful amount of traction. Even giants like Alibaba and Tencent are also exploring the capabilities of blockchain to enhance their platform. The list goes on and on but you get me; it'll be HUGGEE!
The Chinese government have conjointly been embracing blockchain technology and have stepped up efforts lately to support the creation of a blockchain ecosystem.
In China's thirteenth 5-Year Set up (2016-20twenty), it known as for the development of promising technologies including blockchain and artificial intelligence. It conjointly plans to strengthen analysis on the appliance of fintech in regulation, cloud computing and massive knowledge. Even the People's Bank of China is also testing a prototype blockchain-based digital currency; but, with it possible to be a centralized digital currency slapped with some encryption technology, its adoption by the Chinese voters remains to be seen.
The launch of the Trusted Blockchain Open Lab as well because the China Blockchain Technology and Trade Development Forum by the Ministry of Trade and Information Technology are a number of the other initiatives by the Chinese government to support the event of blockchain in China.
A recent report titled " China Blockchain Development Report 2018" (English version within the link) by China Blockchain Research Center detailed the event of the blockchain business in China in 2017 including the varied measures taken to manage cryptocurrency within the mainland. In an exceedingly separate section, the report highlighted the optimistic outlook of the blockchain industry and the huge attention it has received from VCs and therefore the Chinese government in 2017.
In outline, the Chinese government have shown a positive attitude towards blockchain technology despite its enforcement on cryptocurrency and mining operations. China desires to control cryptocurrency, and China can get control. The repeated enforcements by the regulators were meant to shield its citizens from the money risk of cryptocurrencies and limit capital outflow. As of now, it's legal for Chinese citizens to carry cryptocurrencies but they are not allowed to hold out any type of transaction; hence the ban of exchanges. As the market stabilizes in the coming months (or years), we tend to will see undoubtedly see a revival of the Chinese crypto-market. Blockchain and cryptocurrency return hand-in-hand (aside from non-public chain where a token is mindless). Countries therefore cannot ban cryptocurrency without banning blockchain the awesome technology!
One factor we will all agree on is that blockchain remains at its infancy. Many exciting developments awaits us and right now is definitely the most effective time to lay the muse for a blockchain-enabled world.
Last but not least, HODL!