The saga of the cryptocurrency craze

What is a cryptocurrency? Cryptocurrencies are a type of virtual currency, reports BBC News. The currencies are not regulated by any official bodies, and instead are only accepted as payment for goods or services….

The saga of the cryptocurrency craze

What is a cryptocurrency?

Cryptocurrencies are a type of virtual currency, reports BBC News.

The currencies are not regulated by any official bodies, and instead are only accepted as payment for goods or services. Some have been developed with the help of established entities, although the majority of them are run from online “wallet” accounts, which receive payments directly from individuals.

Bitcoin, the most popular of the crypto-currencies, gained the name because it is based on the blockchain – a public ledger.

The price of a bitcoin currently sits at around $4,000.

Why are cryptocurrencies controversial?

Most of the currencies are traded on “entities” called exchanges, or cryptos, which are regulated. The peer-to-peer exchanges like virtual-currency trading site Darkcoin, Coinbase, IOTA and Swift Lite accept payments, as do Bitcoin Cash, Ether and Litecoin.

However, a number of these major exchanges have been banned in Nigeria and Pakistan this year. In Nigeria, the central bank also took steps in August to shut down platforms such as Acornswallet and BitPesa, adding: “To instil confidence in customers and maintain the integrity of the banking sector, it is incumbent on all licensed payment providers to vet their users and verify their identity through appropriate mechanisms, even for online transactions.”

What’s the attraction of cryptocurrencies?

Although some of the currencies have been criticised as too risky for use in transactions, the appeal lies in their perceived speed of transactions.

There’s also an added appeal to the fact that there’s no central authority overseeing the currencies. But many do believe that the meteoric rise of the currencies is driven by many investors speculating on the price.

What’s the government doing about the issue?

The Bank of China issued a warning on 5 November. It said: “Daily illegal and speculative trading activities are increasing with the rise of the crypto assets, causing market liquidity to dwindle and market price to rise.

“These activities will lead to capital flight and cause financial market instability. Cryptocurrencies are banned and can’t be used in payment facilities and also can’t be cashed out in China.”

Other people believe that the warnings could scare off many investors in cryptocurrencies. Before the warning, there had been a surge in transactions in the past week as many people converted their virtual currency into cash for better returns on their investments.

Read the full article here.

What the protesters have done

In July, a group of angry Chinese residents trashed five cryptocurrency exchanges in the Pearl River Delta region. One resident reportedly barricaded the office of an exchange in the city of Wenzhou. The city has several cryptocurrency exchanges, and some have come under fire for not being open to Chinese users.

In October, the head of a cryptocurrency exchange in Urumqi was fined $23,500 (£19,865) for violating local regulations.

Watch his sentencing here.

What the traders have done

Hong Kong-based cryptocurrency trader Thomas Flattery has not been deterred. He says he has established four trading platforms in China.

Read the full article here.

What the ICO organisers have done

In July, the Global Initiative to Globalize ICOs – a non-profit group – was set up by a number of technology companies, including Mastercard and Goldman Sachs. It aims to make it easier for Chinese investors to participate in the market.

Read the full article here.

What the investors have done

In July, web payments platform PayPal and bank software company Springfiled announced they would set up a cash-for-crypto exchange programme in China.

Read the full article here.

What the researchers have done

More than 120 researchers have identified the worst-performing companies. Half of the worst were connected to government agencies and related to mining or finding natural resources. Most were high-tech start-ups.

Read the full article here.

What the regulators have done

In October, Chinese authorities began to more than three dozen crackdowns on Chinese companies that have been, or are now, mining for cryptocurrencies. Although it wasn’t yet known how many companies were affected, many of the businesses had already deregistered themselves.

Read the full article here.

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