A look at some of the recent major events and movements in crypto markets and the wider blockchain industry
In the month since the last Tales from the Crypto, one of the big stories has been China’s cryptocurrency U-turn, which included unveiling plans to launch a state cryptocurrency backed by gold.
The People’s Republic has been a fierce critic of blockchain but president Xi Jinping recently pushed for the country to launch its own projects to counter US dominance in the sector.
Making a public about-face, Xi said China should be “expediting the development of blockchain technology and innovation-driven industrial development”.
Aside from using blockchain innovation as part of its push to maintain superpower status, the technology also seems to appeal to Beijing due to its unfalsifiable nature, meaning permanent records can be maintained while being almost impervious to hacking.
China has already used a blockchain system to automatically generate and file an enforcement case in court against a party that failed to pay damages, as well as a recently launched app designed to record and store information on members of the CPC.
The country’s proposed gilt-edged cryptocurrency might, said analysts at SP Angel, “generate substantial new buying” of the yellow metal.
The new digital currency could potentially take business away from Bitcoin, the broker said, however, the original crypto still had its advantage of simultaneous settlement, not possible with gold or fiat currency.
SP Angel added that it will also take global investors “some time to trust in China’s backing” of its crypto, as while the PRC is currently sitting on around 20,000 tonnes of gold to back the currency, they questioned whether this will be sold in times of economic stress.
Bitcoin outperforms gold
Bitcoin also managed to beat out the yellow metal in terms of market price gains in October, posting a rise of 10.3% compared to gold’s 2.7% gain in the same period, and there are technical reasons why it could be heading even higher.
Bitcoin has often been suggested as offering similar ‘haven’ qualities to gold, somewhere investors can put their money that is mostly separated from the volatility of the global markets.
Wayne Chen, chief executive of fintech firm Interlapse Technologies Corp (), says while Bitcoin has always been considered a speculative asset, it is now viewed as “a better digital gold”.
“As popularity and demand grow, you will see more traditional investors diversify their portfolio into a more powerful version of gold because it is highly divisible, portable and transactable for micro payments”, he added.
And prices could be heading even higher over the next six months as a Bitcoin ‘halving’, when the reward for successfully mining a block of transactions on Bitcoin’s blockchain falls by 50%, is due around May next year.
A halving tends to be presaged by a rise in Bitcoin prices as it becomes harder for miners…