When it comes to the “cryptocurrency circle”, some people get rich overnight, while others lose their money. In the eyes of some people, on one side is a “rich mine”, on the other side is a sharp rise and fall, burst positions, financial fraud, “cut leeks” ……
Editor’s Note: In May, the cryptocurrency world attracted a lot of attention. on May 18, the China Internet Finance Association and other three major associations issued a notice pointing out that the exchange of legal tender and virtual currency and the exchange of virtual currency between the business violates the relevant laws and regulations and is suspected of being a crime. on May 21, the State Council’s Financial Committee made a strong statement, once again clarifying the financial regulator’s position on bitcoin. On May 21, the Financial Commission of the State Council made a strong statement, once again clarifying the financial regulators’ attitude towards strict regulation of bitcoin: “Crack down on bitcoin mining and trading, and resolutely prevent individual risks from being passed on to the social sector”.
Where does the “fever” of coin speculation come from? What is the chaos in the “cryptocurrency world”? How does “mining” consume energy? How to develop blockchain healthily? With these questions, the People’s Daily Online “Strong Observation” column launched a series of “Four Questions about Bitcoin”, please pay attention.
When it comes to “cryptocurrency”, some people get rich overnight, while others lose their money. In some people’s eyes, there is a “rich mine” on one side, but on the other side, there is a sharp rise and fall, position explosion, financial fraud, “cutting leeks” …… How to view the “cryptocurrency circle” chaos? The “chaos”? The people’s network “strong observation” column visited the virtual currency “senior players” and related experts.
The “coin speculation” player tells the “coin circle” chaos
“From 2017 into the ‘coin circle’, I have invested nearly 10 million RMB one after another, but after being harvested by the dealer, the virtual currency in hand should be ‘cut’ ‘cut meat The virtual currency in my hand was ‘cut’, the ‘air’ became ‘air’, and in the end the account number was not even 1 million.” Mr. Xu is a former “senior player” in the “coin circle”, he shared his typical experience with the “Strong Watch” column.
In June 2017, Mr. Xu was introduced by a friend and bought a virtual currency called “dog coin” on a website, the number of which exceeded ten million, valued at about 160,000 RMB. Because of the low entry price, Mr. Xu thought the sale would be promising in the future, so he decided to hold it for a long time.
“At the end of 2020, when it was time to “harvest”, Mr. Xu not only couldn’t open the website where he bought “dogcoin” at that time, but also couldn’t open the website where he bought it. “The company’s main business is to provide a wide range of products and services to the market.
Mr. Xu revealed to the “strong observation” column that he is not the only player who has been “cut leek”. In the time of “speculation”, most of the virtual currency players he met have experienced a plunge in the price of coins, trading channels closed and so on, such as “lightning” events, serious losses.
Virtual currencies are on the court ruling
In fact, the “cryptocurrency circle” chaos has constituted a crime.
According to the data on China Judicial Documents, there have been 2,130 judgments in criminal cases related to virtual currencies since 2011, with the number increasing year by year, reaching a high of 595 in 2020. So far this year, 167 verdicts have been handed down in relation to the “cryptocurrency circle,” including cases involving “fraud,” “assisting criminal activities in information networks” and “obstructing credit card management. “obstructing credit card management”, “illegal absorption of public deposits” and many other crimes.
“For example, in some cases, virtual currencies are “financial products” using the latest financial technology; in others, they are fabricated by pyramid schemes. For example, in some cases, virtual currencies are “financial products” using the latest financial technology; some are “commodities” and “points” fabricated by pyramid schemes; and even in some cases, virtual currencies are used as a tool to pay for drug money, gambling money, and money laundering. These cases are widespread and involve millions of dollars, causing a very bad impact on society.
“Judgments from China, South Korea, the United States, Japan and other countries show that criminal cases related to speculation in virtual currency trading are mostly focused on fraud, illegal fund raising and illegal issuance of securities.” Xiao Sa, director of the China Banking Law Research Association, said that a large number of criminal cases related to virtual currency in China also appeared in the crime of organizing and leading pyramid schemes, which seriously affected the order of social management, involved many people, involved a particularly large amount of money, and the great social harm was obvious.
In the trend of “speculation” where investment becomes speculation, experts remind investors to pay attention to the legal risks involved.
“Trading virtual currencies is an illegal activity, and once the risk arises, the virtual currency property of individuals or enterprises is not protected by law.” Zhao Lei, a researcher at the Institute of Law of the Chinese Academy of Social Sciences, said that because of the illegality of virtual currency itself, for cases involving virtual currency transactions, courts around the world are able to rule that the relevant transaction contracts are invalid based on the relevant provisions in the Notice on Preventing the Risks of Token Issuance and Financing, and that the consequences caused by the transactions and the risks triggered are borne by the investors themselves.
