CHINA & CRYPTO

*Note: this article was written in early February! Just sharing!

THE GOVERNMENT

It is named the People’s Republic of China for a reason. However, it is NOT a democracy. China is arguably a communist state with many leanings towards capitalism in the last 30 years since opening up its market to the world in 1980s. With a population of 1.4 billion and GDP of $11.7 trillion, it is certainly a world power in any market. Its changes in demand certainly have huge effects on any industry, crypto currencies included.

Quick lesson: the “Chinese government” is the Communist Party of China which is composed of a few branches and the current leader Xi Jinping. Chinese citizens in general have a deep love towards the leadership and Xi, some call it “brainwashing/propaganda”. I call it strong management (how else do you manage 1.4 billion people?)

The government moves extremely quickly. Decisions are made and acted upon immediately.

New railway? Done.
New airport? Done.
Big meeting in Beijing?Close all bars for the week.
Too much pollution? Shut down factories.
Trump visiting Beijing, CNN broadcasting? Let’s clear the polluted skies.

No questions asked and nothing the citizens can do about it, as we can see in recent news in the past year on crypto currencies.

CHINA'S CONTROL OVER ITS $ (¥ actually)

The country has strict controls over its currency the RMB¥. Not only does China get criticism for controlling and manipulating its currency (Currently: ¥6.29 = $1) globally; but, there are also strict controls over personal money flowing outwards. There is a $50,000/year conversion limit to other currencies for cash for example.

With regards to crypto currencies, China bans it strictly for the above mentioned reasons. The government does NOT want money flowing outwards, and does not want to lose control over its currency. Decentralization is a big threat to the country.

CHINA & EFFECT ON CRYPTO MARKETS

China’s moves undeniably have a huge effect on the crypto markets. China is still estimated to stand somewhere between 20 - 50% of global crypto currency trade volume even after all the negative news surrounding China vs. Crypto.

Aug 2017 - Exchange Ban
Rating: Terrible
Limits access to trading, and has a profound effect on global outlook on crypto currencies.
Those who still want to trade will. But, it certainly slows progress. (Think: Prohibition USA)

Jan 2018 - Mining Ban
Rating: Not so bad
Not good for global view on China/Crypto.
But, Chinese mega miners are already moving out (like I said, there’s ways to do anything).

Feb 2018 - Foreign Exchange Ban
Rating: Whatever

This doesn’t mean anything. I personally always use a VPN and I can guarantee any traders from China are doing so too. Chinese can still access the websites. It’s just simpler people who don’t know of VPNs who cannot.

However, markets will still panic.

GLOBAL VIEW ON CHINA & CRYPTO

I’m going to summarize the global outsider view of China with: plain ignorance, lack of research, and blind belief. It is almost funny to me how outsiders talk about China.

Here are very common things I see in regards to China/Crypto:

“OMG! (INSERT COIN) is rumored to be partnering with Alibaba! To the moon!”
“It’s just Chinese playing whale games.”
“China is going to lift the ban on exchanges soon!”
“China is waking up! The markets are about to go crazy!”
“Jack Ma! Alibaba! Lambos!”

The Chinese government does NOT care about what you think. It will do what it chooses to do. China is NOT only Alibaba/Jack Ma. And NO, Alibaba certainly will not be partnering with any crypto currency openly without the blessing of the Chinese government. Even Jack Ma bows down to the Communist Party.

Do not ever make assumptions or believe what you hear about the Chinese government’s moves. Burn it into your minds that the Chinese government is more powerful than you can ever imagine. Trust me, I’ve been here a long time.

There was so much talk from people with blind hopes of China lifting the ban on crypto currencies and out comes this news of China banning foreign exchanges. STOP praying and believing with hopes of good news.
Learn to look at the entire situation objectively:

Trading/Price: Yes. China’s negative news affects prices very heavily. Remember that 90% of the people in crypto just want to make a quick buck and will bail out or jump in at any bad/good news. (I don’t blame them, I am trying to make returns too)

Long Term Revolution: Keep in mind that crypto currencies are the stepping stones to decentralization. The crypto industry is still very much in its early stages. The whole point of decentralization is that there is not anything any one government can do to stop it. That’s the whole beauty of it. Yes, there will be roadblocks along the way. And yes, this is all terrible for price/market/gains; but, in the long run these bumps in the road will only be a thing of the past.

WHAT TO DO?

It’s going to take a long time for markets to recover and get over this. Yes, the crypto industry moves very fast. But, many people who don’t understand will take a while to get over this fear. Remember that 90%+ of the market has no idea what they’re doing and just wants to make money on all this. Which is fine, but learn to play at a higher level than the rest of the market.

This may very well be the cheapest and lowest point for the crypto currency market for the rest of time. This low point might last weeks, might last months. But, realize that decentralization = governments cannot control it, they can only slow it down.

I hope you learnt something about China today. It isn’t just pandas, Jack Ma, Baijiu, and whale games.

Hold on and buckle up! It’s going to be a rough ride.

@CryptoGodfatha