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22:20, 13-Jul-2017
Bitcoin fluctuates, PBOC warns against virtual currencies
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By CGTN's Yang Chengxi
Virtual currencies took a hit recently, with the prices of two of the most popular crypto-currencies, Bitcoin and Ethereum, falling to their new lows in one and a half months.
Almost all of the other top 100 block chain-based virtual currencies suffered similar fate, some dropping by almost 35 percent.
Block chain experts say dramatic ups and downs like this are common in virtual currencies.
"Some private institutions poured money in Bitcoin to hype it up and then many investors followed," said Zhou Yu, block chain research head at China Unionpay, an association for China's banking card industry. "There's a lot of speculations in the market."
Others say to not rush into the conclusion that block chain technology itself would lead to volatility.
"Things like Bitcoin are not only using block-chain technology, they're using a peer-to-peer network so that there's no central control," said Cai Weide, director of the block chain lab at Beijing University of Aeronautics and Astronautics. "The creator designed it this way precisely to prevent authority supervisions. Because of this, Bitcoin will become a tool for money laundering."
Major block chain-based virtual currencies have been dropping. /Source: Coingecko
Major block chain-based virtual currencies have been dropping. /Source: Coingecko
Experts say a digital currency issued and managed by a central bank is actually favorable from a policymaker standpoint.
"Contrary to people's impressions, an official block chain currency can be very helpful to regulators because block chain technology ensures every single pieces of transactions can be traceable,” said Cai.
That could have positive implications for a government's tax management, anti-corruption efforts and a wide range of other endeavors.
The British central bank first announced in 2015 that it is researching a possible official virtual currency.
"Many central banks are researching it, and the important thing is that the official virtual currencies will have central policy control as opposed to bitcoin,” said Zhou.
China's central bank set up a research institute earlier this month in Beijing to study virtual currencies.
But experts say we are still quite far away from the launch of an official virtual currency in the near future.