Year End Bitcoin Talks in China
Bitcoin (BTC) has risen two places in the latest ranking by the Center for Information and Industry Development (CCID), under the Chinese government’s Ministry of Industry and Information Technology.
From the 11th spot in the 14th version of the ranking (published in September) to 9th now, BTC’s position in the 15th and year-end update of the CCID crypto project rankings is significant as 2019 ends amidst suggestion that Asia is comfortably on top of the crypto industry and blockchain adoption, as the CEO of CoolBitX, Michael Ou states, thus establishing new “rules of the game” with regulators.
Coming as a new report says Bitcoin miners in China control up to 66% of global mining hash rate (Sichuan province alone accounting for more than 50% while the provinces of Yunnan, Xinjiang and Inner Mongolia follow), the year end brings back the mining centralization debate after it’s been rested for a while.
As China has historically been leading the global Bitcoin mining sector, the issue also set the tone for the coming year as the large mining operations reported to be coming in the US and Russia in 2020 could possibly change the industry.
Mining is highly encouraged in China now. They hope to control bitcoin by having all the miners in the country (is, under their control). https://t.co/Rty4NmJsph
— CZ Binance (@cz_binance) December 12, 2019
Regardless of what happens though, things have not been looking too fast but good for BTC generally. The community may want the price to rise, but the likes of the second largest producer of its mining equipment, China’s Canaan, is feeling the brunt of the market. Its price hovers around $7000 (as at this writing) as recent Flipside Crypto data shows only 14% of the existing 18 million bitcoins exchanged hands by the last week of November unlike more than 50% last year.
One reason for the slowdown could be the “sobering reality that creating new global monetary standards requires more than computer code,” going by The Wall Street Journal. The majority of the cryptocurrency, it says, is controlled by a relatively small group: About 8.5% of wallets hold 99% of all the bitcoin in circulation.
There is the uncertainty of the likely effect of China’s proposed central bank digital currency (CBDC) – or the digital currency and electronic payment project – which financial news outlet Caijing reports could be launched as a small-scale experiment in parts of the country before 2019 ends for a scale up next year.
The buzz about the CBDC is particularly interesting because more than 80% of payments in China is currently estimated to be transacted on mobile devices (as at 2018), a sharp rise from the less than 20% it had in 2013. The digital currency is also likely to be expanded to the 130+ countries in its Belt and Road Initiative, notes Don Tapscott, the co-founder of the Blockchain Research Institute, which will give it a wider reach.
When combined with the fact that China getting to define the future of the nascent blockchain technology could be “dangerous” according to some experts, the situation leaves no choice than for competition to surface from other regions like Europe and the U.S. which could change the direction of the space as known at the moment.
As shared in a Bloomberg op-ed piece, regardless of whether its position as the world’s reserve currency is weakening, the U.S. dollar is not likely to be replaced anytime soon. The spread of a Chinese currency that would otherwise cause “a major shift in the global economy the likes of which only happens once or twice a century” would be fiercely contested.
The U.S. has to discourage the rise in the use of euro as an alternative reserve currency and China from desiring to diversify its foreign-exchange holdings to avoid harsh consequences of their ensuing trade war for the dollar to be strengthened though.
Olusegun Ogundeji writes on tech-related issues including from the crypto/Blockchain space.
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