If you're a cryptocurrency evangelist then you must be aware of the fact that last month China has announced that it'll ban all the ICO's conducted within China and major cryptocurrency exchanges have also ceased operations regarding Bitcoin trading in China. Now, there's no option available for Chinese people to buy Crypto via Renminbi (China Currency).
If someone have to purchase Bitcoin, then he can only buy it via International exchanges like Coinbase.
Now this decision taken by the government has been criticized many crypto evangelist and people of high influence. Some are even saying that taking this decision, China may have triggered 'Cobra Effect'.
So, What is Cobra Effect?
Well, back in days when British Government ruled India, there were a huge problem of Cobra's in most of the prominent areas of British Offices. Cobras are the poisonous snake which can kill with a single bite.
Now, to eradicate this problem, the government introduced a reward system on per kill of Cobra. Having heard this, initially people killed many cobras but as the time passes people had started to breed cobras in order to kill them after, to get more rewards from the British Government.
As soon as the Government get to know about this, they scrapped that system. But after hearing the system scraping, people left all those cobra's they were breeding in the open and thus making the situation worse.
Same Case With Cryptocurrency Ban
Now, the same thing happened with Chinese Government. They think that banning all the ICO's and crypto exchanges will eradicate all the trading and investing activities in cryptocurrencies as most of the trading were taking place in Chinese Crypto exchanges. But, now this Cobra effect may have triggered in China regarding this ban.
The main reason of ICO and crypto exchange ban is to make Bitcoin buying difficult for the normal person. In order to reduce the popularity of crytpocurrency in China, it was must to ban all these exchanges, so China deliberately did ban everything. May be Chinese government were trying to protect the interest of retail investors.
Now, people have a tendency to purchase more when something is banned as they think of it as the next best or profitable thing because their own Government have banned it but in other countries it is flourishing. This makes them greedy and would try to get their hands on that thing through unfair means. This may be happening in China right now.
Now, the exchanges are closed, people will try to turn their heads towards P2P trades which may be even dangerous as the high risk of fraud exist there. P2P traded means buying Bitcoin through local people via fiat currency. There will not be any exchange involved in the transaction nor will any security measure.
All in all, it seems that Cobra Effect is going to spread over China soon enough. Let's see for how long this Ban lasts?
Conclusion: Always keep your investment safe and invest only after proper research, using your own due diligence. If you're purchasing cryptocurrency, then try to buy it only from official exchange or some reliable mode.
Thanks for reading.
