Hello everyone. My name is Nick, the host of Sobuka taking over for Brian (B) due to the holiday in the US. Today I will be going over some of the terms that have been thrown around lately in the cryptocurrency ecosystem. I will also be covering an interesting news story that came out from Australia this past week (since this channel primarily focuses on cryptocurrencies in the southern and eastern hemisphere).
Bitcoin Bubble
There have been so much FUD lately in the cryptocurrency ecosystem this past few weeks. And I believe a lot of this nonsense is originating from China. It started last week with a rumor on how China was planning to ban all ICOs. Then a few days later, that rumor turned out to be true and was confirmed by a Chinese official. So now this new rumor is about how China plans to close down all exchanges in their country. And so what’s interesting about this rumor is that this story was leaked when Chinese residents were sleeping while United States residents were just waking up. So there was no way of questioning what was going on in China. Therefore within that period of time, there was a lot of panic selling in the US, that slowly bleed into China and everyone else by the time they woke up. This China exchange ban is still a rumor since as of right now, no one in the Chinese government has come out to officially confirm this story.
My personal take on this whole situation is that it is very irresponsible for a Chinese publication to do something like this without any stated source. This type of news has so many market implications, and it affects people across the entire world, not just China. If China wants to outright do something, my personal take is that an official should just come out quickly and state facts. Letting something like this linger for everyone to speculate about causes a lot of market uncertainty which is bad for most people in poorer countries. Currently cryptocurrencies are down by about 10-15% on average as I am speaking and writing this post. If this news is true, I expect a 40-75% drop in the cryptocurrency market given that more than 30% of cryptocurrency holders are based in China. Thus we would see massive panic selling. Given this situation, I feel that people need to plan accordingly on how they should act. I know some folks would sell, some folks would just hold, and the smart ones would buy major dips and add to their positions. I am a holder of my cryptocurrencies because I like the projects that they are supporting. But to “each their own.” So please do what you feel is comfortable and to your best interest. And I recommend talking to a financial advisor. As for trying to ban ICOs in the United States, I think the 50% tax on cryptocurrency gains is pretty much a fair substitute for that. For anyone outside the United States (US) who is not aware of our tax situation, for US residents that decide to cash out of their cryptocurrencies, they have to pay the IRS 50% of their crypto gains. Therefore the US government would have a lot to lose in terms of tax revenue if they decided to ban cryptocurrencies.
This now brings me to the topic of my section which is about this Bitcoin bubble FUD. It is amazing hearing how people are still thinking if Bitcoin is in a bubble, and its mainly coming from the media. The media has this hate or spite towards Bitcoin into which I cannot understand. What I do understand is that there are folks in the media that have been touting Bitcoin since the very beginning. That said supposedly Bitcoin was in a bubble when it was at $5, $10, $900, $2000, and on and on. And what is interesting, is that there is a meme out there saying how Bitcoin has died more than 130 times. Whether I think Bitcoin is in a bubble is irrelevant. I tend to look at the overall market sentiment and the new money coming in. If we see or have some type of irrational exuberance where everyone and grandma start to jump into the Bitcoin ecosystem, then yes, I would think we are in a Bubble. This market is different than what it was in 2013 and a few months after the post Mt. Gox situation where basically an exchange ran off and stole a lot of people’s money. And back then there was a handful of very few popular exchanges. Today it is a different time and story where there are exchanges around the world that allow people to buy/sell Bitcoin, and these exchanges also act as remittance programs. Therefore, if Bitcoin was in a bubble, these exchanges would definitely go bankrupt or lose popularity in a matter of days.
However I do think that Bitcoin is a slightly more risky asset to invest in amidst the new investors jumping into the space right now. And that is always the case when someone tries to pick an entry point especially when the price of an asset keep rising while "newbies" jump face in. And typically new people within the space are even more unaware of what is going on within the market, hence one of the reasons why we see the volatility in the market.
China ICO Ban and Possible Exchange Ban Yet to be Seen
Now moving on to my next topic, I want to discuss this China ICO ban even further. So from my understanding, the Chinese government recently banned ICOs from raising capital from investors within their country. This whole thing started as a rumor, and then a public official came out to confirm the story. I honestly thought this was a smart move by the Chinese government because I know it was getting out of hand with these crazy ICOs coming out every second from China. So the Chinese government had at least gained my respect on this issue. And in fact this ICO ban was good for Bitcoin and legitimate cryptocurrencies out there that are currently trying to build good, physical technologies.
But one thing I am definitely upset about is with the FUD surrounding the exchange ban. I am upset that we do not know if this ban is just a bad rumor or whether it is true. We also do not know if it is on certain exchanges in China or all exchanges in China. We also do not know where this source came from within the Chinese government. Therefore, there is so much fear, uncertainty, and doubt around this issue. What we do know as of this time is that the top three exchanges within China have stated publicly that they have not heard of anything related to this news from the Chinese government at all. And these exchanges are going on with business as usual.
