Cryptocurrency Falls Sharply as China Banned ICO’s:
China shocked the cryptocurrency world by banning ICO ( Initial Coin Offering) & declaring the practice of raising capital cash investment by initial coin offering illegal. A joint statement was made by seven Chinese government agencies including PBoC (Peoples Bank of China ). China securities regulatory commission & the china banking regulatory commission, which stated all companies & individuals are banned from raising funds through ICO’s.
This declaration caused the crash in cryptocurrency especially ethereum & bitcoin. Ethereum was sharply crashed at the fall of almost 20% on the day at $283. Bitcoin was also down 8 % . its market capital value crashed by 10%. The price of bitcoin fallen bellow $4400 mark.
Earlier it was speculated that Bitcoin will touch $5000 mark within few weeks but the ban on ICO’s has crippled that expected growth. ICO means Initial Coin Offering, it is an unregulated mean to raise the funds for new cryptocurrency venture .in an ICO campaign, a percentage of cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for bitcoins also known as ‘Initial Coin Offering’.
These coins are reffered to as token & are similar to share of a company sold to investors in an IPO transaction . if the money raised doesn’t meet the minimum funds required by the firm , the money is returned to the investor & ICO is deemed to unsuccessful. If the fund requirement is met within the specified time frame, the money raised is used to either initiate the new scheme or to complete it. Ethereum is the most popular cryptocurrency platform to use when hosting an ICO. It’s blockchain allows people to write ‘smart contracts’ that will release new tokens to investors when a certain amount of ether, the digital currency that powers Ethereum, is received. this either can be converted into dollars or other fiat currencies. In ICO the investors are generally motivated by the hope that the plan would be successful & will translate to higher value crypto coin & will generate huge profit for them.
Cryptocurrency was expected to grow positively & may even have got boast through the initial coin offering, but banning of ICO & declaring the practice of ICO illegal has just turned the tide negatively. This ban will make it difficult to invest in cryptocurrency for the main land Chinese population.
China is the most populous country, second largest economy & one of the most influenceable super power. so this decision & action will have global wide spread reaction for at least this week. It will also matter that how the markets & investors world wide especially American react to this decision. This will tell & would later decide confidence & trust over crypto currency which is already very volatile market to invest & at the same time gives a glimpse of futuristic currency system which will be completely decentralized & would be based upon blockchain technology.
The whole notion of trading on cryptocurrency is based upon the trust, value based currency model & future potential. It would be interesting to see how other countries will respond to the cryptocurrency following the ban on ICO by the communist Chinese government. China has its own plans to develop cryptocurrency based on blockchain but would be regulated & centralized which make awkward because cryptocurrency was meant to be decentralized Already the majority of a market are down because of North Korea ‘s hydrogen bomb test & rising tension between North Korea & USA with speculation of some serious consequences.
That was it if you have any queries feel free to comment them down below!
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Article by Rohit Sangale