Cryptocurrency trader, Rume Ophi has said many countries have deployed diverse approaches to manage the trading on cryptocurrencies.
In a report on the cryptocurrency trading in Nigeria, he said since the Central Bank of Nigeria (CBN) issued a circular banning Deposit Money Banks, Non-Financial institutions, and other financial institutions from transactions in crypto, the economy has continued to lose huge sums and revenue and fees.
Ophi, who is the founder of Cryptopreacher, said many countries have managed the crypto currency challenges.
“What China did was to regulate initial currency offerings (ICOs) in a manner similar to their regulation of initial public offerings (IPOs) of equities. Today, China is the undisputed world leader in bitcoin mining. Chinese mining pools control more than 60 per cent of the bitcoin network’s collective ‘hashrate.’ Hashrate is a way to determine the relative safety of a crypto-asset. It is the representative of the combined power of mining computers connected to the network,” he said.
According to Ophi, mining in cryptocurrency is the process where new bitcoin is issued. “China doesn’t only mine, but manufacture equipment for mining. China has to highest amount of bitcoin mining farms due to its cheap cost of electricity. Not only does China manufacture most of the world’s mining equipment, but massive mining farms are located there to take advantage of extremely cheap electricity prices,” he said.
Beyond crypto currency, China is also leading the way for the Central Bank of Digital Currency (CBDC).
“Its digital yuan has started testing in major state like Guangzhou, Shenzhen and Beijing. About last month one of the four biggest state-owned bank in Shenzhen has begun the testing of digital yuan on its ATM’s. In fact, China is preparing to use its digital currency in the 2022 winter Olympics in Beijing,” he said.
The European Union (EU), through the Deutshe Bank, is also in the process of stating its digital currency.
“Earlier before the COVID-19 first phase lockdown, the United States Senate was looking at modalities on issuing its digital dollar since China is at the verge of dominance in the space. The Bank of Korea (BOK) is also planning on launching its digital currency project which took place last October,” he said.
Cryptocurrencies such as bitcoin have very specific processes for expanding their money supply – mining by technology with strict limits. For bitcoin, most of the “mining” happens in China, as earlier stated. The strict money supply rules mean that if demand grows, as it has, the price can soar, which it has. Some observers, such as economist and Nobel laureate Robert Shiller, have suggested that the rapid rise in bitcoin prices resembled a financial bubble.
Ophi said bitcoin’s mining supply grew at an infinite pace in 2009 when the currency burst into existence. As at 2017, it slowed to around 4.2 per cent and then dropped to below two per cent per year after 2020, before its recent rise. Sometime around 2140, the last new bitcoin ever will be mined, bringing the total to 21 million. The bitcoin market anticipates this, hence the extraordinary bull market in the digital currency.
He said in other climes, regulators are moving to bring cryptocurrency platforms into the mainstream. For example, in July 2017, the Commodities Futures Trading Commission (CFTC) in the U.S. approved a new Derivatives Clearing Organisation (DCO), which was also granted an order of registration as a Swap Execution Facility (SEF).
Ophi added: “The crypto transactions have gone Peer to Peer. “One finds a coin of interest, sends a ‘buy’ notification, Binance Exchange finds a ‘sell’ notification, funds and coins go into a virtual Binance escrow account, verifications are automatically carried out, funds are delivered to the seller and coins to the buyer directly! And the government is kept out of this transaction,” he said.