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China Bans Bitcoin Exchanges

For a while now, we have been hearing that the Chinese exchanges are where the money has been flowing in to Bitcoin from. The price has been surging up at a very fast rate, and it has been raising mostly during periods where it is day time in China. Today, however, we got a piece of information that has caused quite a blow to the Bitcoin price, although we are still doing decent compared to where we were even a month ago. So what was this information that was given and what does it mean for the future of Bitcoin?

It has been declared that it is now illegal for Bitcoin exchanges to allow people in China to sell their coins for fiat. This was stated as being due to different risks involved, although it is not clear what risks are being mentioned. But because of this situation, we have lost a very large section of our Bitcoin investors, at least for the time being.

What the government said is pretty much that Bitcoins can be mined and utilized, but that they can not be exchanged for fiat. So as long as people are using them to buy or sell items but are not involving cash with the transaction, they are completely safe. In essence, they are trying to put the Bitcoins in to a state where they are more like tokens; they have value because we are willing to buy and sell items for them, but past that they are worthless. But wait a minute… is that not how the Bitcoins are already valued? Well, it is, but the difference is that we can still trade our coins for cash when it is needed, whereas that is not allowed in China any longer.

It is undeniable that China represents a lot of the world's economy. They are where we import most of our items from, and they are also the people who loan the United States most of its money. This means that getting them on board with the Bitcoin system is pretty much a necessity if we are planning to boost their value and keep the values up. With them off board, we are relying solely on the smaller areas of the economy to help take up for them. How well this is going to work is unsure at this point, but as we are seeing with the Bitcoin prices already, this has caused a pretty big dent.

I think that as our own government starts to come up with rules and regulations surrounding Bitcoin, that we will end up bringing China back in. One of the biggest problems at this point is that, despite being many years old, Bitcoin and crypto currencies in general are still pretty new. I can not even imagine how much time it took to create the rules we have for our fiat money, and now we are running in to the same situation with the Bitcoins. It is going to take a long time, and it is a somewhat scary area for those that are holding them because there is no telling how the government is going to regulate them and how that is going to affect things. For example, one of the purposes of using Bitcoins and other currencies is that they are somewhat anonymous. Part of the regulation could easily outlaw that aspect and make them much more transparent, which goes against what Bitcoin is and what it stands for. Furthermore, they could also work towards putting the power of Bitcoin and exchanging in to the power of the banks.

I am not against the regulation of Bitcoin or anything; I just hope that it is handled in a good way. Bitcoin is an awesome concept and it is showing that it is really a viable system, but it requires the government to see the same potential and not to try and exploit or destroy that. Depending on how it is all handled, Bitcoin could easily end up becoming a useless currency aside from being something we can trade over the counter to one another, without any type of centralized exchange. This is far less than preferable, and most are in the same boat as me in hoping that this is not what ends up happening. What we need is a median between regulation and freedom with the coins. Should the regulation take in to consideration what we are going for as well, I think it could help strengthen the currency even more, really ramping up its viability in the real world. Our government actually backing the crypto currencies would be a huge thing and should definitely have a positive impact. It could lead in to other countries taking a similar stance as well, boosting the value all around!

As it is right now, we have to just sit around and hope that the other traders will account for the losses that we are experiencing due to losing China's support. If this happens, we can continue on our surge up the hill and more boosts in value, but until then we can consider this as being like a trough. It is more than likely just going to end up being yet another blip on our radar and we are going to pull away from this.

Bitcoin | News


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