Bitcoin enthusiasts, especially those in China, have been riding a financial roller coaster as of late. As 2013 comes to an end, we thought it would be helpful to recap just how we arrived where we are today: with heavy government restrictions on the world’s most robust Bitcoin market.
In the first three months of this year, China’s relationship with bitcoin was virtually nonexistent. A handful of scattered miners and exchanges like BTC China, which launched in 2011, had never really entered the public eye. As far back as we can tell, Bitcoin’s recorded history in China dates back to April, when a Chinese charity started accepting bitcoins to help earthquake victims in Lushan, Sichuan province. That probably sparked the curiosity of a few speculative investors. The miners sooned caught the favorable eye of state media, which led to China’s explosion of interest.
Between June and October, the Chinese Bitcoin community quietly thrived until it became the biggest in the world. A few online and offline businesses started accepting the world’s most popular cryptocurrency, including Chinese search giant Baidu for its website security services. What the government had once treated as a novelty on state media soon became a real concern. China became home to the world’s largest Bitcoin exchange, along with a massive population of miners and speculative investors.
When the value of bitcoins skyrocketed to more than $1,000 each in December, a government ruling was inevitable. No one was really sure which side the state would come down on, and the result took a heavy toll. When the government ruled that bitcoins could not be used as legal currency in China, prices went into a freefall to less than $500 per bitcoin from a peak of almost $1,150 within two weeks. They’re now at $761.
Still, bitcoins are not banned outright in China, and the global market remains surprisingly resilient. Bitcoins are still worth six times what they cost in April, and optimism exists for the Chinese market.
(Bitcoin price history according to CoinDesk)
(Editing by Josh Horwitz)