China must rethink ban on Crypto 

The news coming out of the People’s Republic of China is that although the country will continue with its central bank digital currency (CBDC) efforts, it shall continue imposing a complete ban on all cryptocurrency-related operations.
Before we examine this ban, let us look at the history of bitcoin mining in China. It dates back to 2009, when the world’s first cryptocurrency was introduced. 
Ever since cryptocurrencies were introduced, China has led the way in bitcoin mining due to its cheap electricity and large amounts of computing power.

Still, despite the evident benefits of cryptocurrencies, the Chinese government, in September 2021, imposed a complete ban on all cryptocurrency-related activities. 
The government’s reason for such a ban pointed to the potential for illegal activities and the disruption of the nation’s financial stability.
However, financial experts in China say this ban is a mistake and official Beijing should reconsider.
Huang Yiping, former advisor to China’s central bank, believes that the ban on crypto-related activities is sure to result in China’s falling by the wayside when it comes to innovating in cutting-edge technologies. 
Huang says there is plenty to be gained for any country if it involves itself in researching blockchain technology. 

One area where this technology may help is in political democracy and this could be the real reason why official Beijing is more than a little lukewarm in embracing cryptocurrencies. Cryptocurrency, which is underpinned by blockchain technology, has the potential of leading to more inclusive government and thereby the enhancement of good governance.
To be sure, blockchain technology is an advanced database mechanism that allows transparent information sharing within a business network. A blockchain database stores data in blocks that are linked together in a chain.
By extension, the transparency of information sharing through a consensus algorithm precludes the need for a centralised authority.

In short, cryptocurrency has a powerful political use in that it democratises access to money, so anyone can open up a wallet. Thus its technology has the potential to make governance more equitable and accessible and thus accountable. 
It is a technology that takes away financial monopoly from government and without the centrality of such power vested in government, it can be used to promote democracy.
To be sure, cryptocurrencies democratise access to money and the blockchain technology decentralises, through the consensus algorithm, the information related thereto.
Although the China government may be apprehensive about such political dimensions to cryptocurrency activities, it may have no choice but free these activities.
Data from the Cambridge Centre for Alternative Finance (CCAF) shows that 20 percent of all bitcoin hash rates came from China between September 2021 and January 2022.

Obviously, then, there is a massive underground mining sector in China, with miners becoming more secure and satisfied with the security provided by local proxy services as the ban took effect. The situation in China is similar to the law of prohibition in the United States from 1920 to 1933, when a nationwide constitutional law prohibited the production, importation, transportation, and sale of alcoholic beverages.
Prohibition ended with the ratification of the 21st Amendment, which repealed the 18th Amendment on December 5, 1933.
This is because it was realised that the ban was doing more harm than good as a black market of bootleggers erupted on the scene. And this led to an increase of organised crime as the mafia, led by Alphonse Capone, muscled in on this market. China would do well to take lessons from this history.

Mr Orena is the CEO of DM Exchange, a Fintech company.    @martinorena