{"id":114443,"date":"2021-06-24T11:05:20","date_gmt":"2021-06-24T05:35:20","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=114443"},"modified":"2021-06-24T11:05:20","modified_gmt":"2021-06-24T05:35:20","slug":"why-is-china-targeting-cryptocurrencies","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/why-is-china-targeting-cryptocurrencies\/","title":{"rendered":"Why is China targeting cryptocurrencies?"},"content":{"rendered":"\n

Synopsis:\u00a0<\/span><\/b>Bitcoin has fallen below $30,000 for the first time in more than five\u00a0months. This\u00a0is because of China\u2019s crackdown against cryptocurrencies which are not sanctioned by China.<\/span>\u00a0<\/span><\/p>\n

What has China done?<\/span><\/b>\u00a0<\/span><\/h5>\n
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  • China has asked banks\u00a0<\/span><\/b>and online payment firms not to offer any crypto-related services, such as account openings, registration, trading, clearing, settlement and insurance reiterating the 2017 ban.<\/span>\u00a0<\/span><\/li>\n
  • Moreover<\/span><\/b>, China has also asked Banks and payment companies to step up monitoring of money flows involved in cryptocurrency\u00a0trading and\u00a0coordinate more closely in\u00a0identifying\u00a0such risks.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
    Why has China taken action against cryptocurrencies?<\/span><\/b>\u00a0<\/span><\/h5>\n
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    • To crackdown on Crypto Mining:\u00a0<\/span><\/b>China accounted for around 65% of global Bitcoin mining operations in 2020 with Sichuan province rated as its second largest producer.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
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      • Role of Bitcoin Miners<\/span><\/b>: Bitcoin miners play a similar role to gold miners \u2014 they bring new Bitcoins into\u00a0circulation.\u00a0They\u00a0get these as a reward for validating transactions which require the successful\u00a0computation\u00a0of a mathematical\u00a0puzzle. And\u00a0these computations have become ever-increasingly complex and therefore energy-intensive in recent\u00a0years. Huge\u00a0mining operations are inevitable if one is to mine Bitcoins.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
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        • To stop access to cheap electricity:\u00a0<\/span><\/b>Access to cheap electricity has made mining lucrative in\u00a0China. In\u00a02020, China accounted for\u00a0two-thirds\u00a0of the total computational power last year.<\/span>\u00a0<\/span><\/li>\n
        • To stop Illegal activities:\u00a0<\/span><\/b>Cryptocurrencies bypasses official institutions and the anonymity that it offers makes it a flourishing business for illegal activities.<\/span>\u00a0<\/span><\/li>\n
        • To avoid Financial Risk:\u00a0<\/span><\/b>Bitcoin and other cryptocurrencies cannot be traced by a country’s central bank making them difficult to regulate. Hence, China has\u00a0acted\u00a0on cryptocurrencies to prevent and control financial risks.<\/span>\u00a0<\/span><\/li>\n
        • To launch its own Digital Currency:\u00a0<\/span><\/b>China is planning to introduce its own digital\u00a0currency.\u00a0Its\u00a0aim is to allow China to conduct transactions in its own currency around the world reducing dependency on the dollar which\u00a0remains\u00a0dominant internationally.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

          Source:\u00a0<\/span><\/b>The Hindu<\/span><\/b><\/a>\u00a0<\/span><\/p>\n

          Cryptocurrencies in India<\/a><\/p><\/blockquote>\n