Is China and Elon Musk Making the Crypto Downfall or Something Else Is Behind It?
Bitcoin prices fell to less than $34,000 for the first time in three months on Wednesday following china’s new ban on cryptocurrencies.
China recently banned banks and payment firms from transacting through cryptocurrencies. China on Tuesday also warned investors about transactions through cryptocurrencies.
Earlier, car maker Tesla had also said it would not use bitcoin for purchases. Bitcoin prices have since fallen by more than 10 percent last week.
Its prices recovered slightly on Wednesday, but they are still down 10.4 percent at $38,131. At the same time, the prices of other cryptocurrencies like Ethereum and Dogecoin of the Ethereum Blockchain Network have declined by nearly 22 percent and 24 percent.
This decline is not just in Bitcoin. Shares of his company Tesla also fell nearly three percent after Alan Musk’s announcement. It is to be noted that Alan Musk has a $1.5 billion cryptocurrency.
The first announcement, then U-turn
In March this year, Tesla announced that it would accept purchases through Bitcoin as well. Many environmentalists and investors had opposed his move.
Alan Musk recently reversed his decision and took a U-turn, saying Tesla was canceling its plans to buy trains from cryptocurrencies in view of climate change concerns. He said bitcoin mining takes a lot of energy and uses many high-powered computers. Coal is often the main source of energy in power used for this purpose.
However, Musk has also clarified that the company will not sell its purchased bitcoins, but tesla will use its currency when permanent energy is used for mining.
China’s take on cryptocurrency
In 2019, China banned cryptocurrency transactions from curbing money laundering. But even then, people are doing transactions through cryptocurrencies like Bitcoin for online work, which had become a source of trouble for the Chinese government.
Chinese government-backed institutions, including the National Internet Finance Association and the Payment and Clearing Association, issued warnings on social media on Tuesday.
He said that if anyone suffers due to investment in cryptocurrencies or their transactions, they will not get any protection in this matter.
These institutions said the recent fluctuations in cryptocurrency prices “threatened the security of a person’s property” and “affected normal economic transactions.”
Neil Wilson, who works in Markets.com, says, “China was already trying to put pressure on the cryptocurrency sector. But now he has taken a tough step. With central banks of countries also pushing for digital currency, other countries may follow China’s path.”
“In the case of Bitcoin, western regulators have so far been relaxed, but the situation may change soon.”
After China’s decision, Bitcoin cannot work in China, but it is also true that more than 75 percent of the world’s bitcoin mining takes place in China.
The eco-friendly currency
The cryptocurrency Chia (Cryptocurrency Chia), considered green and energy-efficient, is now gaining investor interest. Chia’s current price on the coin market is US$ 1,379.64. Chia coin prices have more than doubled in just two weeks.
Chia Network is built by Bram Cohen of BitTorrent. According to the company, Chia uses proof of space and time (POST), allowing users to use the rest of the hard disk for transaction verification. This will require less computing power and reduce power consumption. So, Chia is considered to be an eco-friendly cryptocurrency. Transactions in this cryptocurrency have started on May 3. Chia is the first cryptocurrency to use the new Nakamoto Consensus algorithm.
Industry experts and climate activists have different views while the investors are simply looking for huge profits. The crypto market is fluctuating like any other market; Elon Musk’s statements and tweets are majorly controlling the cryptocurrency market. The investors in China now don’t have any support from the Government. Facebook is also making its own cryptocurrency Diem. All these reports clearly show that crypto is here for a long time. Regulatory support it or not people are using it as the major companies that do financial transactions like PayPal and Square are accepting cryptocurrency.
The future of digital currency is assured; we can easily presume this with the whopping amount, the pros and cons of anything are always dependent on the ethics and values on which it is based, and when it is the currency, the ethics and principles must be regulated and favor a larger audience so that cryptocurrency and technology both brings hope and prosperity in the already profitable digital world.
Is China and Elon Musk making the crypto downfall or something else is behind the epic downfall? Musk is worried about energy consumption.
Lorraine Allison is an avid technical blogger, a magazine contributor, a publisher of guides at McAfee Login and a professional cybersecurity analyst. Through her writing, she aims to educate people about the dangers and threats lurking in the digital world.