In 2008 following the financial crisis, a paper entitled “Bitcoin: A Peer-to-Peer Digital Cash System” was printed, detailing the concepts of a payment system. Bitcoin was born. Bitcoin gained the interest of the world for its use of blockchain technology and as a substitute for fiat currencies and items. Dubbed the next best technology after the internet, blockchain offered solutions to issues we have would not address, or overlooked within the last few decades. I actually will not look into the technical aspect of it but here are some articles and videos that I recommend: How Cryptocurrency works
How Bitcoin Works Under the Engine
A gentle introduction to blockchain technology
Ever question how Bitcoin (and other cryptocurrencies) actually work?
Quickly forward to today, sixth February to be exact, authorities in China have just unveiled a new set of regulations to ban cryptocurrency. The China government have already done so recently, but many have circumvented through international exchanges. It has now enlisted the almighty ‘Great Firewall of China’ to dam access to overseas exchanges in a put money to stop its residents from carrying out any cryptocurrency transactions.
To know more about the Chinese language government stance, let’s backtrack a couple years returning to 2013 when Bitcoin was gaining popularity among the Chinese citizens and prices were soaring. Interested in the price volatility and speculations, the People’s Bank of China and five other government ministries published a state notice on December 2013 titled “Notice on Stopping Financial Risk of Bitcoin” (Link is in Mandarin). Several points were featured:
1. As a result of various factors such as limited source, anonymity and lack of a centralized issuer, Bitcoin is not an established currency but an electronic commodity that cannot be utilized in the open market.
installment payments on your All banks and financial organizations are not allowed to offer Bitcoin-related financial services or participate in trading activity related to Bitcoin.
3. All companies and websites offering Bitcoin-related services are to register with the necessary government ministries.
4. Due to the anonymity and cross-border features of Bitcoin, organizations providing Bitcoin-related services ought to implement preventive measures such as KYC to prevent money laundering. Any shady activity including fraud, playing and money laundering should to be reported to the authorities.
5. Businesses providing Bitcoin-related services should always educate the public about Bitcoin and the technology to it and not mislead the public with misinformation.
In layman’s term, Bitcoin is categorized as a virtual commodity (e. g in-game credits, ) that can be bought or sold in their original form and not to be exchanged with fiat currency. It are not able to be understood to be money- something that is a medium of exchange, an product of accounting, and a store of value.
Inspite of the notice being dated in 2013, it is still relevant with regards to the Chinese government position on Bitcoin and as mentioned, there is no indication of the banning Bitcoin and cryptocurrency. Alternatively, regulation and education about Bitcoin and blockchain will play a role in the Chinese crypto-market.
A similar notice was given on Jan 2017, again emphasizing that Bitcoin is a virtual commodity and not a currency. In September 2017, the growth of initial coin programs (ICOs) led to the publishing of a distinguish notice titled “Notice on Preventing Financial Risk of Issued Tokens”. Soon after, ICOs were banned and Chinese exchanges were looked into and eventually closed. (Hindsight is 20/20, they have made the right decision to ban ICOs and stop senseless gambling). One other blow was dealt to China’s cryptocurrency community in January 2018 when mining or prospecting businesses faced serious crackdowns, citing excessive electricity intake.