With the growth of Bitcoin and cryptocurrency as a whole, it was only a matter of time before significant countries began to take the necessary steps to control its influence and affect their economies. It should come as no surprise that the primary company to take this step was none other than China, given how much they value the amount of control they could flex over their economy. They’ve taken the step of banning the mining of new cryptocurrency within the giant nation, which adversely affected the value of bitcoin worldwide, which can only lead to people wondering how and why this happened and what it means for the future of online currencies.
The Domino Effect
There are many ways matters could go down with China taking these drastic measures. As mentioned before, China is a country that wants to have as much control over its economy as it can manage. What could be interesting is if and how other countries could follow China’s example and copy their methods of regulating cryptocurrency. Having this online currency outside the direct control of other countries can make these countries nervous and apprehensive at allowing the status quo to continue.
The Economic Effect
Considering the size and influence of China’s economy, it’s not at all surprising to see how much cryptocurrencies throughout the world lose nearly $190 Billion and drop 9% in value. Despite this, there’s no denying that cryptocurrencies are still precious, but as mentioned before, this all hinges on whether or not other countries follow suit in such policies. India is another major economy that is considering taking action as well. If two significant economies go down this path, it stands to reason that cryptocurrency value could take even more blows as a result.
It shouldn’t also be a surprise that the United States had decided to show its support for Bitcoin and other cryptocurrencies worldwide in response to this bold move. Senator Pat Toomey criticized China for its emphasis on economic restrictions within their country. One can only assume that America will seek to encourage and strengthen crypto-currencies for the opportunities it could provide the economy and ways it could inconvenience their chief adversary in China.
Not The First Strike
The actions that China Took on September 24th are not particularly surprising given the country’s past efforts in dealing with cryptocurrencies. In 2013, China banned Bitcoin altogether just when the idea of it was gaining traction by making a wide range of bans and regulations on cryptocurrencies. In 2017, it did everything possible to limit the concept’s influence over its economy.
There’s no doubt that China’s actions could have a ripple effect for other countries at a loss for approaching cryptocurrencies in the future, especially when coined as the currency of THE future. Whether that turns out to be the case remains to be seen, mainly because of the still-powerful influence of the American Dollar. We can only wait and see how events develop further due to China’s actions.