China Bans Financial Companies from Bitcoin Transactions

http://www.bloomberg.com/news/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions.html

“China’s central bank barred financial institutions from handling Bitcoin transactions, moving to regulate the virtual currency after an 89-fold jump in its value sparked a surge of investor interest in the country.”

This is a pretty interesting article that could have major implications on the future of bitcoin.  This happened about a week ago and basically China decided they want to treat bitcoin in a similar fashion as gold.  Essentially they are admitting that there is a value for it but it cannot be used to buy anything in China and financial institutions cannot use them.  This could have a huge effect on bitcoin’s future because if a nation as huge as China is banned from using them as a currency, it may not take off anymore than it has already.  After this news came out, bitcoin dropped from around $1200 per coin to $550 per coin.  Since then, it has steadily risen back to about $900 a coin.

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One thought on “China Bans Financial Companies from Bitcoin Transactions

  1. Bitcoin’s only weakness: government regulation.

    As wonderful an idea as Bitcoin is, there is a lot of risk by investing in the company. The market is very sensitive, considering this is the first, big virtual currency that exists, and many people do not know what to do with it. If the government were to hypothetically step in and begin regulating transactions, implementing more taxes (what they do best), and cause as large of a mess as they have done with social security, it could be the end for Bitcoin.

    In terms of the indecisiveness of bitcoin prices, this is simple supply & demand. Unfortunately for China’s financial companies, they may not be able to get in on all of the action while there still are bitcoins to be collected. This is good news for everyone else. Bitcoin is a highly interesting subject for ethics, considering its current position where the government has not interfered… yet.

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