Around 2008 following the financial crisis, a paper titled “Bitcoin: Your Peer-to-Peer Electronic Cash System” was published, detailing the particular concepts of a payment system. Bitcoin was born. Bitcoin gained the attention of the world for its use of blockchain technology and as an alternative to correios currencies and commodities. Dubbed the next best technology following internet, blockchain offered solutions to issues we have failed to target, or ignored over the past few decades. I will not delve into typically the technical aspect of it but here are some articles and video lessons that I recommend:
- How Bitcoin Works Under the Hood
- A delicate introduction to blockchain technology
- Ever wonder how Bitcoin (and other cryptocurrencies Airdrops) actually work?
Fast forward to today, 5th February to be exact, authorities in China have just unveiled a different set of regulations to ban cryptocurrency. The Chinese federal have already done so last year, but many have circumvented thru foreign exchanges. It has now enlisted the almighty ‘Great Firewall of China’ to block access to foreign exchanges within the bid to stop its citizens from carrying out any cryptocurrency transactions.
To know more about the Chinese government stance, let’s backtrack a couple years back to 2013 when Bitcoin was gaining popularity among the Chinese citizens and prices were soaring. Concerned with the price tag volatility and speculations, the People’s Bank of China based online stores and five other government ministries published an official recognize on December 2013 titled “Notice on Preventing Personal Risk of Bitcoin” (Link is in Mandarin). Several points were definitely highlighted:
1 . Due to various factors such as limited present, anonymity and lack of a centralized issuer, Bitcoin will not be a official currency but a virtual commodity of which cannot be used in the open market.
2 . All bankers and financial organizations are not allowed to offer Bitcoin-related personal services or engage in trading activity related to Bitcoin.
3 or more. All companies and websites that offer Bitcoin-related services should be register with the necessary government ministries.
4. Due to the being anonymous and cross-border features of Bitcoin, organizations providing Bitcoin-related products and services ought to implement preventive measures such as KYC to prevent money washing. Any suspicious activity including fraud, gambling and capital laundering should to be reported to the authorities.
5. Establishments providing Bitcoin-related services ought to educate the public about Bitcoin and the technology behind it and not mislead the public by using misinformation.
In layman’s term, Bitcoin is categorized as the virtual commodity (e. g in-game credits, ) that are being sold or sold in its original form and not to be traded with fiat currency. It cannot be defined as money- a factor that serves as a medium of exchange, a unit of human resources, and a store of value.
Despite the notice being dated around 2013, it is still relevant with regards to the Chinese government pose on Bitcoin and as mentioned, there is no indication of the banning Bitcoin and cryptocurrency. Rather, regulation and education related to Bitcoin and blockchain will play a role in the Chinese crypto-market.
A similar notice was issued on Jan 2017, for a second time emphasizing that Bitcoin is a virtual commodity and not your currency. In September 2017, the boom of early coin offerings (ICOs) led to the publishing of a split notice titled “Notice on Preventing Financial Risk of Written Tokens”. Soon after, ICOs were banned and Chinese geneva chamonix transfers were investigated and eventually closed. (Hindsight is 20/20, obtained made the right decision to ban ICOs and stop senseless gambling). Another blow was dealt to China’s cryptocurrency community in January 2018 when mining operations challenged serious crackdowns, citing excessive electricity consumption.