Zhao Lei suggested that before investors come into contact with a new investment product, they must first confirm its legality, and secondly, make up for the relevant professional knowledge to avoid someone using the trappings of financial management to do criminal things.
Crackdown on virtual currency offences
In the face of the continuous upgrade of China’s regulation, some virtual currency players wandering in the edge of the law have the idea of moving their business overseas, thinking that they can avoid the supervision of Chinese law, and even if they break the law, Chinese criminal law is “too long to reach”.
“This is not the case, if the relevant business touches China’s criminal law, by virtue of the expanded interpretation of ‘place of crime’, China’s criminal law can also be based on territorial jurisdiction to regulate it.” Xiao Sa said that blockchain and virtual currency-related activities are often carried out through computer networks. China’s “Criminal Procedure Law Interpretation” Article 2, paragraph 2 for the main use of computer networks to commit crimes, the concept of “place of crime” to expand the interpretation, even if the main body of the institution, the business transferred to a foreign country, but as long as the market subject has a Chinese, and the loss of Chinese property, then China can be “The place of the information network system used by the victim”, “the place where the victim was infringed” or “the place where the victim’s property suffered damage”, etc., the public security judicial organs of China can still have jurisdiction over the criminal acts of the practitioners. The public security judicial organs of China can still have jurisdiction over the criminal acts of the practitioners.
“The purpose of the escalating regulation of virtual currencies is to crack down on illegal and criminal acts.” Liu Junhai, a professor at the Law School of Renmin University of China, believes that China’s active construction of effective regulatory means and laws and regulations for virtual currencies is an important measure to return some resource elements to production. At the same time, he also advised all the players in the “cryptocurrency” circle to look at virtual currencies correctly, abandon the psychology of luck, drop the illusion of “overnight riches”, and create a better life by working hard to get rich through legal means.
On May 18, the Internet Finance Association of China and other three major associations issued a notice pointing out that the exchange of legal tender and virtual currency and the exchange of virtual currency between them violates relevant laws and regulations and is suspected of being a crime. The State Council’s Financial Committee once again clarified the financial regulator’s attitude towards strict regulation of bitcoin: “crack down on bitcoin mining and trading, and resolutely prevent the transmission of individual risks to the social sector.
Where does the “fever” of coin speculation come from? What is the chaos in the “cryptocurrency world”? How does “mining” consume energy? How to develop blockchain healthily? With these questions, People’s Daily Online “Strong Observation” column launched a series of “Four Questions on Bitcoin”, please pay attention.
Recently, Bitcoin has attracted a lot of public attention because of its sharp rise and fall and the government’s strong regulation. How to understand the relationship between bitcoin and blockchain? What role does blockchain play in helping the development of the real economy? What will China do to promote the healthy and orderly development of blockchain? In this regard, People’s Daily Online “Strong Observation” column invited a number of experts to explain.
Is bitcoin equivalent to blockchain?
“In fact, bitcoin is a virtual currency.” Zhao Xijun, a professor at the School of Finance and Economics of Renmin University of China, said that virtual currency is like the points that some platforms launch to encourage players to use their own systems more, which are just numbers and not real money, but can be traded in kind or transferred in points. “Such numbers generated by the platform according to the rules, without a fixed denomination and not a currency issued by the platform in advance, can be understood as virtual currency.”
When it comes to bitcoin, many people will bring up blockchain, and some even believe that bitcoin is blockchain. Is Bitcoin the same as blockchain?
“Bitcoin is in no way equivalent to blockchain. The essence of blockchain is a decentralized distributed database, an innovative application model of the Internet with various technologies such as distributed data storage, multi-centered peer-to-peer transmission and encryption algorithms, and not a virtual currency.” Long Fan, director of the TreeMap Blockchain Research Institute, said, “In short, blockchain is actually a distributed database or ledger of recorded data that achieves decentralization and is difficult to be tampered with, including public, private and alliance chains.”
Regarding the relationship between Bitcoin and blockchain, Zhao Xijun believes that blockchain is the underlying technology of Bitcoin, and Bitcoin can only exist and run with the technical support provided by blockchain, and the relationship between the two is more like that of dependency and dependence. But the application of blockchain is not limited to the financial field, it has a wide range of applications.
How can blockchain help the real economy?
On October 24, 2019, General Secretary Xi Jinping stressed during the 18th collective study of the Political Bureau of the Central Committee of the Communist Party of China that it is necessary to promote the deep integration of blockchain and the real economy to solve problems such as difficulties in loan financing for small and medium-sized enterprises, difficulties in risk control of banks and difficulties in supervision of departments.
