Last week, the Central Bank of China, known as PBoC, decided to introduce a regulatory move that criminalizes all crypto trading, taking place in any shape or form. The move, in effect, made cryptocurrencies, including bitcoin, illegal in the massive global economy. However, the same development, while it did create a tumble in the markets, failed to crash them in a catastrophic manner. Instead, the leading digital assets of the modern-day and age kept on keeping on. Also, interestingly enough, the move from the PBoC came roughly in the same period as the decision from another internationally relevant body – Twitter social media. The same network decided to introduce cryptocurrencies to more than 330 million active users.
Through it, users will be able to send small amounts of bitcoin through the Lightning network. That process will be instantaneously and virtually without any costs to either sender or the receiver. This is not important only because it, to a point, acts as a firebreak against the Chinese FUD, which began spreading quickly last week but did not grow into a conflagration that some hoped it to become. Besides this firebreak, the Twitter announcement represents the crowning achievement of the Lightning network so far, which has been in development for years. Its scalability and potential in making crypto transactions even more streamlined could be one of the key factors in the process of mainstream adoption of the BTC token.
PBoC Rip Waves
China’s central bank finally cleared its rules and defined the ecosystem in which trading and investing in cryptocurrencies can take place – the short and precise answer is that it cannot take place in any shape or form. While previous bank announcements were open for a range of interpretations and possible explanations, the current setup is crystal clear. So, the Chinese economy is officially out of the crypto space and that applies to all of the participants in the networks, including bitcoin. Because of that, the PBoC cleared that the process of mining is also illegal and this is slowly rolling into an exodus of all manner of crypto companies that are leaving China en masse.
At the same time, big Chinese businesses that have played a massive role in the expansion of the cryptocurrency industry are also obeying the rules with the utmost urgency. That is why Alibaba announced that it will no longer sell any mining equipment or anything else that is connected to the process of supporting blockchain networks. They will stop carrying any of these before October 8, showing that the decision to react to the PBoC announcement is more than real and grounded. Yet, even with all of that, the effects on the market did not materialize to a catastrophic selloff.
On Saturday, roughly a day after those announcements and the drastic reactions from the businesses in China, one bitcoin was selling at 42,666 USD on the Bitstamp exchange. That meant that it was holding above the token’s long-term moving averages and also that it was beyond the value that the coin had at the start of August. A day prior, BTC token price slid below 40,700 USD, putting the bear impulse into the striking distance of the 30,000 USD range. However, the trading stabilized above that psychological barrier and the token value gradually began climbing.
Over the weekend, the price rose further and the movement was seen not just in the bitcoin network, but also in the ethereum, cardano, and many other altcoins. This also established a new narrative across social media, where events like this tend to paint a completely different picture of an ecosystem. The same can be seen in esports, but also in crypto trading. Instead of people sharing panicking information, a range of reactions appeared that lampooned the China FUD phenomena.
Short but Relevant History
Bitcoin began working in 2009, functioning as an open-source network designed to provide monetary functionality to its users. It employed blockchain technology to do the same and thus made a digital currency that operated completely outside of the traditional financial and banking sector. Initially, China appeared as one of the biggest hubs of this activity, using its cheap electricity to build private mining facilities. That happened in the private sector, but there is little doubt that the officials were fully aware of the processes that were taking place in their provinces.
During the same period, the Chinese authorities also came out with an almost endless stream of statements that included some kind of reduction or restriction of crypto activity. That is why many continue to joke that China kept banning bitcoin for at least 10 years prior to the latest big statement. However, the present changes signal a potentially harsher ecosystem for crypto in China. In June, the PBoC stopped banks working in China from taking any business from crypto companies. It also outlawed the crypto mining industry, which led to the present situation. However, for many in the crypto community, the Twitter integration of crypto transactions overshadows all of the mentioned movement in the Chinese financial waters.
Twitter, Lighting Network, and Crypto
As the bitcoin network, the background of the Lightning and Twitter integration is a process that reaches back a long time. However, the massive social media is now comfortable enough with both the regulatory framework and the tech factors to start that long-awaited integration. With it, users will be able to send and receive bitcoin just as easily as they would tweet something to one another. This is exceedingly important because it negates the idea that the bitcoin network is unusable for regular people across the world.
A typical BTC transaction costs around eight USD at present prices and will take around 20 minutes of validation time. Lightning network, however, solves that effectively and can handle many millions of transactions every second – for comparison, the Visa system can handle 1,700 payments per second. The rollout will take time with the Twitter system but its significance will likely overshadow another China bitcoin ban in a year or two.