Bitcoin soars on Brexit, digital currency prospects attract industry attention

Along with the U.S. dollar and gold, Bitcoin has also risen due to Brexit. Data from relevant trading platforms show that as the situation of the UK referendum on June 24th reversed, the price of Bitcoin soared all the way, reaching as high as about $675 at the moment of Brexit success. The day before, Bitcoin had fallen to $600 due to the prevailing public opinion of staying in the EU.

Xu Mingxing, founder and CEO of OKCoin, a bitcoin trading platform, told the Securities Daily reporter that because the total amount of bitcoin is constant and it is more divisible than gold, the uncertainty of the international financial situation has strengthened the safe-haven property of bitcoin, triggering more transactions and attention from investors. Xu Mingxing also said that the recognition and widespread application of blockchain technology is also an important factor in pushing up the price of bitcoin.

The latest book "China Financial Supervision Report 2016" published by the National Financial and Development Laboratory specifically discusses the content of cryptocurrency and blockchain technology in the special research. The report believes that the application of digital currency and blockchain technology can effectively improve the coverage and convenience of financial services, which is conducive to improving economic operation efficiency and low cost, and is of great significance to financial institutions and financial innovation.

Relevant data shows that by the end of 2015, more than 20 of the world's top financial institutions had explored and tried blockchain technology. There are currently five main forms: one is to set up blockchain laboratories within financial institutions; the second is to invest in blockchain startups, such as Goldman Sachs' investment of $50 million in Bitcoin company Circle; the third is to cooperate with blockchain startups; the fourth is securities issuance business. In the documents submitted by Overstock.com to the SEC (US Securities and Exchange Commission ), the company stated that it plans to issue up to $500 million in stocks and other securities through blockchain technology; the fifth is securities trading business. On December 30, 2015, Nasdaq announced that its partner Chain.com used Nasdaq's blockchain technology trading platform Linq for the first time when issuing stocks to a private investor.

However, Hu Bin, editor-in-chief of the report and deputy director of the Institute of Finance of the Chinese Academy of Social Sciences, said in an interview with the Securities Daily reporter that all countries are stepping up their research on digital currencies, but private digital currencies do not have the conditions to become mainstream currencies, and the real promotion and use of digital currencies still needs changes in the overall pattern of blockchain technology. "The biggest problem in the development of digital currencies is how to prevent financial risks caused by the application of digital technologies based on the Internet," Hu Bin emphasized.

Theoretically, the growth in the scale of digital currency transactions will lead to a decrease in the demand for other currencies, thereby affecting the amount and turnover of currency in reality, and to a certain extent affecting the implementation of monetary policy and having a destructive effect on the stability of the financial and payment markets. At the same time, its holders do not need real-name authentication, and the tax authorities cannot understand the relevant information of the holders, making it impossible to manage and tax the profits from their transactions, which may also facilitate money laundering and black market transactions.

Earlier this year, on January 20, the People's Bank of China held a special seminar on digital currency in Beijing, which triggered various speculations about the central bank's change of attitude towards Bitcoin. Five months later, at the first Big Data Finance Forum held on June 24, the director of the Central Bank's Survey and Statistics Department gave a relatively comprehensive response: the central bank's digital currency in the future is a standard currency based on technological innovations such as blockchain, which will help improve the effectiveness of money supply and monetary policy.