03.14.2019 0 Author Crypto

Dmitry Smirnov portfolio manager Aurora Blockchain Capital Fund in his newspaper column in the RBC Crypto explain - why the Chinese government has banned Bitcoin and how the country relates to digital money

Chinese authorities share blokcheyn and cryptocurrency - one they are actively developing, the other nipped in the bud. Details on the situation in the country in his newspaper column in the RBC Crypto said portfolio manager of the fund Aurora Blockchain Capital Dmitry Simirnov.

case history

Chinese love of gambling is not a big secret. Faith in the special significance of numbers and characters, the interaction of fate and objects is rooted in the philosophy and religion of the region. Millennial history of lotteries, card games and mahjong is closely intertwined with the state's attempt to cool the reckless ardor of the population. So, over the past 170 years to legally try their luck in the game for money in China can be had only in one place - the former Portuguese colony of Macau.

With the opening of the Shanghai Stock Exchange in 1990, China's gambling residents found a new application. The history of stock trading in the region is full of vertical ups and downs, their main driving force was the simple people. The state has repeatedly interfered in the course of exchange trading, banning bets on the market fall, increasing fees for transactions and limiting trade in credit.

No wonder that when the opportunity to speculate grows into the tens and hundreds of times cryptocurrency Chinese speculators rushed to buy new tools. The Chinese market at the peak of up to 90% of the total trade Bitcoins.

But this time the state began to quite quickly to tighten the screws. In December 2013 China's central bank did not allow financial institutions to conduct transactions with cryptocurrency. April 1, 2014 the banks and payment systems has been discontinued service accounts to trade Bitcoins. Finally, in September 2017 a group of Chinese regulators to take coordinated steps to implement the ban ICO. Host virtual coins were found unlicensed fund raising, and most of the projects, often not without reason, been called a fraud. Activities kriptovalyutnyh exchanges in China was found to be illegal.

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The current situation with the trade cryptocurrency and ICO

Chinese kriptovalyutnye exchange rather quickly reoriented to other emerging markets: Japan, Korea and the United States. So, for example, existed at the time of the ban only two months, the Hong Kong Binance marketplace through aggressive marketing failed for six months to become one of the largest in the world. After the ban, she changed her registration first Japan and then Malta. Chinese companies have continued to make loud ICO, but the target audience was already outside the borders of the country (even if only on paper).

By November 2017 trade Bitcoins RMB has fallen to less than 1% of worldwide turnover, the daily volume of trade has declined from a peak of almost 120 thousand Bitcoins to less than one hundred.:

cryptocurrency trade for Chinese citizens has not been formally prohibited, but legitimate ways to buy and sell almost gone. Virtual currency will continue to exist in the gray and black areas. The mass detention of illegal bookmakers during the last football World Cup was due to the withdrawal of large volumes cryptocurrency. They are widely used to display the assets from China to purchase expensive real estate abroad. But the masses were excluded from the speculation that says about the unique success of the Chinese authorities in the implementation of the ban.

Leadership in Meiningen

Despite the ban trade cryptocurrency, China continues to be the undisputed leader of the world of mining - the process of confirmation of transactions traded blokcheynov for remuneration in the form created in the process of new digital coins. Four of the world's largest association of miners (mayningovyh pools) have Chinese roots: AntPool,, F2Pool and BW.COM. In total more than 72% of computational capacity Bitcoins located in China. A more than 70% of China capacities are in Sichuan. For example, recent flooding in the area caused the power loss (hash rate) Bitcoin network by almost 10%. The reason for this power concentration - cheap coal and hydro power generation - the basic "feed" for mining.

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The largest manufacturer of equipment for mining Bitmain also comes from China. Realizing all regulatory risks, in July, he opened an office in Silicon Valley and is planning an early IPO shares on US stock exchanges. Chinese authorities have repeatedly threatened Miner prohibitions and restrictions on access to the electricity, but as long as the risk is not realized, and miners remain where cheaper cost of their business

Blokcheyn technology outside cryptocurrency

Despite the state ban cryptocurrency and ICO, the authorities of Shanghai, Guiyang, Hangzhou and Guangzhou, Shanxi and Henan provinces have adopted policies to encourage the development of technologies blokcheyn. A Hangzhou - the capital of the eastern province of Zhejiang announced plans to invest 10 billion yuan ($ 1.5 billion) in blokcheyn fund, which is to become the largest in the world.

Moreover, blokcheyn was officially inscribed in the 13th five-year development plan of China from 2016 to 2020. Blokcheyn described it as one of the directions of development of the nation, along with quantum computers, artificial intelligence and autonomous vehicles. Following the trend in the first half of 2018 Chinese companies registered 3078, the title of which the word is used blokcheyn. This is six times more than in all of 2017 and significantly higher than in the US over the same period (817 firms).

The Chinese authorities are clearly shared blokcheyn and cryptocurrency. And, despite the fact that Bitcoin is the first successful application of blokcheyn technology, its usefulness Chinese regulators are skeptical and prefer to limit the potential danger cryptocurrency.