What China's Bitcoin Ban Means To Digital Currency!

cryptofy (50)in #china • 7 years ago (edited)

Storms have surrounded Bitcoin since its launching in the year 2009. The digital currency has been exposed to critique, hackers' attacks, regulation disputes and hit by numerous bans in various countries including China!

When China announced the ban, cryptocurrency market fell by 20% in value in a matter of days. While Bitcoin has since gained back its value since then, losing such a large market has caused disruptions in the digital coin markets!

Why the Ban?

Bitcoin is a cybernetic currency entirely self-run, meaning it cannot be controlled by any government, businessman or a principal authority. This decentralized currency that can’t be monitored appropriately doesn’t sit well with the Chinese authorities!

The Chinese government has excessive control over its citizens and their rights. So the thought of a currency that the government can’t control is something the authorities can’t allow. There has been the concern that the popularity and power of digital coins in the financial markets could potentially weaken the Chinese Yuan!

China banned initial coin offerings, ICOs and called on all local cryptocurrency exchanges to stop trading in cryptocurrencies. Besides, the country outlined guidelines to discourage bitcoin mining, which is the energy-intensive computing process associated with digital currencies!

The Motive of the Ban

The reason the government banned the digital currency is mainly to take the reins of the financial sector in China. There has been a crackdown for the last two years in the financial market to seal all the loopholes that may be exploited. Cryptocurrency has created a large shadow banking sector where investors can get unregulated loans and a way to move money outside Chinese borders creating outflows that the authorities are determined to curb!

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Impact of China’s Actions

The ban has greatly reshaped the digital currency industry. The move has driven up costs of transactions mining costs. China is home to some of the biggest mining firms in this sector. It has been a preferred location due to its cheap power, local chip-making factories, and inexpensive labor. The ban has had investors and companies looking elsewhere to move their businesses. Bitmain, which runs the largest Bitcoin mining, has moved setting regional headquarters in the U.S, Canada, and Singapore. Bitcoin exchanges and service firms linked to the coins have stopped over-the-counter shops in Hong Kong and other neighboring countries!

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Is Bitcoin Trading Allowed in China?

Bitcoin and coins can still be traded, but only over-the-counter markets; a slower process that some analysts say increases credit risk. Over-the-counter transactions are legal despite online transactions to have been banned, So if you already have your coins, you can sell directly to a buyer or use it as a payment method, whether in a physical retailer or done online!

The ban on digital currencies in China triggered more countries to take regulatory measures with some considering banning them. That is meant to bring sanity and control into the cryptocurrency market and to increase data security. The rising control of the Bitcoin across the globe explains why investors felt such heavy losses at the start of 2018!

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