China’s Supposed ‘Bitcoin Ban’ Fails To Crash Market As Twitter Adds

A move by China’s central bank to criminalize all forms of cryptocurrency trading – effectively making bitcoin illegal in the country – has failed to meaningfully impact the price of the world’s leading digital asset.

The clampdown came one day after Twitter announced that its 330m active users will soon be able to send bitcoin to each other instantly and for virtually zero cost – harnessing the Lightning network that’s been built on top of bitcoin’s primary layer and, many believe, will propel the cryptocurrency into the mainstream.

One bitcoin was worth $42,666 on the Bitstamp exchange at 16:00 EST Saturday, holding above its long-term moving averages and surpassing its value at the beginning of August.

The digital currency briefly dipped below $40,700 on Friday, when the so-called People’s Bank of China – a Communist government-controlled central bank – declared that all cryptocurrency-related activities were “strictly prohibited” in the country. Beijing accused the cryptocurrency industry of “disrupting economic and financial order” and “endangering the safety of people’s property”.

Bitcoin was launched in 2009 as an open-source monetary network that uses blockchain technology to create a secure form of digital cash entirely outside the control of central banks.

China was initially tolerant of the technology, but its opposition has grown in recent months.

In June, the authoritarian government banned local banks from enabling cryptocurrency transactions and outlawed the energy-intensive practice of bitcoin mining, in which specialist computers are put to work solving complex problems in a race to earn newly minted bitcoins.

That clampdown triggered a 20% crash in bitcoin’s price, yet the latest, more draconian measure has moved the needle by less than 5%.

Bitcoin was almost completely unchanged on Saturday, having found strong support at its 200-day exponential moving average.

And while mainstream media outlets like the BBC, Sky News, The Times and The Guardian rushed to report on the negative developments in China, news coverage of the positive adoption by Twitter

TWTR
 was almost entirely restricted to financial outlets like Bloomberg and CNBC.

Twitter began integrating the Strike bitcoin Lightning wallet with its platform last week, enabling users to send and receive bitcoin as easily as tweeting out a thought.

The launch may have been largely ignored by the media, but its significance is hard to overstate. Critics of bitcoin have long argued that the cryptocurrency can’t be scaled for mass adoption because of its high costs and slow processing times. Average transactions on bitcoin’s primary layer typically cost around $8 and take about 20 minutes to be validated, although fees and timeframes vary in-line with network demand.

Lightning solves this problem by processing transactions off-chain…