The sudden announcement of inspections of major Bitcoin operators by the Chinese Central Bank caused panic and a significant drop in Bitcoin price within just a day.
In the past few days, Bitcoin has been shedding most of the gains of the end of 2016 and early 2017. These gains were attributed mostly to activities of Chinese traders who did huge volumes in the market, thereby singlehandedly increasing the global demand for Bitcoin.
One characteristic that the users of Bitcoin have always boasted about is the fact that the government cannot control or determine what happens in the Bitcoin world.
Considering the recent developments in China, one may wonder what aspect of the cryptocurrency is really beyond government influence.
No control, but influence
Aleksandar Matanovic of EC District tells Cointelegraph that Bitcoin itself cannot be controlled by governments. Matanovic explains that rather, it is companies working with Bitcoin that are usually affected by the activities of their governments of residence.
According to Matanovic, since exchanges are the places where Bitcoins are traded and its price is being determined, every action or decision by the government that affects such exchanges usually affects the price of Bitcoin too:
“Individuals can use Bitcoins freely among themselves and there is little governments can do about that. However, through regulations, they affect the usability of Bitcoin, which naturally affects its price.”
The second stage
Jeremy Epstein, CEO of Never Stop Marketing drives home his opinion by quoting the philosopher, Arthur Schopenhauer who says that new technologies go through three phases: first, they are ridiculed, second, they are violently opposed and third, they are seen as self-evident.
Epstein says that what we are seeing now in China is the second phase, which he describes as the struggle for ultimate “control” by the State. Epstein notes that Bitcoin represents a threat to the Yuan as a tool of control by the government. Therefore, they are violently opposing it using the force of the State.
“It may be rough and ugly for a while, but ultimately, I think they will have to bend.”
According to Epstein, it is an ironic twist that a decentralized technology that isn’t owned by anyone could be the single thing that forces China to change more than other countries’ foreign policy.