Breaking: as I write this on Friday morning news has just surfaced that China is creating its own digital currency.

The new crypto will be called DCEP (digital currency electronic payment). And it will used distributed ledger technology.

The news came straight from the People’s Bank of China governor Zhou Xiaochuan. And what’s more, he said China is relaxing rules on crypto trading and ICOs. Or at least, that it is not planning any more sanctions anytime soon.

This is a massive crypto endorsement from China, and it could well be the news that sees markets turn after the Mt Gox fiasco I wrote about on Friday. Of course, it could also not be. You never really know with cryptos.

However, the main event that caused crypto’s two month crash back in September 2017 was China cracking down and shutting down exchanges. Surely, an endorsement of crypto from China should have a big positive effect.

The reason for China’s turnaround is obvious.

After the US came out hugely in favour of cryptos in its regulatory hearing in January (I wrote about it here) it was clear China would end up doing the same.

Neither country wants to lose a foothold on this emerging technology. No country wants to lose out on the huge amount of money “the next internet” could bring. At least, not once they hear the US has endorsed it.

I see this announcement as yet more proof that cryptos aren’t going anywhere. Despite the huge price swings, and contrary to what many commenters say, cryptos are here to stay.

And let’s not forget, a couple of weeks back, Russia also announced it would have new crypto laws in effect by 1 July. As Coin Telegraph reported last week:

Russia’s president Vladimir Putin has signalled cryptocurrency regulation in the country should become law “by July 1” this year, according to the official government publication Parlamentskaya Gazeta Feb. 28.

Putin has set in stone the release date for a regulatory package, now called the Digital Assets Regulation Bill, which first appeared last year.

Its introduction will end years of uncertainty in which cryptocurrency – along with investors corporate and private – lay in a gray area, with local authorities in Russia taking various contradictory moves to decide which aspects of it were and were not legal.

Russia has so far been one of the few big countries that looks favourably on cryptos.

Now that the US has given cryptos the green light. Now that even China is starting to warm to them. It’ll be interesting to see what Russia does. Although, you never really know what Russia is going to do.

Yes, this is all positive news for crypto. But remember, no matter how exciting a crypto project is, or how certain you are you’re going to make money, never invest more than you are willing to throw away.

Anything can and does happen in the world of crypto. That’s the fun of it. Things shoot up 1,000% in days, then the entire market is dragged down by a hack that happened four years ago.

You have seen the price swings first hand now. Don’t forget these are the norm in crypto. The way you make more money is by investing less. It sound’s strange, but I explain it in my free beginner’s guide to crypto here. Please read it before you put any money in. It will save you a lot of heartache in the long run.

I had planned today to write about the power of memes. But once I saw the China regulation story surface, I knew had to cover it straight away. There is a lot more to the meme than meets the eye. They are not just funny photos shared over the internet.

Richard Dawkins, the man who coined the phrase in his 1971 book, The Selfish Gene, describes them as a sort of brain virus.

Memes have shaped our culture for centuries and, as I’ll show later this week, they have created some of our most enduring technologies.

Until next time,

Harry Hamburg
Editor, Exponential Investor

PS On the theme of never knowing what Putin will do, I read a great book about the Kremlin’s misinformation tactics called “Nothing is True and Everything is Possible”. It is written by a former Russian TV reporter. And it reveals a lot of the tactics of Vladislav Surkov, the king of disinformation and mass manipulation.

If you’re at all interested in the inner workings of Russia, or just how politicians manipulate, I can’t recommend it enough. If you can’t find time to read the whole book, this article about it in the Atlantic is a great summary of the chapter on Surkov and the “New Russia”.

PPS I got the line for today’s issue from a somewhat mesmerizing montage of Donald Trump saying China, a lot. You can watch it here if you want a laugh.