Bitcoin Is A Tool For Speculation – China’s Communist Party Paperbr>
The official newspaper of the Chinese Communist Party, People’s Daily, has published an article calling bitcoin a bubble, comparing it to the Dutch Golden Age Tulip mania.
The People’s Daily is the biggest newspaper group in China. The paper is published worldwide with a circulation of three million. The newspaper provides direct information on the policies and viewpoints of the Communist Party.
In a commentary piece written under the name “Wei Liang,” the paper stated that it was an established fact that bitcoin was a bubble. Irrespective of whether it is assessed on price or value, bitcoin is flooded with froth. The paper added that bitcoin’s so-called advantages – scarcity, authenticity, strong liquidity, transparency and decentralization – are only covers for speculation and cannot support its volatile price.
According to the author, the cryptocurrency’s bubble was created by a combination of speculation, hype, mystery, and decentralization. The author also hints at possible insider trading, suggesting that a small group of bitcoin owners were speculating on its price and manipulating general investors.
Wei Liang compared bitcoin to the Tulip Mania, a period in the Dutch Golden Age during which contract prices for tulip bulbs reached extraordinarily high levels and then dramatically collapsed in February, 1637. The Tulip Mania is generally considered the first recorded speculative bubble.
The article further states that bitcoin isn’t recognized as a legal tender throughout the world. Financial regulators “naturally do not regulate the cryptocurrency as much as they do other currencies,” leaving bitcoin in a “special gray area.” The author also cited bitcoin futures on regulated exchanges as an example of how the cryptocurrency is being protected.
In September, the Chinese central bank closed local cryptocurrency exchanges and banned initial coin offerings (ICO) with the aim of containing financial risks. BTCC CEO Bobby Lee, however, is hoping that China lifts its ban on cryptocurrency exchanges. In an interview with CNBC, Lee said, “In this world, nothing is ever permanent.”
“One day I think it’s possible they’ll lift the ban, so-called, and they might reinstitute it and license it,” said Lee. “The more the governments and the regulators tried to put a squeeze on bitcoin, the more we see that bitcoin is actually resilient.”
Recently, Block Tribune reported that the central bank had a closed-door meeting with members of the Leading Group of Beijing Internet Financial Risks Remediation to discuss how to regulate bitcoin mining. The central bank reportedly told the members to ask local governments to regulate the power usage of bitcoin miners to gradually reduce the scale of their production. The proposed regulations on power usage, if implemented, will gradually remove preferential policies for electricity, tax and land use for bitcoin mining companies.