The flood of interest in cryptocurrencies by block chain pioneers and speculators has now caught the attention of Chinese officials. Decentralization on a mass scale is seen as potentially undermining the yuan and the central banking system that China has otherwise had absolute control.
The biggest issue seen by the Chinese government is the use of “initial coin offerings” to raise funds for new projects. Actual funding sources would become nearly impossible to track and control… a problem for the pseudo-capitalist society.
Shutting down major cryptocurrencies exchanges in China, however, may serve as an opportunity for investors who are looking to buy into the future of currencies. With the exchanges closed down, much of the countries mining operations may also be pushed offline or forced to scale back. The biggest winners may be the emerging cloud mining operations that take seed money from individuals in exchange for compute power used to run the blockchain and validate transactions (which is effectively what mining cryptocurrencies amounts to).
One of the best positioned firms is perhaps HashFlare, where they are accepting investments starting at $2.40 for BitCoin. From there, individuals buy into mining compute power and are paid out BitCoins as a proportion of their investment. Effectively, there are millions of people around the world who are earning BitCoins while they sleep!
Interestingly, they also provide access to other emerging currencies like Ethereum.
In my perspective, the current price drop is just a temporary knee jerk reaction by investors trying to liquidate positions. The 1000% plus growth rates do not seem to have an end in sight as BitCoin ATM’s are starting to pop up around the country.