The price of bitcoin has been under pressure following reports suggesting that the government is looking to outlaw cryptocurrency exchanges in China, following it taking a similar position on cryptocurrency tokens a week earlier.
While this news is unfortunate, we believe that it doesn’t in any way reflect the underlying utility or social and economic value of Bitcoin more widely. Bitcoin is the ultimate tool of economic empowerment, but it can’t be controlled. We may have been misled to believe that as China’s economic power has increased over the last few decades, that things work the same way in China as they do in most of the rest of the world. That would lead us to miss fundamental differences that provide a useful context to the motivation behind the negative stance taken by the Chinese government:
- China is not a democracy; representatives are not elected by the public.
- China doesn’t allow the free movement of information; Google, Facebook, Youtube, Twitter, Instagram, Pinterest, Dropbox, Slack, The New York Times, Bloomberg, The Independent, BBC, The Wall Street Journal, Reuters and TIME, amongst many others, are all banned & inaccessible from inside China because of the existence of a massive firewall that prevents anyone inside China from accessing information deemed undesirable by the government.
- China’s economy is directed by the government; market forces don’t determine how resources are allocated, so a parallel economy, created on the back of cryptocurrencies and tokens and existing outside of Chinese government control, could not be allowed to exist in China.
It’s possible that what we’re seeing is a clearing of the decks to make way for the introduction of a Chinese cryptocurrency — the “digital RMB”. Unfortunately, it’s not the first time that a technology service originating outside of China has been shut out of China & replaced with a local alternative . The local option is typically provided with exclusive or very favorable market conditions that enables it to build up a massive userbase, provided that the Chinese government is able to control the flow of information. Ever heard of Baidu? That’s Google. How about RenRen? Facebook. Sina Weibo? That would be Twitter. Perhaps we should be more surprised that cryptocurrency has been legal in China for this long and that cryptocurrency exchanges were allowed to exist in the first place.
Nothing has fundamentally changed within Bitcoin this week. We’re well on our way to creating a decentralized, permissionless, inclusive and financially empowering financial network. Let’s not lose sight of what we’re trying to achieve with Bitcoin, at the first instance of a government fighting back to protect it’s economic control.
Hodl onto your bitcoins.
If you’re a member of the Chinese Bitcoin community, please let us know if there’s anything that we can do to assist you at this time. If you’re not already a member of the Bitcoin Foundation and would like to join, or if you’d like to make a donation to our programs, please do so now.