I recently talked with Bobby Lee, CEO of BTCC, China’s first and biggest bitcoin exchange. It would be fair to call Bobby an optimist when it comes to Bitcoin in China and throughout the world.
“The great part is that in China, Bitcoin is very popular. There’s a lot of speculation, and a lot of mining activity, and a lot of traders,” he says. “There’s huge interest, demand, and activity in China.”
Mainland China is a big deal in the world of Bitcoin. A tremendous amount of “mining” – that is, the process of using computational power, often entire server farms’ worth, to discover new coins – is now done in the country. By some estimates, about 80 percent of the global mining market is now within the People’s Republic.
Bitcoin is also used in China in ways that it isn’t in other parts of the world. China already has very advanced infrastructure for epayments – namely WeChat Wallet and Alipay – so many Bitcoin holders don’t use the currency for daily transactions. Instead, they use it to scratch the itches that are typically off-limits to average Chinese citizens, like investments and currency conversions.
Bobby’s optimism on Bitcoin in China is not shared by everyone.
“Because people in China are buying and selling Bitcoin in boatloads, there’s a great liquidity in Bitcoin trading. It makes the prices much more stable,” Bobby says. “So bitcoin volatility has actually come down in the last two years – and that’s a great thing. You can fully attribute that to the fact that China is contributing liquidity.”
All good news, right? But Bobby’s optimism on Bitcoin in China is not shared by everyone.
The bad news
Back in January, (now former) Bitcoin developer Mike Hearn wrote an article that got quite a bit of circulation within the cryptocurrency community, and it wasn’t enthusiastic. (I reached out to Mike to comment on this article, but he declined.)
Dubbed “The Resolution of the Bitcoin Experiment,” the piece is essentially a list of reasons why Bitcoin is completely screwed. It got a bit of flak online – Gizmodo said, “Bitcoin has died – for the 89th time” and noted that declarations of Bitcoin’s death have happened every few months since the currency was first created. But some of its criticisms, especially those related to China, are worth taking seriously.
One is that China’s Great Firewall (GFW) censorship apparatus is wreaking havoc on Bitcoin’s technological infrastructure. Because so much of Bitcoin is transacted within China, and because connections from China to other countries are slowed by the GFW, the entire global network for Bitcoin is made slower.
A related criticism is that, according to Mike, China’s dominance of the global Bitcoin mining market has turned into a liability because the specific individuals in control of the country’s biggest mines are resistant to changes in the blockchain, the decentralized technology that makes all of Bitcoin work in the first place.
Bitcoin usage map, by Tech in Asia.
It’s good to be open-minded
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