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The market capitalization of cryptocurrencies has become unprecedented $ 800 billion this year, up from $ 20 billion just a year ago. Never in history, a class of assets has even increased by far, cryptocurrencies. While the government could afford to ignore it while it was still a niche market, it became too important to ignore it. Smart governments are better adopting this banking revolution, fighting it is useless and will prove incredibly expensive.

The Chinese Way

While Chinese trade accounted for more than 90% of the volumes traded a year ago, this number dropped to zero percent last November. The Chinese government decided to close all the stock exchanges two months before the month of September, which caused Bitcoin's price to drop from $ 4,500 to $ 3,000, when all Chinese investors came forward at the same time. What happened next? Once again, the crypto market has demonstrated resilience and antifragility. Despite the loss of the Chinese market, the cryptocurrency market has recovered and Bitcoin is up 5x since its crash to $ 3,000

<img alt=" World market capitalization of all cryptocurrencies " src = "http://cointelegraph.com/storage/ uploads / view / 6d6e7f418a6ee27953f5d2ac82ab3469.png" title = "Global market capitalization of all cryptocurrencies" />

This ban cost billions of yuan to Chinese investors who missed a big rally while they panicked By banning cryptocurrency and preventing its citizens from benefiting from the rise in cryptocurrency, the Chinese government has lost billions of yuan in potential tax revenues and in GDP growth

But the worry was elsewhere: the Chinese government feared that its citizens use cryptocurrencies to circumvent the control capital and protect Yuan depreciation. Economic history shows that capital controls always fail, ultimately. If people want to take out their money, they will always find a way

The problem with banning a business that people desperately want is that it does not work. The ban has simply pushed the cryptocurrency market underground in China. Web sites facilitating peer-to-peer exchanges have appeared all over China. It is impossible to know for sure the size of such a market, but the cryptocurrency trade is indeed in China, the government has just lost all control over it.

The Japanese Way

Japan, on the other hand, took the opposite direction. Confronted with demographic and economic challenges and public debt of up to 250% of its GDP, Japan must find ways to generate more economic growth. So, instead of ignoring or banning cryptocurrency, Japan has decided to regulate them. In the same month that China closed all its cryptocurrency exchanges, Japan issued licenses for 11 cryptocurrency exchanges. The goal of Japan is very clear: to become the world's cryptocurrency engine.

As a result of this friendly environment, trading in Yen cryptocurrency has grown exponentially and the first results are already there. Nomura recently estimated that Bitcoin alone could be responsible for 0.3% of Japan's GDP growth. Ironically, Huobi, which was once the world's largest cryptocurrency exchange before being shut down by the Chinese government, is moving to Japan and plans to open two exchanges there

The Way for Governments

Many governments still do not know what to do with cryptocurrencies, mainly because they do not understand them. One thing is certain, weak, insecure and authoritarian regimes are very likely to fight against cryptocurrence because they are a very powerful tool for people to regain their freedom. Democratically elected and well-functioning governments have nothing to fear and much to gain from cryptocurrencies, both in the form of additional economic growth triggered by this banking revolution and by the additional tax revenues that will accrue to them. capital gains on cryptocurrencies. ]

Cryptocurrencies are not going anywhere. It may not be Bitcoin, it may not be Ethereum, but some cryptocurrencies will soon become ubiquitous. Would you have fought the deployment of email to protect your postal service 20 years ago? Well, fighting cryptocurrencies is the same thing, it just can not be done. Prohibiting them – as Jamie Dimon has suggested – would require shutting down the Internet, what is the probability of this happening? While the rise in cryptocurrencies may be slowed, but it is only temporary, this situation is not sustainable in the long run as it will become prohibitive for China to be left behind when the rest of the world will advance.

The change may not come from where you expect it, but it happens. A prominent Ghanaian banker – Papa-Wassa Chiefy Nduom – has recently publicly urged the Central Bank of Ghana to invest one percent of its foreign exchange reserves in Bitcoin. This is the next step where central banks are finally realizing that they have lost their monopoly on the issue of currencies and that they have to live, coexist and compete with cryptocurrencies. Most of them do not know it yet, but the hegemony of the cash trust is already coming to an end.