Contd…. previous post
Bitcoin worth just $150m last year, and speculations were that it will be used confoundedly by drug dealers and criminals to hide trade and resultant profits. And now it has reached $10bn, oh! God, there are politicians too in the list. It can be considered as personal risk when it comes to hide own money from being taxed because countries like China and India opposed it strongly as there is a huge degree of uncertainty that it might not last for long, and eventually start to collapse due to less faith in its complex uncertainty which can be result in another downfall in this current situation of economic crisis. And now due to its popularity, world’s regulators are confronting bigger issues to accept it, and there is no past to assist and understanding its impact is out of the book. Questioning here is lot easier than assessing its impact which has been left on the shoulders of the opposing and supporting bodies. The reason I have put opposing body first is because they question, and a most anticipated and convincing explanation is formed in response by the supporting body on assumption.
The reason behind the reversal in interest by China and India is because it failed empirically to support and forms a strong hypothesis to support its continuity in the long run. Adam Shapiro, director at Promontory Financial (consulting firm) says that its growth interest in Bitcoin has alerted governments to the risk that it could be used to elude more than just DEA.
Bitcoin does not use the conventional method of banking system but it functions across peer to peer network, and is capable of moving large amount of money across borders cheaply and most importantly anonymously.
In December 2013, china banned handling virtual currencies and suggested not to promote this but Beijing authorities said that individuals are free to purchase virtual currency but at their own risk.
Ken Lo, chief executive of ANX, a Hong Kong-based Bitcoin working on trading from inside China says: “Sometimes you have to read between the lines. If you’re doing something illegal, regulators will tell you right away.”
In the first week of Jan 2014, Taiwanese authorities stopped the planned installation of Bitcoin ATM, and directed that individuals should not use Bitcoin for transactions. South Korea also showed detest towards virtual money. However, Hong Kong couldn’t comment on this because it falls beyond their dominion.
ECB (European Central Bank) was one of the first banks trying to understand its impact and suggested that central banks should control its popularity and operations.
The Bank of England says “the current levels of economic activity and payments involving Bitcoin” are too light to have any impact on financial stability.
Mr Shapiro said it is the generosity of developed countries that they have given a chance to bring this innovation and prove public policy benefits.
Bitcoin re-opened in China encouraging yuan-to-bitcoin deposits claiming that everything investment is a risk and no central bank can avoid risk. Earlier in Dec People Bank of China stopped Bitcoin trading in china and warned them to close all trading by the end of Jan31, before Chinese New year.
Bobby Lee executive, BTC china opined that they can legally accept Bitcoin deposits in their corporate bank account and then transfer to customer accounts.
Shanghai-based BTC China stopped accepting deposits in Chinese yuan in December after the People’s Bank of China warned financial institutions not to sell or trade bitcoin. Government ministries told financial institutions dealing with bitcoin they must stop by January 31, the beginning of Chinese New Year holiday.
“We are definitely in compliance with the Dec. 5 memo, but the government and the government agencies can change the rules anytime in the future,” Mr. Lee told the WSJ by phone. “So we are going to take a wait-and-see approach.”
A top official at Estonia’s national bank said on Friday that bitcoin “is a problematic scheme” because no central banking authority can protect any risk.
“All risks are assumed by the user, who has no one to turn to for help,” said Mikhel Nommela, who heads up the national bank’s payment and settlement systems department.
The Russian Central Bank also discourages bitcoin use on the grounds it lacks government regulation, which therefore gives it “a high risk of devaluation”.
Please check – Mistakes From Satoshi Nakamoto in Developing Bitcoin.