On October 25th, China's President Xi Jinping opined that blockchain should be treated "as an important breakthrough for independent innovation of core technologies." He also stated "[We must] clarify the main direction, increase investment, focus on a number of key technologies and accelerate the development of blockchain technology and industrial innovation." Exciting words from a leader who hadn’t spoken on the subject prior, and naturally, this statement was enough to disrupt the crypto space.
"Blockchain" was searched 72,040 on that Friday alone, Bitcoin increases 16% at a time amid the speech about embracing the blockchain technology.
"It is unprecedented that China’s top leadership has elevated any technology to such a high level," said Zhang Gang, chief strategist at Central China Securities, "It’s a big boost to market confidence." Market confidence indeed. Following the statement, the market witnessed session highs for Bitcoin reaching a high of $10,540.49 - a 16% increase within a day.
In addition, the word “Blockchain” was searched an amazing 72,049 on Friday alone with Wechat also reporting the word being searched 3,331,874 times.
Further adding to the frenzy is the recent news about China's abolition of their ban against mining cryptocurrencies. According to reports, an official state document called the "Catalogue for Guiding Industry Restructuring 2011" has recently been made invalid and "virtual currency mining" as an industry has been struck off from the list of industries to be phased out, effective 1 January 2020. This comes simultaneously as China rolls out a brand-new policy based on the previously mentioned 2011 catalogue for 2019. The 180 degree change in attitude towards cryptocurrencies from China is sure to be met with an even bigger uproar from the community.
Due to the overwhelming traffic and excitement from China’s bullish announcement, many of the crypto services were not ready for the flood of users. Downtimes proceeded for many frustrated traders and users alike.
A majority of derivatives exchanges were down due to the announcement from overwhelming traffic.
One derivative exchange named Bybit was able to stay robust especially during the current surge encouraged by Xi's statement. On the other hand, top exchanges like FTX, Deribit were down during the peak. According to Coingecko’s ‘Top Cryptocurrency Derivatives by Open Interest & Trading Volume’, Bybit ranks the top #3 along with Bitforex #5, FTX #7, and Binance #10.
Due to the incidents, other exchanges like FTX and Deribit traders were unable to reach customer support due to the high volume of sudden customer inquiries caused by the unstable servers.
Another downside of poorly managed customer service brings is that this could lead customers to create countless amounts of content about how poor the service is, thereby significantly undermining the service credibility as a whole. According to an article, one of the most popular cryptocurrency exchanges, Coinbase, had experienced the volume increment by 295% in November and December of 2017. Coinbase did not regard customer support as important, so they failed to solve customer’s problems on time. The angry customers furiously posted and commented about Coinbase’s poor customer support about the unanswered and unresolved operational issues. “The [customer support] team was left feeling like we were bailing out a sinking ship with pots and pans,” Dan Romero, Coinbase’s general manager, wrote in his blog.
Currently, many of the cryptocurrency traders had to go through the unstable trading with worries and concerns, especially in the crypto space. That is mostly due to poor customer service and unstable service. As people expect fast-growing trading volumes due to the recent news, especially since the lifting of the ban against mining cryptocurrency in China, the future form of exchanges should be prepared to be robust and should not have overloads. Lessons could have been learned from the 2017 bullrun, and only a few services, like Bybit, were prepared.
With the adoption of blockchain in China, people should expect new money to begin spurring innovation. Lessons learned from the 2017 Tulip mania should have smarter money coming in to build a new defi ecosystem. One that is robust and will be longer lasting. There is a great future coming ahead for cryptocurrency and blockchain, and the meme prediction from the future time traveler might not be so insane.