Connect with us
Blockchain Technology Future Blockchain Technology Future


Blockchain: Through the Struggle

 9 min read / 

Why have there been so many polarised views on Bitcoin and Blockchain? What does each country gain by putting up regulations? Is there an agenda behind these political strategies?

These are all questions people should ask themselves when investing and researching the potential repercussions of bitcoin and blockchain technology. What are individuals striving towards with this technology? Unity? It’s always a climb when trying to achieve something greater; nothing comes easy. Maybe war is a necessity before reaching unity, maybe not. The nation-states of the EU once warred for thousands of years, and now they’ve achieved something greater for their people.

So, is this the beginning of total economic warfare over the blockchain? This is not simply a trade war, and this is not to be taken lightly. In the cryptocurrency sector, it not only affects the two nations involved, but it significantly affects the entire world due to the nature of cryptocurrencies which are universally inclined. China is just one example of this: They have constantly manipulated their currency and since 2017 have let the Yuan appreciate 10% and “crush” the Dollar, as CNBC eloquently put it. Economic war comes in many more forms than just tariffs, and it’s taking a new form in the cryptocurrency space.

Bitcoin and blockchain are different in the sense that bitcoin is only a very small subset of what blockchain technology is capable of. Many hear that they should not invest in Bitcoin, and maybe that’s correct, but they do not hear much about other cryptocurrencies or what the blockchain inherently is. Blockchain technology has the potential to unite the world and is revolutionary in any economic sector one can think of.

However, Bitcoin is not. Bitcoin was simply the first cryptocurrency, but it won’t be the last, and it may not even be needed to continue societal advancement in this up and coming space. Many countries stated that they are putting up regulations against Bitcoin, and they are doing this to strategically manipulate the market. This has been seen on a smaller scale before in 2013 when there were little to no regulations in this market. People with significant wealth could sway the entire market and easily cause it to rise and fall as they wished. Many small investors would be overwhelmed. This is still happening but on a larger scale. Now we have entire countries manipulating the market.

Types of Blockchain Regulations

China has already done a number on the cryptocurrency market since September 2017.  First, they established a ban on their two biggest exchanges, OkCoin and Huobi, which caused huge fluctuations in the market. This happened just as the market was recovering from the Bitcoin Cash fork, and caused another nosedive that let large investors accumulate more Bitcoin as the price continued to decline. At this point, China was the country that mined the most Bitcoin by far, and also the country with the highest trading volume going through it.

In a more recent example concerning virtual currencies, the SEC Chairman’s testimony on virtual currencies reported their conservative support and agreed that it stimulated creativity and progression. They came to the conclusion that they would continue looking into the market and keeping it in check, but that it does serve a good purpose. The interesting thing to note here is that China released a statement, just a day after the SEC’s hearing, that stated that they will move to ban all cryptocurrency trading by banning foreign exchanges as well.

There is definitely some causation here. The blockchain is a new area, and when broad streams of income and taxation open up, governments are keen on holding and controlling these outlets. Virtual currencies are inherently more global than any given national currency and are treated differently in that sense; the country does not have total control over the circulation of the currency, so every country tries to do what they know best: to regain control of that currency. China and the United States are the two states both vying for control of this technology and this market.

Many people are suffering because of it, but it may not be the only reason. Among the two giants China and America, South Korea, Japan, and India are also using the market for their own gains. South Korea is also manipulating the market and using fear and uncertainty in their own way. Currently being the country with the highest trading volume, South Korea has numerously stated that it will ban and regulate cryptocurrencies as a whole. Not only that, but the unnatural price escalation at the end of December of last year has a lot to do with Koreans buying all cryptocurrencies, not just Bitcoin, at a very high premium. The price inflated and people were buying relentlessly. had to remove Korean exchanges from their listing because it caused too much miscalculation. Even now one will regularly see the Korean exchanges offer their currencies at a much higher price. Pair this with Upbit and the trading volume in Korea and it’s no surprise that prices were going up.