“Blockchain technology is about value circulation, trust building, contract trustworthiness and enforcement, and can play a key role in technical support for the construction of China’s real economy ecological environment, such as reducing transaction costs, improving product quality and credit, eliminating capital friction, building virtuous supply chain relationships and creating an ecological environment for innovation and creation.” Zhu Wei, a member of the expert pool of Beijing Science and Technology Commission, explained that the market and policies and regulations are regulating the development environment of the manufacturing industry, but there is still a space for the construction of industry order between the two. “Blockchain plays a supporting role in building the industry order of the manufacturing industry from the technical perspective, and can help the manufacturing industry to build a benign order of the industry quickly, spontaneously and purposefully.”
Based on the technical characteristics of blockchain with anti-forgery, anti-tampering and traceability, Zhu Wei believes that it is conducive to solving the problems of equipment management, data sharing, multi-party trust collaboration and security in the manufacturing industry, which are important for enhancing industrial production efficiency, reducing costs and improving the level and efficiency of supply chain collaboration.
In addition, blockchain technology can promote the combination of industry and finance, so that finance can better promote the development of the real economy. Zhao Xijun said that the combination of blockchain technology and supply chain can greatly alleviate the problem of difficult loans and financing for small and medium-sized enterprises in the supply chain; the security mechanism of blockchain’s tamper-proof and private key makes identity management easier and does not need to rely on the supervision and credit of third parties, which greatly enhances the credibility of the data network; distributed ledger technology makes non-commercial confidential data stored and backed up in participating nodes, which solves the Distributed ledger technology makes non-commercial confidential data stored and backed up in participating nodes, solving the problem of information silo in supply chain finance business.
In order to promote the deep integration of blockchain and real economy, Tian Shandi, associate professor of the School of Finance of Southwest University of Finance and Economics, suggests: firstly, to establish a provincial or even national supply chain tracking system, and to establish a traceable logistics system with complete and credible data for the flow of materials related to national security and people’s livelihood; secondly, relevant departments should encourage industry cooperation, develop collaborative procurement and shared supply chain management platform, and create a highly visible upstream and downstream supply chain through blockchain Once again, enterprises should explore to broaden the application scenarios of blockchain and improve the application efficiency of the technology, such as integrating information flow and using blockchain to replace the delivery of paper contracts and bills, and then integrating capital flow and using blockchain for account management.
How to develop blockchain in a healthy and orderly manner?
In the chapter of “Accelerating Digital Development and Building Digital China” of the 14th Five-Year Plan, blockchain is listed as one of the seven key industries of digital economy in the 14th Five-Year Plan.
Blockchain is included in the national development five-year plan for the first time and becomes an important carrier for developing digital economy and building digital China, which marks that the integrated application of blockchain technology will play a more and more critical role in the process of digital industrialization and industrial digitization.
In this regard, Pan He Lin, executive director of the Digital Economy Research Institute of Zhongnan University of Economics and Law, said that although virtual currencies are ushering in strong regulation in China, blockchain is likely to become an important new infrastructure in the era of digital economy with the support of a series of policies, which is of great significance to the development of real economy, modern finance and technological innovation, and is being vigorously developed in various countries today.
In addition to benefits, blockchain also presents new challenges in terms of regulation. A blockchain research expert from the Central Bank explained that virtual currency exchanges, ICO (Initial Token Offering) fund raising, pyramid selling in the form of tokens and other clearly illegal and unlawful financial-like behaviors are frequent, and current regulatory technology needs to monitor and analyze the public chain addresses and transaction data of the above behaviors to determine whether they are illegal and criminal. However, the anonymity of public chain based on blockchain technology and the unmanned automatic execution of smart contracts make it impossible for the current regulatory technology to implement detection and analysis, so naturally it is impossible to complete the judgment of illegal and criminal acts.
Some illegal blockchain applications borrow points, stored value, equity, bill of lading, sales rewards, coupons and other names to implement fund-raising, pyramid schemes and other illegal and unlawful financial behaviors. “In addition to technical regulation, there should also be laws and regulations to regulate, but the laws and regulations in this area are still missing.” The expert added that even for compliant and legal blockchain applications such as supply chain finance, compliant asset registration and trading, and depositing certificates, it is not clear how to adapt and be compatible with the existing regulatory process, and the regulator needs to develop refined standards and specifications with operability.
To solve the above-mentioned problems, the expert suggested that for virtual currency finance based on blockchain technology, a unified data supervision and analysis platform should be built, which can not only analyze, predict and judge financial risks by combining with bank transaction data, but also improve analysis capability by applying technologies such as big data, joint risk control based on privacy computing, knowledge mapping and artificial intelligence. At the same time, the regulation should be strengthened and the cost of violation should be increased for the violations in the name of blockchain but not blockchain technology.
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