Why China banned Bitcoin?
Herald the coming of winter of Bitcoin?
It's zero sum game relationship between fiat currency and crypto-currencies. Normally, a capable government of sovereign country would not allow Bitcoin or other crypto-currencies to erode its monetary system. Measures would be taken to enforce the indispensable status of official fiat currency so as to strengthen currency sovereignty.
China is a good example. Bitcoin and other crypto-currencies had brought tremendous values to China and the Chinese people. Firstly, blockchain technology and its application system were introduced into China which promoted technology advancement. Secondly, various crypto-currencies related industries, such as crypto-currencies financing services, manufacture of mining machine, chipset and peripheral, and so on, were established and became industry giants, for example, BTC China, Bitmain and etc… Last but not least, the Chinese people made a handful of wealth from trading Bitcoin as China was once the largest crypto-currency market of the world.
Even though there were huge vested interests and benefits, a complete ban on Bitcoin and other crypto-currencies could not be avoided. ICO was first banned in Sept 2017; closure of exchanges and punishment on making transaction of any kinds followed; finally, even Bitcoin mining was forbidden. Laterally, all crypto-currencies related activities were not allowed. In response to ever toughest regulations, the price on Bitcoin once slumped as much as 45 percent.
Of course, you would hear more about illegal fundraising, tax evasion, dark-web marketplace and etc... Diagram above showed the headline of an editorial article about negative aspects of Bitcoin published on China Daily, during the Chinese government imposing total ban on Bitcoin in Sept. 2017.
However, the Chinese government has not buried the truth that currency sovereignty is really the matter. Senior Chinese officials had urged to grab tighter control over currency sovereignty in mass media, in both explicitly and implicitly ways. The subtext was quite clear that Bitcoin had already posed substantial threat to Renminbi.
Please be noted that the banning of ICO and crypto-currencies would not affect the development of blockchain technology and digital currency in China. As we can see, the investment in blockchain is still on the upsurge in China after the ban. Enterprises continue to apply the technology widely in their products or services to increase productivity and competitiveness. On the other hand, the People's Bank of China is actively preparing for official digital fiat currency, a digital form of sovereign currency backed by Chinese government. It is foreseeable that the development of blockchain technology and digital currency in China would outpace most parts of the world as the country has strategically planned, organized and invested in it in the very early stage.
To conclude, one should not have doubt on whether a government would intervene in crypto-currencies or not, once currency sovereignty is found to be endangered. It is a matter of how, leaving leadership of a country to decide whether outlawing or manipulating is more appropriate to deal with.
Coming back to the focal point, people are interested in knowing if the development of crypto-currencies would pose threats to the Federal Reserve's monopoly authority in currency, and the US government (or the Wall Street) would give up their control over currency monopoly or take similar measures as China did to crackdown. The US government’s stance has enormous impacts on the price trends of Bitcoin and other crypto-currencies which is directly linked to your wealth and happiness.