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. Because of this, BTCChina, one of 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 (along with 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 get over the recent falls. Josh Mahoney, a 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 going 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 as 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 is actually going on? Since China’s ICO ban, other world-leading economies are going for a fresh look into the way the cryptocurrency world should/ could be regulated in their regions. Rather than banning ICOs, other countries still recognise the technological great things about crypto-technology, and are looking into controlling the market without completely stifling the growth of the currencies. The big issue for these economies would be to figure out how to do this, as the alternative nature of the cryptocurrencies don’t allow them to be classified under the policies of traditional investment assets.
Some of these countries include Japan, Singapore and the US. Appreciation Token seek to establish accounting standards for cryptocurrencies, mainly in order to handle money laundering and fraud, which have been rendered more elusive because of the crypto-technology. Yet, most regulators do recognise that there seems to be no real benefit to completely banning cryptocurrencies because of the economic flows they carry along. Also, probably because it is practically impossible to turn off the crypto-world so long as the internet exists. Regulators can only just focus on areas where they may be in a position 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 number of inquiries from blockchain project founders located in the mainland” and that there has been an observable surge in the number 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 will only 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. As such, individuals seeking to obtain cryptocurrencies in China will have to obtain additional computing power, as opposed to making straight purchases via exchanges. Essentially, Nvidia’s sentiments is that is not 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 you believe in the foreseeable future of the technology, or believe that it is a “fraud… which will inflate”, the cryptocurrency rollercoaster is one worth your attention.