by Rumours have been doing their rounds on various news networks claiming that China has banned Bitcoin.
This however, is incorrect.
The People’s Bank of China, and three of the largest exchanges in China—OKCoin, BTC China and Huobi—said on Monday that they haven’t heard anything about a ban from the country’s regulators.
China has not banned Bitcoin or any other type of cryptocurrency just yet. China has announced that they have banned cryptocurrency ICO’s but they haven’t ban Bitcoin or Bitcoin exchanges.
So What Are ICO’s And How Do They Work?
ICOs are otherwise known as Initial Coin Offerings. These are like IPOs which refer to Initial Public Offerings. IPOs are offerings that companies make by offering shares to potential investors.
ICOs refer to when companies offer a chance for investors to invest in a new cryptocurrency that often has a business related aspect. Companies accept Bitcoin for “cryptotokens”which function as shares in the company.
“Exchanges have been refunding customers who bought ICO tokens on cryptocurrency exchanges, so they have been working within the rules that are already in place,” explains BitCoinZar‘s Francois Harris.
According to Gizmodo.com, ICOs have raised close to $2 billion just this year.
So Why Has China Ban ICOs?
China hasn’t released an official statement, however there has been speculation that China may be planning to develop their own cryptocurrency.
Next month the country will also face a key communist leadership shuffle which could have influenced the decision.
However, Harris believes that China is ‘crying wolf’ again. “Since ‘wolf’ has been cried so many times, this time the market has not really reacted as it has every time China banned Bitcoin in the past.”
Although China makes up a large number of the Bitcoin community, this will not affect long term cryptocurrency exchanges.
How Will It Affect The SA Bitcoin Community?
“If China bans Bitcoin, it will drop the price as there will be uncertainty in the market, and some of the biggest exchanges in the world are in China, but I don’t think it will affect the supply and demand for bitcoin in South Africa,” explains Harris.
This is not the first time that China has threatened to ban Bitcoin and other technological aids. This has never had much impact on the rest of the digital world.
If China does in fact decide to ban Bitcoin, there will be a slight weakening of the cryptocurrency. However, this is expected to stabilize again very quickly.
Harris explains that although many things are legally banned in China, the citizens still make a plan to use them. “Users of Bitcoin in China would find a way to trade bitcoin doing over-the-counter trading, face to face trading, using anonymous exchanges, or using exchanges outside of China.”
Need a crash-course on Bitcoin? Read more here!
Long Term Prospects For Bitcoin?
Bitcoin will not be affected by China’s decisions. In fact, Bitcoin is in such high demand that the demand far out-weighs the supply.
If more countries decide to ban Bitcoin, this could have greater effects for the investors who are still using the online currency.
“Every month there are hundreds of thousands of new Bitcoin wallet accounts made on exchanges. The demand for Bitcoin is skyrocketing.”
For South Africans, now would be a great time to invest in Bitcoin as it has taken the biggest drop in months. Just yesterday (September,12) one Bitcoin was over R57 000.
In just one day, this has weakened to a measly R49 850.91 in exchange for one Bitcoin.
Cryptocurrency fluctuates like the wind blows, so while it’s weak, why not use those extra pennies and invest?
