BLOCKCHAIN WILL REIGNITE CHINA IN 2018

To understand why the Chinese government will restore crypto exchanges in the future, you have to understand why they banned them in the first place.

BLOCKCHAIN WILL REIGNITE CHINA IN 2018

Written by: Hongrui Shen

In September 2017, the Chinese crypto ban marked arguably the biggest obstacle the crypto space has ever encountered since its existence, with bitcoin losing 50% of its value. Chinese exchanges moved their servers overseas and investors flocked to Japanese exchanges. Only less than a week after, the Chinese government found itself to be shocked by how fast did the crypto market recover, and stronger than ever, and soon to realize banning crypto was a grave mistake. From September up to January of 2018, I have gathered enough clues to predict that China will be open arms to crypto in 2018 at the earliest, and here are the reasons.

To understand why the Chinese government will restore crypto exchanges, you have to understand why it banned crypto exchange in the first place. A common misconception of why Chinese government banned crypto was to prevent money laundering and tax evasions. I believe this is both far from the truth.

Tax evasion cannot be the root case either. In 2016, China had a tax revenue of 13 trillion yuan. more than enough money to build infrastructure and other services. I believe that the real reason China banned crypto was because it has threatened Chinese politicians’ soft spot and money generating machine – the stock market. Unlike what many believed, Chinese politicians’ wages aren’t as generous as western politicians, their wealth mainly comes from connections with domestic businesses and stock market manipulation.

With the population turning away from stock and into crypto, the stock market has become unstable, and in turn, hurt their interest. Well, then why politicians don’t put their hands into crypto to have a piece of meat as well? That is because crypto is new to them, and they have not figured the pattern, characteristics and behavior of this particular market. Make no mistake, Chinese government wants this piece of meat, but because they cannot control it, they banned it.

But how does this explain why china will reenable crypto trading? Like I said, China quickly found out banning crypto was a mistake, and are now taking strategies to influence the crypto market. The government backed VeChain, is an example. During the Korean crypto ban FUD, VeChain was one of the few coins unmoved from the negative market sentiment, and was actually 30% up. It was likely artificially pumped up to make Chinese crypto appear superior. The Chinese government was also known to subsidize and nurture its domestic businesses and don’t be surprised if VeChain is directly financially backed by the government.

Also, number of Chinese ICOs based on the NEO platform has increased in January. Take for example, The KEY and APEX ICO. This serves as evidence that China is trying to build up its own crypto space in competition with Ethereum based (ERC-20) ICOs. These are the steps taken by China so far, but we’ll have to wait and observe more actions to be taken in the future in order to make a conclusion for certian. But one thing is for sure, for Chinese politicians to make maximum utility of this Blockchain boom, the larger Chinese population has to be involved as well.