Happy Chinese New Year! to celebrate this amazing holiday, we’re going to visit a country with an immense density of crypto miners and traders, where cryptocurrencies are viewed as a valuable asset and a means of safe investment. China is one of the main exchange markets and home to some of the biggest bitcoin ‘mining pools’ in the world. Unfortunately, the ban on cryptocurrencies from Chinese Government had a negative effect on the whole industry. Despite this fact, there are plenty of reasons to stay optimistic! Let’s go sightseeing! Government & Regulation In 2016, technology development was added into — the plan for national development over 2016–2020 — thus making China one of the first states in the world to accept the technology in its official policy. It’s important to note that state-sponsored usage of the blockchain is heavily favoured, as opposed to decentralized practices characteristic of many blockchain-based projects. It might still be too early to make any conclusions, but at the very least, this governmental support is likely to boost the country’s R&D. blockchain the 13th Five-Year Plan hasn’t enjoyed such a warm welcome from Chinese officials, though. Let’s take a quick look at the timeline: Bitcoin People’s Bank of China (PBoC) issues a “ ”, prohibiting all crypto-related operations for banks. The main reason for this measure is the lack of safety due to Bitcoin’s decentralized nature. At this point, Bitcoin has already gained massive popularity throughout China; December 2013: Notice on Preventing Financial Risk of Bitcoin China introduces blockchain technologies into its 13th Five-Year Plan; December 2016: China all ICOs. Shortly after, Chinese BTC exchanges are forced to all trading operations (particularly crypto-to-fiat ones) because of government investigations in the crypto industry. Eventually, the oldest Chinese crypto exchange, BTCC, all domestic operations. Yet even after the ban on cryptocurrency trading, the Chinese government along with local corporations like Tencent and Alibaba continue to see huge potential in blockchain technologies and focus on developing decentralized financial platforms; September 2017: bans halt shuts down China bans P2P and OTC markets. By this point, Chinese state regulators have worked out a long-term strategy to eliminate cryptocurrency from the national economy by announcing a on foreign crypto-related platforms. This is obviously seen as a big deal given the immense amount of crypto mining conducted in China; January 2018: ban Access to offshore crypto exchanges and ICO websites is blocked; February 2018: China’s president Xi Jinping praises the blockchain technology, calling it . The State Council of China local financial authorities and state-funded research centres to put extra effort into the development and commercialization of blockchain technologies. A blockchain-powered system to combat fraud is by the PBoC; May 2018: “a part of the technological revolution” urges revealed China’s largest TV broadcaster CCTV informs the viewers that “ ”. In the hour-long video, Chinese government officials team up with international experts to educate the audience on the concept and potential of blockchain technologies. June 2018: the value of blockchain is 10 times that of the Internet China’s central bank has hailed it’s cryptocurrency crackdown a complete success. Declared by the People’s Bank of China (PBoC) and reported by state media, data apparently shows that the Chinese currency is now involved in less than one percent of all Bitcoin $BTC▼1.62% trades worldwide. July 2018: Authorities about risks from illegal fundraising activities under the guise of “cryptocurrencies,” and at least one major business district in Beijing banned promotional cryptocurrency events. August 2018: warned : Taiwan anti-money laundering (AML) policies targeted at crypto exchanges, requesting exchanges to monitor and prevent any illegal transaction processed using digital assets. Pressure from China was cited as possible reasons for this decision. November 2018 officially tightened The People’s Bank of China (PBoC), the country’s central bank, highlighted the illegality of Security Token Offerings (STOs) in the country. December 2018: China has its latest government-sponsored rankings of major cryptocurrencies, placing Bitcoin (BTC) in 15th, while EOS was 1st and Ethereum was 2nd. The rankings were released in a press release on Jan. 24. The crypto rankings by China’s Center for Information and Industry Development (CCID) were first announced in May last year. In this ninth edition of the index, EOS keeps its place as the top-ranked blockchain, which has been occupied by the platform since June 2018. January 2019: released Mining China is known for its plants manufacturing video cards and . Thus, Chinese miners are able to purchase the necessary equipment at a much lower cost compared to the rest of the world. numerous ASIC miners The country can already boast a remarkably ; add to it the decision of the Chinese government to the industrial production of cryptocurrency by offering additional discounts on electricity to crypto farm owners, and you can see why China is one of the world’s largest mining centers. low price for electricity encourage Farms for crypto mining are strewn all across the country. Notable examples include Sichuan (also known as , with its industrial farm placed right next to a hydroelectric power station), province (with a three-story farm in its small city of Dalian for over 3% of the entire Bitcoin network’s hash rate), Xinjiang, Inner Mongolia and Yunnan. “the capital of bitcoin mining” Liaoning accounting Business & Research China is one of the most technologically advanced countries in the world. With its