Bitcoin is Back After China’s Ban — But Worse
Last year when China banished cryptocurrency, experts believed that the market was doomed to crash. It didn't. The twist was that China’s crackdown wasn’t a total crackdown. Although mining was prohibited in China, the miners moved operations to other countries.
Meanwhile, loose regulations have allowed DEX (Decentralized Bitcoin Exchanges) bitcoin transactions to take place. The primary consequence, though, is the precedent it set into motion for eight other countries that replicated the Chinese ban.
Before its effort to curb cryptocurrency, China took pride in using solar, wind, hydropower, and other renewable energy to fuel bitcoin mining. This facilitated a step in a green direction. Unfortunately, miners migrated to Kazakhstan and the United States only to use coal and fossil fuels after the ban. Rather than keeping crypto clean, China encouraged its miners to move to countries that still use dirty methods.
Cryptocurrency, while volatile, can serve as an indispensable tool for impoverished countries. By revolutionizing banking transactions, it has lifted millions out of substandard conditions. Remittances or family payments traditionally given to low-income individuals also use crypto-currency. Sadly, seven countries, including Morocco, Algeria, and Tunisia, have followed China’s ill leadership with a full ban on crypto. With the ban, poorer nations cannot reap the benefit of cryptocurrencies and alleviate economic despair.
Although Chinese regulations have been somewhat ineffective, the methods to bypass the ban can be tedious. DEX platforms allow active bitcoin users in China to trade freely. Because of this, the market hasn’t completely plummeted. However, using DEX platforms requires more technical skill that discourages casual investors. Many people are also deterred by the potential punishments codified by the authoritarian government. Overall, the ban didn’t stop investment altogether, but it ended informal investment.
What Does This Mean for the Future:
A ban is not the solution. As the United States looks toward regulatory approaches, it must learn from China’s mistakes. Making crypto green should be America’s primary priority. But environment aside, an American regulation on crypto-currency will encourage underprivileged nations to regulate rather than ban. After all, bitcoin may be the key to banishing poverty. Regulations also must be tight. China taught us that off-shoring and remote operations could easily prosper behind governmental oversight.