Although I do not expect this to be of any surprise to anyone, but it's a safe bet that some will be shocked by it. The governments do not like to deal with reality for what it is, and sometimes seem to not understand how "restrictions" pose as a great catalyst for "increased demand".
Is it just plain dumb? Or FUD for profit?
Just as it would be crazy for anyone to believe that the usage of cryptocurrency in China could be stopped, it would be twice as crazy to believe the Chinese government are dumb to the core!
Key reasons nations adapt to new business models
Tourist attractions - at a grand size, new technologies cause certain exposure that brings about neighboring or far-distant attention. While not limited to "technologies" in quotes, businesses, and nation-state developments all aid in attracting eyes.
The benefit of this is that the country will benefit from the value that flows from these visiting parties. Foreign currencies and non-internal value flowing in a country add greatly to its economic health.
This is where we can point fingers at El Salvador, as it is a great example of what effects adapting new technologies like "Bitcoin" in this context can cause.
Employment - easy guess? New businesses entail new vacancies for employment and there are clear economic-based benefits to this.
Increased Tax - with more businesses emerging, the government has more routes to collect taxes. The increasing investment incentive that comes as an effect of this creates room for more value flow to the government.
Allowing "Crypto assets and Blockchain" to grow within a country places that country in a spot for global eyes as more structures emerge upon the said network.
So Why did China ignore all that?
Nobody really knows, but we can make guesses of which many may point at the fact that the Chinese government wishes to have "control" over everything and crypto doesn't quite give much room for that.
One can also speculate that this was a FUD spread mechanism needed to give the Chinese opportunities to acquire network influence as prices of assets in the ecosystem fell.
To what expense? Losing out of having controlled about 70% of Bitcoin mining hash? Maybe the Chinese government understands there's more to crypto in the future than "mining" or maybe not?
Did the Chinese ban on crypto stop crypto?
The answer is NO! and this was expected!
Chainalysis’ director of research, Kim Grauer explains a billion-dollar market for China’s crypto industry to tackle - Bitcoinist
“There are informal crypto markets that are operating in a kind of a legal gray area. We’ve talked with merchants who are in Sub-Saharan Africa and Latin America who are purchasing goods from China, using cryptocurrency in this informal market capacity. We can see people within China are still visiting major centralized exchanges.”
Shocker? Not really! But the "Centralized Exchanges" part may be scary, but this is China, innit?
Historically looking at government policies and the effects it has had on product markets shows that "restrictions" sadly cause prices to increase thus allowing more value flow as demand drives up.
The growing popularity of p2p trading may play a huge role in continual crypto trades between parties in restricted locations. With the use of "Atomic exchanges" where trades can be facilitated without third-party involvement or the need for "centralized liquidities"
Regulations will fail, crypto ban will increase network value!
Regulations seem to be a hot topic these days due to the growing popularity of crypto assets and blockchain technology, and sadly we've seen even industry participants drawing silly opinions on how the ecosystem should be regulated, like seriously SBF? you think DeFi should be regulated?
Who are you with? Us or them? This makes me see for a fact that Bitboy may be onto something.
But all roads lead to a dead end, crypto assets are built in an entirely new system structure, one that only needs a few lines of code tweaked to beat regulations and network centralization. Though it will be fun to see them try and fail over and over again, at some point, it will just be sad because at the expense of these trials is a fast-growing technology which means a value lost on a large scale.
Thank you and please leave a comment, your thoughts matter to me