Bitcoin is virtual cash having a P2P network and blockchain technology. There is a massive misconception amongst cryptocurrency enthusiasts that bitcoin can have a solo existence without blockchain. Blockchain can undeniably survive without bitcoin, but bitcoin is a technical projection on the blockchain.
In a nutshell, both peer-to-peer networks and the blockchain are exceedingly crucial to bitcoin. These technologies correspondingly assist bitcoin in achieving political freedom. You are familiar with the fact that China recently announced a cryptocurrency crackdown. The cryptocurrency crackdown banned cryptocurrencies like bitcoin and every other activity related to these cryptocurrencies. Such as bitcoin mining, trading, and many more.
Bitcoin trading and investing in bitcoin are some of the utmost profitable jobs at the instance. You can check websites like bitcoin circuit to make your bitcoin trading venture much more robust and productive. Below is an utter portion defining the impacts of the china cryptocurrency crackdown on the entire cryptocurrency marketplace.
Why did China ban bitcoin?
China was the capital of cryptocurrencies as there was ample trustable exchange in China, a bitcoin mining pool alongside bitcoin mining rigs manufacturers. However, despite such facts, China did ban bitcoin in the country.
As per robust sources, there were few crucial reasons behind the bitcoin ban in China. The foremost reason why China announced a cryptocurrency crackdown in China is the decentralization aspects of these coins. You are familiar with the fact that no organizations and third parties can control bitcoin or any other cryptocurrencies.
Due to the political freedom of bitcoin, the store value of bitcoin is very fragile, and several factors can affect the market value of bitcoin. In a nutshell, bitcoin is a very volatile currency, and to mitigate the probability of any financial risks, China decided to ban bitcoin mining.
Other reasons include the environmental toll of bitcoin mining, alongside massive electricity consumption due to bitcoin mining. All the more, China did ban bitcoin. And other cryptocurrencies to underline the existence of their centralized cryptocurrency or digital cash Yuan. Thus, China becomes the first-ever country to release digital cash by releasing Yuan.
Impacts of Bitcoin Ban in China
As mentioned ahead, bitcoin is a decentralized cryptocurrency, and factors like crypto regulation affect bitcoin’s store value to an exceeding extent. Here are some impacts of the bitcoin ban in China on the cryptocurrency marketplace.
The Decline in Market Value
Since bitcoin is politically independent, crypto regulation is one of the prominent factors that can affect bitcoin’s market value to an exceeding extent. For example, after the cryptocurrency crackdown announcement in China, the cryptocurrency market crashed the next day.
On the 18th of May, China announced a cryptocurrency crackdown, and on the 19th of May, the cryptocurrency market crashed. The cryptocurrency crash declined the store value of bitcoin by almost 30%. And it declined the store value of the second-leading cryptocurrency, ethereum, by almost 45%.
The fact that might amaze you is that the store value of bitcoin after the cryptocurrency market crash was just $30000, and the store value of ethereum after the market crash was $2200.
The Decline in Hash Rate
You are familiar with the fact that China was the capital of bitcoin mining. After the cryptocurrency crackdown in China, there was a sudden drop in the bitcoin mining hash rate. The prominent reason behind this fact was that bitcoin miners from china were not able to mine bitcoin units. The Bitcoin mining algorithm adjusts the difficulty of bitcoin mining based on several miners working on it.
All the more, it measures the difficulty of bitcoin mining in terms of hash rate. Since there was a massive drop in the bitcoin mining global china after the bitcoin mining ban in China, it was exceedingly easy to mine bitcoin units. In a nutshell, the bitcoin mining ban in China did profit bitcoin miners elsewhere to an exceeding extent.
According to some bitcoin mining plants, after the bitcoin mining ban in China, they were able to avail more bitcoin units without adding extra bitcoin mining rigs or hardware. However, the supply of bitcoin units remained the same. The mentioned portion demonstrates the impacts of the bitcoin ban in china on the cryptocurrency marketplace.