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Savers boosting bitcoin demand in China, exchange says

Bitcoins, the unofficial online currency units created as an investment instrument independant of banks, are booming on the mainland

PUBLISHED : Friday, 15 November, 2013, 5:26pm
UPDATED : Friday, 15 November, 2013, 5:26pm
 

A co-founder of China’s biggest bitcoin exchange on Friday said there were “boundless opportunities” for the digital currency in the country because of the Chinese saving ethic.

“The main reason why bitcoin has become big in China is because Chinese people are savers, and more people are seeing bitcoin as a way to store and invest their money,” Linke Yang, vice-president of BTC China, told reporters on the sidelines of a conference in Singapore.

“There are boundless opportunities for BTC China and bitcoin in the next five years, you never know with the way the internet develops,” Yang said through an interpreter.

Bitcoins, a form of digitally-created ‘e-money’ which is stored in a virtual wallet and bypasses banks, allowing users to remain anonymous, has soared in value in recent months.

They were created in 2009 in the aftermath of the global financial crisis by an anonymous programmer who wanted a currency independent of any central bank or financial institution.

The price of a bitcoin on BTC China, which is available only to traders in the mainland, is currently at 2,647.90 yuan (HK$3,348.12), surging nearly 100 per cent from its price in late October.

It handled 434,349 bitcoin exchanges and had 33.68 per cent of the global bitcoin exchange market share over the last seven days, according to market tracking website Bitcoinity.org.

Yang attributed the sharp rise in Chinese demand for bitcoins to a documentary broadcast on state-run CCTV, as well as increased acceptance of the crypto-currency as an investment instrument.

Yang, who co-founded the firm in 2011, brushed off concerns that the virtual currency could be used for illicit purposes like money laundering because of its anonymous nature, or could be targeted by hackers.

“We are the first bitcoin exchange in China, and we have the trust of our users who have been with us for two years and who know we have a strong system in place,” Yang said.

“We focus on our own growth in China, and not on the negative news surrounding bitcoin.”

Other participants at the bitcoin Singapore conference echoed Yang’s bullishness on the digital currency’s prospects in China.

“The ‘yuppies’, or upper middle-class in China will drive demand for bitcoin especially with the amazing uptake of e-commerce going on now,” said Zennon Kapron, a Shanghai-based managing director of Kapronasia, a financial consulting firm.

Investors however are closely watching to see if China’s government will place specific restrictions on bitcoin trading, he said.

China’s central bank is wary of virtual currencies, raising the alarm in 2007 over their potential use in online gambling and money laundering.

Beijing has banned the trading of virtual currencies in online games to prevent potential risk to economic and financial order, according to a government notice.

Hundreds of Chinese investors were left with more than 20 million yuan in combined losses after Global Bond Limited, a bitcoin trading platform, suddenly closed in October, a newspaper reported on Thursday.

Beijing keeps a tight grip on the domestic yuan currency, worried about potential disruption of the economy by sudden outflows and inflows of funds.

 

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