tendency to be among the first adepts of new concepts (such as QR-powered payments), it comes as no surprise that even before the new state investment into blockchain technology, China had already become a leader in that area: In 2017, in an impressive feat of scientific capacity, Chinese-based companies filed the of all blockchain-related patents in the world, increasing the number of Chinese blockchain patents almost 4 times since 2016; majority Chinese e-commerce titan Alibaba the most Blockchain patents globally: an estimated amount of 49 licenses which are mostly app-oriented and have been utilized in such areas as healthcare, public welfare and supply chains. However, this doesn’t stop Alibaba’s founder Jack Ma from Bitcoin “a bubble”. Apparently, just like the Chinese government, Alibaba is more invested in blockchain technology itself rather than in cryptocurrencies; holds calling Another of Jack Ma’s creations, ZhongAn Tech, is to use blockchain technology to cut risk and costs in healthcare insurance. It is that ZhongAn Tech is currently working with Shanghai’s insurance regulatory arm on building a blockchain reinsurance platform; planning reported Huobi, the world’s third-largest cryptocurrency exchange by trade volume, has a $93 mln China-South Korea investment fund for blockchain companies in partnership with Chinese investment firm NewMargin Capital and South Korean securities firm Kiwoom Securities Co., Ltd.; launched Chinese search giant Baidu is planning to a new blockchain-based game called Du Yuzhou. This is going to be Baidu’s second foray into blockchain-based gaming apps: in February, Baidu a blockchain-based game “Leci Gou”, where players are supposed to take care of dogs. In addition, Baidu has recently another blockchain-based product: a “super chain” protocol; launch launched announced Other important players in China include Wanxiang Blockchain Labs (co-founded by Wanxiang Holdings and Vitalik Buterin) and China’s largest online retailer JD.com, which the first four startups for its Al Catapult Blockchain incubation program. has recently announced In late September, Ethereum Hotel, China’s first hotel that Ethereum (ETH) as a payment method, reportedly opened their business in National Scenic Area of Four Girls Mountain (Sichuan Province). accepts On Oct. 1, China’s oldest technology publication Beijing Sci-Tech Report (BSTR) that it would accept Bitcoin as a payment method for its subscriptions beginning early 2019, to encourage the utilization of crypto in a “real-world setting for practical actions”. announced In early January of 2019, The Cyberspace Administration of China (CAC) has introduced new for blockchain firms that are operating in the country. The guidelines require blockchain startups to allow Chinese authorities access to stored data and to introduce registry procedures that would require ID card or mobile numbers from its users. Moreover, they will be obliged to oversee content and censor information that is prohibited under current Chinese law. regulations People The population’s interest in cryptocurrencies has been unwaning for years now. Crypto trading seems to be one of the nation’s favourite pastimes! Seriously though, take a look at these few cases: Reportedly, the most asset classes for Chinese investors are Bitcoin and Real Estate. Real estate is a safe bet, but why Bitcoin? The reason might be that unlike other asset classes, Bitcoin is not correlated to the Chinese economy and thus provides a good hedge to other local investments. The recent ban on cryptocurrency trading might have dampened the enthusiasm somewhat, yet Chinese traders, investors and exchanges alike seem to be ways out; popular finding A mysterious Chinese “whale” — an investor with enough assets to control market prices — has amassed one of the BTC wallets in the world. In total, 93,947 BTC have been transferred to the whale’s wallet; largest Jihan Wu, a 32-year-old Chinese billionaire also known as the “Mining King”, is considering in IPO for his company. Wu runs ., the world’s dominant producer of cryptocurrency mining chips. Founded five years ago, the company is currently beyond crypto and sees an IPO as a way to do that. One of the most attractive non-crypto areas for Bitmain is artificial intelligence development, which is generously funded by the Chinese government; Bitmain Technologies Ltd looking to expand Industrial mining farms in China may, in fact, traditional industrial cities, where workers might live without visiting the outside world at all. The country’s huge population leads to immense competition in the job market; as a result, mining farm administrators are ready to live near the farm 24/7 and ensure constant production of cryptocurrencies for a relatively small salary. resemble Changpeng Zhao, a Chinese-Canadian business executive, who is the founder and CEO of Binance, the world’s largest cryptocurrency exchange by trading volume, is considered to be a “superstar” of the crypto world. In February 2018, Forbes Magazine placed him third on their list of “The Richest People In Cryptocurrency”. As of September 2018, his net worth is estimated at $1.4 billion. Summary While China has had a rocky relationship with cryptocurrency trading at a state level, its enthusiasm towards blockchain technologies is massive. Among the state-funded research, the governmental support towards industrial crypto mining and the country’s general tendency to be at the pinnacle of technology, it is safe to say we should expect a number of blockchain-based breakthroughs from China in the near future. Do you live in China? If so, please tell us more about the state of crypto in your country. We are eager to hear your point of view in our Telegram channel !
