Wednesday, May 27, 2020

Banned Bitcoins

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The bitcoin has been a hot topic across the board, from technology to finance, but it may now be losing momentum after it has shockingly been banned from China.

The Chinese central bank announced that trading bitcoins will be banned from Thursday onwards.

The virtual currency has been linked to a number of illegal online trades in addition to criminal activity such as drug trafficking, arms dealing and a number of other offences.

This, however, did not seem to be the main reason that trading of the virtual currency has ceased.

The People’s Bank of China revealed in a statement that they did not believe that the currency had any value as it is not backed by any financial institution, such as a central bank, and therefore could not be equated to other global currencies.

The bank also explained how these circumstances imply that the legality of the currency is also in question.

The PBC’s announcement also indicated that although bitcoins are not an official currency, the fact that they are anonymous and cannot be traced, in addition to being passed along with ease through USBs, they are a potential threat to the country’s capital control.

The bank did not ban the use of the digital currency to those who already possess bitcoins, which is a relief to many Chinese citizens as more than 2 million bitcoins were traded in the past month alone.

Analysts believe that this may be another reason that the currency was banned.

It is an attempt to regulate the use of a digital currency that is seemingly outside the control of large institutions, and is gaining more popularity and acceptance with each passing day.

Although the central bank did not ban the use of the bitcoin, it has stated that all institutions that use the digital currency in trade will have to register their businesses with necessary authorities.

According to Bloomberg, stock prices of the bitcoin dropped after the PBC made their announcement.

The stocks dipped below its $1,000 usual and lost around $20. The all-time high for the digital currency was slightly over $1,138 before the announcement.

It is expected that the volatile currency will continue to sink in the short-term, possibly stabilizing in the near future.

As it stands, a growing number of companies and institutions are now accepting bitcoins as a currency to be exchanged for cash at a time of their choosing.

Although digital currencies are notorious for being highly volatile, the success and high usage that the bitcoin has now become accustomed to does not seem to be at risk in the near future.

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