China Official Media: We Can't Ban Bitcoin, We Want To Regulate It
In a quite long piece written a couple of days ago, one of the official media of China, people.cn, described what looks to be an explanation of the latest rumors about PBOC planning to shut exchanges.
I don't know Chinese and the article was translated with Google Translate so it may sound a bit woody at times. But I think the main idea is that China doesn't really want to impose a war on Bitcoin (which would have been impossible) but to extract as much economical value out of it.
The first paragraphs of the article try to explain the government strong position on ICOs:
A simple way to understand ICO is to compare with an IPO. The company's IPO is through the issuance of equity financing, investors pay the legal tender (RMB), access to the company's equity, the company's future profits have a certain share. And ICO is the investor to pay the passage of the encrypted currency, (usually Bitcoin or Taitong currency), then the company issued a new encrypted currency (tokens).
Token has two roles: one is the application of the currency, can be used to buy the company's goods and services. This effect is similar to the game currency, with a game currency can get part of the game function. It is because of this application function, so most ICO projects are associated with the block chain project, because the block chain project is relatively easy to produce virtual currency can be applied. The second is that some of the ICO issued as a currency of interest, the company's future profits have a certain share of the right.
These two paragraphs, as convoluted as they are, are stating a very simple thing: with an ICO, you should invest in the future economical value of an enterprise, not in a token with no economical value, which "appreciates" only through speculation.
When a commodity investment properties over its commodity properties, it is likely to form a bubble, bring great risks. The 15th century Dutch tulip event is a good example. In the present circumstances, regulators have observed the possibility of bubble formation, quick shots, with severe means to suppress the possible bad situation, to avoid greater risk occurs, is very timely and effective.
This is also quite self-explanatory: when speculation is the main way to extract value, bubbles can be formed. We don't like bubbles.
The second part of the article focuses on exchanges:
In view of the decentralized point-to-point trading characteristics of the encrypted currency, such as Bitcoin, it is neither realistic nor feasible to ban the bitcoin. But it is entirely feasible and necessary to strengthen the supervision of the trading platform of encrypted currency such as special currency. So the real focus is whether Bitcoins are of value in the real economy.
It's quite difficult to navigate both an automated translation and the specifics of the Chinese Communist Party narrative, but I'll dare to formulate a conclusion:
"As the only authority in China, we don't want other people to destabilize the currency and we will keep an eye on anybody who will try to do that. If you play nicely, then, we may even support you, as long as we can also make a buck or two."
All in all, I think this is good news. As good as a news can be from a centralized government.
I may be wrong, though, so I'd invite all of my Chinese followers to have a look at the article and post their comments.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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