If there’s one thing we learned from the whole China banning Bitcoin debacle is that there is no country in this world that can kill Bitcoin. Sure, there can be regulations around cryptocurrencies in general, but banning Bitcoin is impossible.
Time and again we hear prominent figures (usually the bankers) say, ‘Bitcoin is a bubble’, ‘Bitcoin is fraud’, ‘Bitcoin will never work’. While these statement may dip Bitcoin price temporarily, it manages to bounce back to hit fresh all time highs every time. We have one website that keeps track of all the ‘Bitcoin Obituaries’. So far, Bitcoin has died 168 times!
Last week China came hard at Bitcoin with its ban on ICOs and then shutting down Bitcoin exchanges. Somewhere in between Jamie Dimon, CEO of JPMorgan called Bitcoin a ‘fraud’. This lead Bitcoin to briefly crash before rapidly soaring back to, and holding, the $4,000 mark.
Countries like Japan, South Korea and Hong Kong are benefiting from China’s recent ban. This just goes to show how far Bitcoin has come and how big it has gotten over the years that second largest economy’s crackdown on the cryptocurrency was shrugged off within a week.
Peter Van Valkenburgh, director of research at Coin Center, a Washington-based nonprofit research firm focusing on cryptocurrencies, sees positives in China’s knee jerk reaction. Valkenburgh said:
“The efficacy of any bitcoin ban is pretty dubious. It’s bullish because if a powerful government like China feels the need to ban major trading, then it’s a good indicator that the technology works and that it does what it’s supposed to. If it overcomes those controls, then it’s further proof that it’s independent from government controls, which is pretty radical.”
These bans have only created inconvenience for people, but hasn’t made it impossible for them to either trade cryptocurrencies or start an ICO. Those affected by the ban have been utilizing LocalBitcoins and even moving away from the state-controlled messaging app WeChat to Telegram.
So far the ICOs are concerned, projects can set up companies in countries where regulation on the sector is more lax, like Switzerland and Singapore.
Even after so many hiccups, the bitcoin network has been running without interruption for seven years now; something that no banking system can claim. Bitcoin and its underlying blockchain – an online ledger that records every bitcoin transaction – represent a fundamental innovation that can dramatically speed up transaction times.
Scaling is one issue that Bitcoin needs to work on. To put this into perspective, at this time, Bitcoin can only handle up to 3 transactions a second, whereas Visa can do thousands of transactions per second.
It is clear that China is no longer the powerhouse of Bitcoin as it once was, so changes in regulation have had less impact than they might have a few years ago. According to a report by Bitcoinity, Bitcoin trading against the Chinese currency has dwindled to 19 percent of total volume in the past six months, from about 90 percent last year.
The bounceback from such a negative hit where daily trading volumes from China plunged to half, indicates that there is not much in terms of real-world market pressure that can derail Bitcoin.