China is well known across the globe for its control over the mass media and the internet in general. Cryptocurrencies, on the other hand, are well known for their volatility and unpredictability, not to mention the anonymous, decentralised activity that they offer. Put the two together and it’s no surprise that the government aren’t too fond of unregulated cryptocurrencies within the country – but what does this mean for the cryptocurrency market as we know it? Could there be a future for the digital coins in China? We’re exploring deeper below.
What Is The Situation Currently?
In recent months, the situation in China regarding cryptocurrencies and ICO’s has been dominating the financial news. From the popularity of Bitcoin to the LTC price fluctuations keeping people on their toes, the excitement around cryptocurrencies in general isn’t one to be ignored, but the question is this: With China cracking down, could this attention be affected?
To understand the effect China could have on the cryptocurrency market, we first have to understand just what the ‘crackdown’ entails. In September of 2017, China saw a complete ban on ICOs. This involved putting a stop to all projects that were raising money via cryptocurrencies in order to cut out any fraudulent practices. With cryptocurrency exchanges also being banned that year, the following restriction on mobile apps and online platforms that allowed cryptocurrency trading has left China practically cryptocurrency-free. There has even been regulation introduced to stop cryptocurrency miners from mining and considering that China produces the highest volume of Bitcoin in the world, this could have devastating effects.
Of course, given its decentralised nature, people were still skirting around the bans by opting for overseas exchanges, and while authorities are attempting to end this practice, it’s still continuing. The initial restrictions came with fears that the upwards curve that Bitcoin was experiencing would plummet, but the curve did initially continue to rise, reaching highs of over $19,700. Unfortunately, with further talk of increasing restriction in China among other Bitcoin-related news, it did take a sharp plummet soon after, and now sits at around $7,000.
While China’s restrictions and regulations won’t destroy the cryptocurrency market completely, it’s becoming clear that investors are already searching for alternate currencies to put their money into instead. To make matters worse, with the likes of India and Korea set to follow suit and regulate the cryptocurrency industry in the future, we could see the market changing significantly.
So, What Happens Next?
While it’s unlikely that China will lift the restrictions anytime soon, they haven’t bypassed the cryptocurrency craze completely. In fact, while the currency itself isn’t widely accepted, the blockchain technology that the cryptocurrencies work on is something they’re looking to utilise to its fullest.
In fact, blockchain has appeared in China’s 13th Five-Year Plan (2016-2020) which promised the development of innovative technologies including blockchain, artificial intelligence, and plenty more that could shake up China’s already flourishing industry even more. On a consumer level, the People’s Bank of China is also testing blockchain-based cryptocurrencies, though of course these will be regulated and centralised.
The future of blockchain technology within China is a bright one, but the fact of the matter remains as this; China’s crackdown on cryptocurrencies has the potential to devastate the industry, but whether it will or not is just as unpredictable as its price.