About South Korea’s Potential Ban on Cryptocurrencies
The past few days have seen major losses in the entire cryptocurrency market. This recent plunge is in response to South Korea’s announcement that they are considering implementing stricter regulatory actions against cryptocurrencies. As the situation in South Korea becomes even more uncertain, many are wondering what does the future have in store for cryptocurrencies.
Cryptocurrencies have attracted so many for having a decentralized nature. While some cryptocurrencies are not entirely decentralized (such as Ripple XRP), they are also experiencing a wave of popularity. Decentralization gives the user independence from its state and its institutions.
South Korea, a country populated by 51.2 mm people, is not the only option that investors had in mind. The country accounts for 0.67% of the total global population, and their cryptocurrency market even less than that. While their exchanges process a large part of the crypto trades (especially Ethereum), that does not render their investors unable of moving their assets outside South Korea.
Decentralization is a vital part when it comes to establishing how much control a government truly has. By being able to transfer cryptocurrencies through a peer-to-peer network, even if state authorities try to go after exchanges and crypto investors people will still find a way to trade among each other. People will still be able to make monetary transactions through cryptocurrencies, as they will find a way to confuse authorities with their transactions. This may not be legal, especially if you are in a country that restricts you from trading digital assets, but this case is similar to when businesses tried to ban the BitTorrent protocol.
A peer-to-peer network involves any number of nodes that can communicate with one another at a global level. The network will still be functional even if a small number of nodes are disconnected.
The drop explained
The news of South Korea’s plans regarding cryptocurrencies has resulted in a major drop.
This could have been caused by new investors not understanding what these actions mean for the crypto market, and as a response they sell their assets in mass, fearing they’ll miss out on higher prices.
Another reason for this drop could be that expert investors are taking advantage of this moment to make profits, causing stop-loss orders to execute, causing this extreme effect.
In spite of its regulatory plans, South Korea cannot put a ban on cryptocurrencies changing the world. Cryptocurrencies will continue to do so, seeing as the perks of decentralization will keep attracting more and more investors. However, the news concerning the possible ban has significantly affected the already volatile crypto market.