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Wednesday, October 4, 2017

The Reasons China's Government Closes Bitcoin Trade Exchanges

The Reasons China's Government Closes Bitcoin Trade Exchanges

Quoted from, Monday (18/9) a professor from Renmin University named Yang Dong explain the reason why the Chinese government to do so.

Darknet Transaction

We both know that bitcoin can be used as a transaction tool on the black market for drug trafficking and some other illicit trade. This transaction will be hard to trace in blockchain. Therefore KYC (Know Your Customer) issue is still a very thread looking solution. It is certainly not possible to implement KYC in the Blockchain system.

License issues

He thinks Chinese financial institutions must be very cautious about this virtual currency business license. "This is a business with big risks," he said. So the matter of this license must be clear first the rules of the game.

Bitcoin Nature

Third is the issue of the nature of bitcoin itself. "The mechanism of bitcoin itself remains controversial." He also explained there is no law that can be used as a reference to control the growth of bitcoin. This is the nature of Bitcoin to be solved.

Money Laundry

We know that in China itself is still dominated by business mafia is quite vulnerable to use bitcoin to launder money. "In bitcoin there are so many anonymous transactions that are hard to control."

Issue Market Manipulation & Security

Professor Yang simply highlights the problem of market manipulation that Bitcoin can do. Suppose that if someone deposits 10 Million USD, with fluctuations in the price is quite fast, the person can benefit from the BTC price increase. Whereas in fact the fundamentals of the BTC price increase is still a debate.

Not to mention the problem of security or data security. It is true this is a crypto currency where all data is encrypted. But still using the internet. This means that if someone acts recklessly, access data can still be stolen.

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