In a bid to control the rising power of cryptocurrency, China has banned its usage for corporate fundraising.
Text Lim Jun Xi
Bitcoin might be trending now, but Chinese users who want to hop on the bandwagon have their options severely limited, as China’s government last year began its crackdown on cryptocurrencies by banning initial coin offerings (ICO) in the country.
Cryptocurrencies are digital currencies stored in a secure, record-keeping Internet programme called a blockchain, and can be used independent of exchange rates and financial institutes like banks.
This lets users conduct digital transactions without fear of governmental prosecution or seizure of funds. ICOs are a way for companies, especially startups, to fundraise by giving out company cryptocurrencies in exchange for cash from investors. Much like stocks and shares, investors keep the coin, hoping it will increase in value as the company expands. However, ICOs are not regulated by financial bodies, leaving them open to abuse by scammers who collect funds and disappear.
Experts say that China’s ban on ICOs protects amateur investors who are blindly following the trend, hoping to get rich quick, but without fully understanding how these currencies work. Others say that this will severely stunt the popularity and use of digital ledgers and coin transactions in a market where e-payment and QR codes are widely embraced by the public.
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For more stories and photographs from this issue, see Asian Geographic Issue 129, 2018