Bitcoin tumbles on report China to shutter digital currency exchanges

Blockchain, a digital ledger of transactions underpinning bitcoin, has leapt to prominence as it enable users to track and record assets across all industries. (Reuters)
Updated 09 September 2017
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Bitcoin tumbles on report China to shutter digital currency exchanges

NEW YORK: Bitcoin fell sharply on Friday after a report from a Chinese news outlet said China was planning to shut down local crypto-currency exchanges, although analysts said this was just a temporary setback.
Sources close to a cross regulators committee that oversees online finance activities told Chinese financial publication Caixin that authorities plan to shut key bitcoin exchanges in China.
Reuters was not immediately able to verify the report. But two sources in direct contact with officials at three Chinese bitcoin exchanges — Beijing-based OKCoin, Shanghai-based BTC China, and Beijing-based Huobi — said the platforms told them that they have not heard anything from the Chinese government.
The news follows China’s move earlier this week to ban so-called “initial coin offerings,” or the practice of creating and selling digital currencies or tokens to investors in order to finance start-up projects.
Greg Dwyer, business development manager at crypto-currency trading platform BitMEX, said there was confusion over whether China would close bitcoin exchanges following the ICO ban.
“If this turns out to be true, then this sell-off is substantiated, and we could see further downside over the weekend, as it could mean the large bitcoin/Chinese yuan exchanges will need to halt trading,” he added.
Bitcoin dropped to a low of $4,227 on the BitStamp platform and last traded at $4,309.80, down 6.6 percent. On September 2, it hit a record high of nearly $5,000.
Sharp losses such as Friday’s are par for the course for an asset like bitcoin, analysts said. Over the course of its eight-year history, bitcoin has on a daily basis risen as much as 18 percent and fallen as much as 13 percent.
Still, bitcoin was still up nearly 346 percent this year.
John Spallanzani, chief macro strategist at GFI Group, said Friday’s losses could be short-lived. “Bitcoin is here to stay,” he said.
Jehan Chu, a partner at Jen Advisers, a Hong Kong-based early-stage blockchain venture capital firm, noted that should China shut down bitcoin exchanges, it will not be the end of the crypto-currency world in the country.
Blockchain, a digital ledger of transactions underpinning bitcoin, has leapt to prominence as it enable users to track and record assets across all industries.
“This is just China pressing the ‘Pause button,” said Chu.
A big part of bitcoin’s recent surge was the ICO craze, which exploded this year. Bitcoins and ether, another digital currency, are used to purchase tokens for ICOs.
By mid-July, tech firms had raised about $1.1 billion in 89 coin sales this year, roughly 10 times more than in all of 2016, data from crypto-currency research firm Smith + Crown showed.


Young Iraqis use innovation to make a living in oil-rich south

Updated 41 min 35 sec ago
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Young Iraqis use innovation to make a living in oil-rich south

  • The job market for Iraqi youths has become starkly different in the post-Saddam Hussein era
  • In the decade which followed the US invasion and the dictator’s ouster in 2003, authorities continued to increase state hirings — with a heavy dose of nepotism

BASRA: From a roving cafe to scrap metal sculptures, young Iraqis unable to tap into the country’s oil wealth are having to find creative ways to make a living.
While their parents generally went straight into public sector jobs after graduation, the job market for Iraqi youths has become starkly different in the post-Saddam Hussein era.
In the decade which followed the US invasion and the dictator’s ouster in 2003, authorities continued to increase state hirings — with a heavy dose of nepotism.
But now, as 26-year-old Karrar Alaa discovered, there are no more guarantees.
Three years ago, he was counting on his business degree leading to a public sector job in the southern port city of Basra.
But tired of waiting, he has turned entrepreneur.
After gathering up all of his savings and borrowing money from relatives, Alaa invested in a car and transformed it into a coffee shop on wheels.
“It’s the first of its kind in Basra. I got the idea from a video shot in Europe and posted on Facebook,” he told AFP.
The “Coffee 2 Go” car has a giant plastic cup mounted on the roof, while an image of a cup of cappuccino and coffee beans is emblazoned on the body.
An initial investment of $20,000 has led to daily earnings of around 150,000 dinars, or $120, from cups of coffee made in a machine installed in the car boot.
Mashreq Jabbar earns similar sums from his little bookshop squeezed into a corridor of a Basra fashion mall.
“Renting a shop costs $6,000 a month; I only pay $2,500 for my hallway,” said the slim 26-year-old, as he tidied shelves of school books, romantic novels and poetry collections.
The geology graduate had also hoped to get a job as a public official, confident that his degree would make him employable in the local oil industry.
But even though the sector accounts for 89 percent of the state budget and 99 percent of Iraq’s export revenues, it provides only one percent of jobs as the majority of posts are filled by foreigners.
The lack of opportunities is nationwide; from the capital Baghdad to second city Mosul in the north, and from the agricultural east to the western desert.
It is not uncommon to find engineers working as taxi drivers, or sandwich stalls manned by literature graduates in a country of avid readers.
Officially, 10.8 percent of Iraqis are jobless, while youth unemployment is twice as high in a country where 60 percent of the population are aged under 24.
A mushrooming number of private universities — with Baghdad boasting around 30 — has made the situation even worse among graduates.
The private sector which emerged after Saddam’s rule has failed to fill the employment gap, with many young Iraqis holding out for the coveted public sector posts.
“The common view is that there’s no choice but to work in the public sector,” said Ahmed Abdel Hassan, an economics professor at the University of Basra.
“Young people who go to work in the private sector say it’s a temporary move before getting a post in the public sector,” he said.
Even Basra’s entrepreneurs see the benefits, with Alaa noting the social security and pension perks, while Jabbar pointed to civil servants’ guaranteed salaries.
Many of those holding out for a state job, however, are left unable to move out of their parents’ house.
Omar Abdallah, 28, had pinned his hopes on getting a teaching job at the end of his studies in fine art.
Iraq once had a high-quality and free education system, but that was left in tatters following the international embargo of the 1990s after Saddam’s invasion of Kuwait.
Having failed to land a job and with no capital to start a business of his own, Abdallah began collecting scrap metal.
“I could only count on myself and my talent,” he said at his family home, where one room serves as both his workshop and exhibition space.
Abdallah has transformed old bicycle chains into scorpions, cutlery into dragonflies and used nuts and bolts to make motorbike models.
In a good month he can sell half a dozen sculptures, charging between $200 and $250 apiece.
“People love my sculptures,” he said proudly. “They tell me: ‘How did you manage to make something so beautiful out of rubbish?’“