Nothing like a fresh announcement from the People’s Bank of China on a Monday afternoon. In case, like me, you are not exactly fluent in Mandarin, let me Google Translate. The above message, and the text that follows it, basically says: ICOs are banned in China retroactively and effective immediately.
In September, this news rocked blockchain exchanges everywhere. Prices began to drop a like fly after a surgical swat. People were running around in the streets in complete panic (Okay, so maybe it didn’t go that far). The point is: there was chaos across blockchain communities around the globe. The price of Ether, the currency of preference for many ICOs, went from yesterday’s high of $365 to $290 within hours. Currently, it is hovering around $280 with quite a bit of downward pressure.
We’ve been here before. A few months ago, China began an investigation into cryptocurrency exchanges and forced Chinese exchanges to prevent the withdrawal of funds stored on exchanges. They did this with little to no warning other than calling an emergency meeting with the heads of exchanges the day before. Within a few hours of the China investigation news and blockade to crypto liquidations, prices of the major cryptocurrencies slipped 10–20% across the board due to market fear. The gossip was: “China is clamping down and might ban Bitcoin and other cryptos for good”.
From there, over the course of a few weeks or so, the price recovered and rallied. The price has since more than tripled. The reason? Government regulations and institutional mandates can’t actually stop the flow of value on highly decentralized and public blockchains like Bitcoin and Ethereum in any country. The blockchain knows no borders.
When Proof was started, one of it's biggest focuses was on extending the power of the blockchain, further than speculative cryptocurrencies and nascent smart contract capabilities. Furthermore, the goal was to further limit the effectiveness of government authorities to impose restrictions to individual financial sovereignty and freedom. When we put property on the blockchain, and then commercial paper… and then as thousands of Proof users began to upload equity, their own community currencies, bonds and more, our visions of decentralized economies around the world slowly began to become realities. Yesterday, when we heard the announcement about the People’s Bank of China’s outright ban on token sales (also known as ICOs), our resolve was greatly strengthened. This is why we’re doing this. Sometimes, you can get so wound up in the development/token sales/marketing and community engagement. Even yesterday, Korean exchanges froze trades for hours during the massive price declines with no announcements, leaving Korean residents with little to no access to their funds. This is why we’re doing this. Reminders are great. This centralization things has gotta go.
While China can imprison its citizens for starting ICOs, they cannot, without permission (or an owner’s private key), confiscate or freeze people’s funds stored on the blockchain (when those funds are held outside of centralized crpyto-exchanges), as they most certainly do when funds are stored in traditional bank accounts.
As platforms further decentralize and become immune to IP blocking and government censorship with the introduction of peer-to-peer Desktop applications, laws like the ones passed in China will further lose relevance. The desktop apps are open-source and protect anonymity, allowing people to create and transfer financial assets backed by things like houses, company shares and fiat without intermediates, with decentralized mechanisms of underwriting and staked risk signalling, garnering similar results that we see today from investment banks and rating agencies.
There will be many more ICOs in the future that issue tokens. Burger King just released their own tokens in Russia, and more companies and brands will follow suit. While centralized exchanges will be closed by governments, hacked, corrupted, and so on, there are decentralized ones like EtherDelta today, and ones like EthFinex and Proof V1 coming soon to replace these aforementioned centralized exchanges, giving people (and not centralized websites/organizations) control of their trades, financial assets, and liquidation events. China has only done blockchain a favor by outlawing ICOs. They will only prove that the second most powerful government in the world does not have the ability to restrict blockchain adoption and the side economies emerging. Neither will the most powerful government in the world.
#egreenbacks #cryptocurrency #blockchain