China Guesses Bitcoin Ban Fails To Explode Market As Twitter Adds Crypto Payments In Historic First Step

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Beijing can’t stop the lightning

AFP via Getty Images

A move by the Chinese central bank to criminalize all forms of cryptocurrency trading, thereby making bitcoin illegal in the country, has not had a significant impact on the price of the world’s leading digital asset.

The crackdown came a day after Twitter announced that its 330 million active users will soon be able to send bitcoin to each other instantly and at virtually no cost by tapping into the Lightning Network that was built above the primary layer of bitcoin and, many believe, will propel cryptocurrency into the mainstream.

One bitcoin was worth $ 42,666 on the Bitstamp exchange at 4:00 p.m. EST on Saturday, standing above its long-term moving averages and exceeding its value in early August.

The digital currency briefly fell below $ 40,700 on Friday, when the so-called People’s Bank of China, a central bank controlled by the Communist government, said all cryptocurrency-related activities were strictly prohibited in the country. Beijing has accused the cryptocurrency industry of disrupting the economic and financial order and endangering the safety of people’s property.

Bitcoin was launched in 2009 as an open source monetary network that uses blockchain technology to create a secure form of digital money entirely outside the control of central banks.

China was initially tolerant of the technology, but its opposition has grown in recent months.

In June, the authoritarian government banned local banks from allowing cryptocurrency transactions and banned the energy-intensive practice of bitcoin mining, in which specialized computers are put to work to solve complex problems in a race. to earn new bitcoins.

The crackdown triggered a 20% drop in the price of bitcoin, but the latest more draconian move pushed the needle back less than 5%.

Bitcoin was almost completely unchanged on Saturday, having found strong support at its 200-day exponential moving average.

And while mainstream media like the BBC, Sky News, The Times, and The Guardian rushed to report on negative developments in China, media coverage of the positive adoption by Twitter TWTR was almost entirely limited to financial media like Bloomberg and CNBC.

Twitter began integrating the Strike Bitcoin Lightning wallet into its platform last week, allowing users to send and receive bitcoin as easily as tweeting a thought.

The launch may have been largely ignored by the media, but its importance is hard to overstate. Bitcoin critics have long argued that the cryptocurrency cannot be scaled for mass adoption due to its high costs and slow processing times. Average bitcoin primary layer transactions typically cost around $ 8 and take around 20 minutes to complete, although fees and times vary depending on network demand.

Lightning solves this problem by processing off-chain transactions through a secondary layer that can, in theory, process millions of payments per second (Visa, by comparison, processes about 1,700 payments per second).

Users interact with the Lightning Network through specially designed mobile wallets such as Strike and Muun. In El Salvador, which officially recognized bitcoin as legal tender this month, citizens are already making micro-payments for cafes and newspapers with their national Lightning wallet, Chivo.

As Strike Founder and CEO Jack Mallers explained in a video announcing the launch of Twitter: We just made an instant, free payment, from Chicago, Illinois, US, to San Salvador, El Salvador via Twitter. Why would someone use Western Union WU again? When you take one of the world’s largest internet social networks and combine it with the world’s best open money network, Twitter accidentally becomes one of the best remittance experiences in the world.

Given the lack of media attention, it’s no surprise that Lightning is only a tiny fraction of the bitcoin network today: less than 3,000 BTC is currently locked into the protocol. But its capacity has grown steadily this year and is expected to increase as Twitter completes the onboarding of all users over the next few weeks.

China is undoubtedly concerned about bitcoin but not because of money laundering, phishing scams, or economic destabilization.

China is worried because bitcoin gives its citizens the freedom to instantly teleport their wealth around the world with one click, thus avoiding the arbitrary and short-sighted capital restrictions that Beijing is no doubt planning in response to the debacle of. Evergrande.

Looking at recent price action, their concerns are well founded. A global superpower has just declared war on bitcoin … and the market barely noticed.

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