Japan is on the other side of the spectrum and has fully legalised cryptocurrencies and made Bitcoin legal tender. The fact that all of the banks in Japan also use the Ripple network cannot be overseen and this factor may not be coincidental in Japan’s enthusiasm for virtual currencies. Furthermore, everything can now be taxed. This may have even benefited Japan’s economy, but the forecasts are still hazy in this new space.

On a not entirely different note, other governments are looking to legalise cryptocurrencies, but not in the same way Japan has. It is still in its infancy, but governments are creating their own “national cryptocurrency.” The economic repercussions of this could be immense. It’s hard to predict what would happen, anything now would be an extrapolation, but Venezuela has a currency called ‘Petro‘. It is going through the same turmoil as the rest of the currencies and is definitely hurting the Venezuelan population. On February 22nd, the Venezuelan President Nicolas Maduro stated that all companies should accept Petro as if it is legal tender. Naturally, if one were living in Venezuela, they would flock to buying this currency now as the price will skyrocket. Wouldn’t this be great? A national virtual currency where all transactions are logged, no fraud can be done, and everything is open and in plain view. That would be an ideal use case for it, actually. However, it doesn’t always work that way. Petro was launched on February 20th, 2018, the President made his statement on the 22nd and by March 7th, Venezuelan lawmakers declare their own official, government-backed currency illegal. The birth and death of a national currency all within the span of half a month. If this experiment to launch a national currency lasted for longer, it could have had a devastating impact on the economy in Venezuela. And Venezuela isn’t the only country to do this, as Iran is also thinking about launching their own, as well.

Light at the End of the Tunnel

Apart from Bitcoin, in particular, governments are also looking at Blockchain technology as a whole, and its capabilities in different areas. India for example “embraces” blockchain, but does not deem Bitcoin as legal tender. China has taken a similar stance on the matter, but both countries still seem to be heavily invested in the cryptocurrency space. Let’s hope that something good comes out of governments embracing Blockchain because the technology does have the capacity for revolutionising education, finance, healthcare, and so many more sectors.

Many countries depend on Bitcoin for sustenance, such as Zimbabwe, which doesn’t have its own national currency. However, the rest of the world doesn’t seem to take into consideration this important fact. China, South Korea, United States, Japan, India, Venezuela, and Iran are all manipulating the markets in their own way to satisfy their political agendas without any thought as to what would happen to the rest of the world that depend on the cryptocurrency space or its technology to survive.

Many people think that cryptocurrencies are creating another 1%, and they are, but it is also distributing income and creating pathways for new sources of income for the underprivileged. Many of the investors in cryptocurrencies are those people in developing nations and by shutting down exchanges, banning currencies, or even publishing news about potentially shutting down this outlet of income, it will cause fear in the public, which naturally causes currency prices to drop. When prices drop, people lose their overall net worth, not just their portfolio value – although investing in the cryptocurrency space may seem like comfort for people in the well-developed areas where they can even develop a secondary source of income, for people in undeveloped areas, cryptocurrency is a store of wealth. Recent examples in India as it bans the 500 and 1,000 rupee bills have shown that trust in the government to regulate and administer currencies is diminishing.

In these countries, people are turning to a more stable version of currency, cryptocurrency, and most of their wealth is invested in this cryptocurrency. The people of Zimbabwe, who don’t have their own national currency due to hyperinflation, heavily invested in Bitcoin at the end of last year. They paid a 15% premium on Bitcoin, and Bitcoin first passed $10,000 on Zimbabwean exchanges. Imagine the emotion when they continue to watch their net worth fluctuate so heavily based on the whims of a few countries.

This is an economic war over the blockchain. It is against other governments, and it is against the people. It is still in its infant stages, however. Once more people value cryptocurrency and blockchain for what it is and what it could be, it has the potential for universal economic unity. It’s a massive step forward for mankind, but society will have to truck through all the mud and dirt that comes before it. Developing countries that have not stepped forward to recognise cryptocurrency and blockchain should do so. They should do so before others make the decision for them.

A world divided politically and economically can and will unite. Globalisation is inevitable. History has proven that time and time again.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend