What is Bitcoin?
Bitcoin is a cryptocurrency that can be ‘spent’ on the internet. To access this, all one has to do is create a digital wallet and a copy of their public key, which is basically a long number that they can share with anyone. This is what makes it ‘decentralised’, no-one owns Bitcoin and the digital code itself.
Is Bitcoin money?
The answer, in short, is no. As Bitcoin is traded outside of a centrally controlled, legal network, there’s no reserve keeping things in ‘balance’. The only thing that’s ‘real’ about Bitcoin, is the idea of Bitcoin. A network that anyone can join, and transfer money into or out of. In that sense, it does have a kind of ‘immutable’ value. As The People’s Bank of China points out, Bitcoin doesn’t represent the Chinese economy in a tangible sense. It’s just a virtual ‘money’ network, with no actual economic, nor financial, value. However, the exchange of Bitcoin has real value for the individuals exchanging the currency and companies seeking to expand their marketing reach. That value has been increasing with time.
Why does China say it’s not a currency?
China appears to want to separate Bitcoin from real currencies by not giving it the central bank’s support. It’s partly due to China’s dependence on the United States for foreign exchange and Bitcoin’s volatility, but also because of the government’s dislike for the idea of having an unregulated digital currency. Who could break China’s code on Bitcoin? The People’s Bank of China released the statement to clarify that it is aware of the blockchain technology underlying Bitcoin, but does not feel that Bitcoin can be considered a currency.
For us as consumers, this should not mean that Bitcoin will not be used in some way. Many users will not only use it to pay for things, but also store their wealth securely with the right level of protection, so I don’t see the ban on exchanges and withdrawals from them coming as a serious issue for Bitcoin in the near future.
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