Bitcoin has tail-spinned for the second time in two weeks on the back of revelations of Chinese moves to close down local bitcoin exchanges on Chinese territory. Markets reacted in the usual fashion with BTC falling to just under $4400 within a few hours of the first hints of this move emerging from China.
Some analysts have been warning that various Chinese initiatives in relation to cryptocurrencies and crypto-related technology – including their recent ban on ICOs – are indicative of the more general direction that governments elsewhere can be expected to take.
However, tellingly, so far no official announcement appears to be forthcoming from the Chinese authorities. Several media outlets, including CoinDesk have quoted Chinese media sources on the subject but no specifics have as yet been provided by any source, Chinese or otherwise.
Markets Don’t Do Perspective
China’s aversion to citizen anonymity may be one driver behind recent trends in its general posture towards Bitcoin. However, another hypothesis may also hold here according to which Chinese authorities are doggedly fighting a growing phenomenon of sophisticated money-laundering techniques organised by criminal networks largely operating out of Shanghai territory.
This may explain the very specific focus on local Bitcoin exchanges and the relatively low key posture of the Chinese government in the affair. National Bitcoin exchanges exercising the standard KYC-compliant procedures appear, at the time of writing, not to be concerned by any of these moves.
Regardless of the specific nature of these recent moves, there is a persistent feeling within the cryptocurrency community that any formal admonishment of Bitcoin by a dominant world power could spell the beginning of the end of the currency for generalised mass-adoption. The currency may be approaching its tenth birthday but has so far largely been an instrument for speculative investment with little practical value. .
Bitcoin’s real value, however, as an anonymous, borderless platform for exchange of its token’s value, however, is likely to endure in some format regardless of external factors. Its peer-to-peer nature will likely also mean that even concerted, co-ordinated attempts by government to regulate or ban its use will likely prove unsuccessful.
China’s posture, however, has been underpinning a general feeling of government ambiguity that ultimately limits Bitcoin’s appeal to the traditional retail sector which continues to represent an obstacle to general mass adoption.