Don’t Underestimate China’s Power In Bitcoin
There has been a wealth of news of late about China and the Chinese authorities new position on cryptocurrency. In the shortest possible terms, the government want to totally ban cryptocurrency trading and investment and wish to stamp out the Bitcoin culture that has slowly built up in China. Whilst this could pose problems for companies like TRON and NEO, overall, the actual power China have here is being underestimated.
The international cryptocurrency community seem to be hiding from the facts. Many say that China canât just stamp crypto out and many more believe that if they do, the impact wonât be significant, however China are a very powerful nation and their intervention in cryptocurrency will be significant, whether they outlaw it or not.
We should consider Bitcoin mining for a start. A huge amount of Bitcoin mining takes place in China, if this is made illegal, mining pools and mining firms will be forced to close. With that, a lot of Bitcoin could be lost. Now of course, this could open up further opportunities for mining in other countries, but a sudden reduction in mining as a result of Chinese intervention would have an impact on the price of Bitcoin and of course, itâs circulating supply.
On the other hand, the sheer fact that so much mining already takes place in China could also cause a problem in the future, if the Chinese authorities decide to take advantage of this fact, according to blokt.com:
âBitcoin is designed in such a way that no single entity can have over 50 percent of the hash power on its network, which provides a majority authority over the blockchain. In practice, the Bitcoin network hasnât suffered an attack of this kind. But if China wants, it can easily influence its large mining pools and, in turn, the Bitcoin blockchain.â
Of course, it is unlikely, we wouldnât expect the authorities to take advantage of the network like this, mostly because we do believe mining pool operators would work to protect the network to ensure this canât happen. The simply fact the risk is there however means that we canât underestimate the power of the authorities here.
The general consensus is that globally, cryptocurrency will survive an onslaught from Chinese regulation and that cryptocurrency will rise from the ashes. The future is very bright for crypto, China or not. Itâs unfortunate that as it stands, China are unlikely to be a part of the crypto revolution, however letâs be wary and letâs all be aware that should they decide to do so, they could make things very difficult for the industry.