Cryptocurrencies
Cryptocurrencies have, since their introduction to the market in 2009, had a significant impact on the way money flows in markets. One of the defining traits of cryptocurrency is its anonymity and its decentralized nature. The most popular and the widely used cryptocurrency being the Bitcoin. However, due to its anonymous and decentralized nature, there are fears by various governments that this currency is just what the drug cartels need to transact their illegal businesses without being traced. This paper gives a view of the post made on China’s plans to introduce a state digital currency.
The article begins by stating the position china held on the bitcoin trade. China, according to this article, accounted for 95% of the global bitcoin volume trade. However, since 2017, the country banned all trades concerning cryptocurrencies fearing a negative impact of these currencies on the financial market. The ban led to a severe drop in the Bitcoin value (6% drop). Contrary to the prohibition, China is planning to introduce a government-controlled digital currency.
According to this article, this move not only goes against the whole point of cryptocurrency of maintaining its anonymity and decentralization but also poses a threat to the current coins. The article further argues that the plan may not have a deleterious effect on Bitcoin and other popular currencies but may threaten the developing altcoins. Besides the negativities, the article explains that having a government-regulated cryptocurrency would increase the popularity of the digital currencies as the public would gain more trust in the currency. Lastly, the article discusses the apparent possibility of other nations following China’s example if the plan works of which Russia and Japan have shown interest too.
The article, although not explicitly, stated its purpose: to shine a light on the effects of introducing a national cryptocurrency on pre-existing decentralized currencies. The article served this purpose well since the points are clearly articulated. Any reader, even with the least knowledge of cryptocurrencies, would find the article interesting to read. The article begins by giving a summary of the position of China in the Bitcoin trade; the subheadings are brief enough to instill the urge to learn more.
In conclusion, this article offers great insight on both negative and positive effects of a centralized government-based digital currency. This article enlightens the people reading it since cryptocurrencies are gradually replacing the conventional currencies. Cryptocurrencies are becoming part of the daily life of people.
Reference
https://www.ig.com/au/trading-opportunities/what-if-china-releases-a-government-backed-cryptocurrency–180717