BEIJING – The cryptocurrency market has returned to the world agenda this week, all due to Chinese President Xi Jinping’s announcement about blockchain.
Prices for the world’s leading digital currency – bitcoin – rose more than 40 percent after the Chinese president stressed the importance of blockchain technology and announced that the Asian giant should advance the development of the sphere in question.
“We should see blockchain as a major breakthrough for independent technology innovations. We should determine the main direction of its development, increase investment and focus our attention on the most important technologies, accelerating blockchain development and industrial innovations,” said the Chinese president.
Taking into consideration that the Chinese government banned the use of cryptocurrencies in 2017, the Chinese official’s speech took many people by surprise. Following President Xi’s remarks, the value of the world’s best-known cryptocurrency soon surpassed $10,000, recovering the devaluation suffered days earlier.
In favor of blockchain, but against cryptocurrencies
China bans cryptocurrency, but welcomes the opportunities offered by blockchain technology, actively investing in its development, Bloomberg reports.
It is therefore important to bear in mind that the Chinese government clearly makes the difference between the technology that makes digital currency production possible and the cryptocurrencies themselves.
What is the reason for the growth?
The rapid growth of cryptocurrencies is related to the entry of major players in the market should not be excluded. Many institutional investors have repeatedly expressed plans for investing in digital currencies, particularly bitcoin which will remain the main cryptocurrency in the market.
Capitalization of the virtual currency market declined approximately fivefold in 2018.
China then became a major monopolist, because it had a large base for the use of digital currencies and cheap electricity, an indispensable requirement for obtaining a large amount of cryptocurrencies.
It is noteworthy that transactions made with cryptomedia using blockchain technology in China cannot be anonymous, which increases transparency.
Another major advantage of cryptocurrency for China is its cost of maintaining it, which is lower than the issuance of cash, meaning that with your help you will be able to make international transactions faster and cheaper.
The idea is to create unmonopolized and regularized money in the market, being a very effective tool for establishing financial controls.