So this now brings me to the following conspiracy questions that I have to entertain here from listening to several different viewpoints out there. My conspiracy list is as follows:
Conspiracy #1 - Is this Clear Market Manipulation?
If you have more than 5 years experience in the world of finance, you definitely understand the concept behind market manipulation. If we want to entertain the idea behind market manipulation, then we would have to entertain the fact that individuals, groups, and organizations who would benefit among all this FUD. Clearly there is people out there or such a rumor about exchanges being banned would not exist. And if we entertain this rumor as being true, which would then lead to people cashing out of their cryptocurrencies, then the next question is where is all that money going to go next?! Will it go back into fiat, gold, etc...etc...who knows?! I am just speculating here. But going back to the idea of market manipulation, if this rumor is false and this is clear market manipulation, then obviously someone has gained the system whether intentionally or not. Maybe it is true that a bad actor is trying to buy some cryptocurrencies at discounted price?! But at the end of the day, who knows. We will have to see how China responds to this FUD situation.
Conspiracy #2 - Governments are Trying to Crackdown on Money Laundering Activities?
This is not really a conspiracy theory but more conspiracy fact! And yes, one can say that money laundering activities is just an escape goat for everything tied with money. We hear of news relating to cyber crime and how it's tied to cryptocurrencies. We also hear about ransom-ware attacks and people transferring cryptocurrencies overseas to escape government jurisdiction. Thus to be fair, all this news is true, but it’s also true for any other monetary or value based asset, not just cryptocurrencies. And to side a bit with government, I think the reason we hear about all these criminal activities is that cryptocurrency technology is way ahead of what central governments can police, maintain, and understand. And it’s growing at such an exponential pace with more cryptocurrency companies appearing even after the whole Chinese ICO shutdown.
Australian Government: Bitcoin Is Causing Organized Crime to Proliferate [1][2]
This now brings me to segue to an interesting article that recently came out of Australia a couple of days ago. And since this is a channel focused on the southern hemisphere with respect to Bitcoin, then it's definitely appropriate for me to cover this news. The article was titled “Bitcoin Is Causing Organized Crime to Proliferate.” When this article came out, it was confusing to hear this news coming from Australia. One day you hear of Australians trying to make Bitcoin a currency and the next day you hear something like this by the government. It goes to show you that we are still living in a very indecisive Bitcoin world. So this story broke out with respect to a study led by the government of Australia to find out the impact of cryptocurrencies.
The study found out that the rise of cryptocurrencies in the region was heavily tied to the the rise of organized crime. I do not have access to the study or know what measuring tools were used to help validate the information. Therefore, I cannot deny it’s validity. I think there is something going on that ties this news to the recent China ICO ban. There are definitely bad actors out there creating scam ICOs for illegal reasons. And seeing how Australia is not too far from China and the South Pacific region, this news from Australia is getting quite credible everyday. If there are scams out there and bad actors, then something must be done to protect the cryptocurrency market and place some legitimacy back into into the ecosystem.
Therefore, I offer my thoughts and solutions but encourage you the listeners to post your feedback on how the cryptocurrency market can police itself better. But anyways here goes a couple of solutions from the top of my head. And I am not saying all solutions are 100% perfect, but it would give us a way to enforce more confidence into the market place. It’s like shopping carts. About 10-15 years ago, grocery establishments were complaining about people stealing shopping carts. Because of this theft which obviously led to a lose of money, it forced a solution, which was to have special locks on the bottom of shopping carts. After this solution was implemented, this drastically reduced the number of disappearing carts by several holds.
My Personal Solutions
Enforce KYC/AML laws were appropriate to also include parties involved in creating ICOs.
Have a vetting process to weed out suspicious ICOs. For example, this can come out from the cryptocurrency industry. Maybe the top 10 exchanges across the world can make a panel to vote Yay or Nay on an ICO.
Central governments need to invest money towards the public's interest to track and detect foul play, manipulation, and money laundering schemes out there.
To conclude, these solutions are simple and can be expanded upon. I will keep track of this China situation and share any interesting insights with you guys (that hopefully no other YouTuber have covered already). Lastly, I want to leave by saying... if you like this information, please give it a thumbs up if you are viewing it on YouTube. If you are on Steemit, you can upvote this post. Also if you want to see more news like this, you can follow me on Steemit or Subscribe on YouTube. Enjoy the rest of your weekend. And as always, comments are welcome!
Nick is a content creator for Sobuka with a background in programming, information technology, finance and digital forensics. He shares interest in cryptocurrencies by reporting on International Affairs. You can find myself, B, and Sarah here from time to time.
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