China's diehard cryptocurrency fans lash out at scams, lament losses as price plunge bites
- Bitcoin is down 80 per cent from its peak and over 900 digital tokens have become worthless
There are many ways to measure the bursting of the cryptocurrency bubble last year: Bitcoin was down 80 per cent from its peak; over 900 digital tokens became worthless; the vaporised value of digital assets exceeded US$600 billion.
Some metrics are more personal and show the pain felt by those on the ground who helped inflate the bubble. Over the past year, Michael Zhang, a 26-year-old telecommunications engineer based in the eastern Chinese city of Hangzhou, put 40,000 yuan (US$5,964) into cryptocurrencies, only to see his investment shrink to one eighth of its original value.
At one point, he bought EOS, a popular form of digital money, when it was trading at nearly US$20. Now it is worth a little over US$2.
“Later I developed a Buddhist-style mindset,” said Zhang, a first-time investor in any asset category. “I don’t check on prices any more.”
China has a booming cryptocurrency space, with start-ups involved in everything from wallet apps to blockchain protocols. It is home to the world’s biggest makers of cryptocurrency mining rigs, like Bitmain Technologies, and top exchanges, like Huobi. Even after the government banned exchanges from targeting local users, cryptocurrency trading still flourishes in the country through channels such as online chat groups.
But after taking big hits from the 2018 cryptocurrency collapse, Chinese entrepreneurs and investors in the space are wondering what is next for them. While some have cut back their investments to weather the bear market, others have shifted their focus elsewhere – effectively forgetting about the craze, at least temporarily.
In China’s technology hub of Shenzhen, Pan Yanlin, 28, quit the online retail platform she co-founded to become a blockchain vlogger at the start of last year – before the bubble burst. The views she gets for her videos – ranging from cryptocurrency 101 to global travels using mostly bitcoin – are too low to generate enough revenue to keep her going. In August, she decided to take care of her long-neglected love life by signing up for a popular Chinese TV matchmaking show.
After appearing in more than 10 episodes, Pan hooked up with a hip-hop dancer who she felt was right at first sight. “I also have deep knowledge of blockchain,” the guy told her on stage.
Wu Xing, 30, resigned from her marketing role at Huobi in September after four years with the Beijing-based firm. Since then she has been taking it easy at home with her coder boyfriend. Her daily routine includes learning new recipes to cook and walking her three-year-old Corgi.
“People say ‘a day in the crypto space equals a year on earth’,” Wu said, referring to an online meme describing the fast frenetic pace of the cryptocurrency community. “But now it’s actually ‘a day on earth equals a month in the crypto space’.”
Xiong Yue, 32, has a similar, but slightly different, perspective. “2017 was a year that you could make money on any investment,” said the chief operating officer of Bixin, a cryptocurrency wallet app. “2018 was the opposite.”
The current bear market could be the worst ever, Xiong said, because competition is now brutal after a new wave of industry players emerged during the last bull run. China is now home to more than 5,000 firms registered with “blockchain” in their names, up from just 500 in 2017, according to government data gathered by qixin.com.
While his company has been forced to cut back on operations, Xiong has turned to rap music to express his feelings.
Under the stage name TCG Yinyang, he wrote several cryptocurrency-themed rap songs over the past year. In I got bitcoin remix, he raps in his Chongqing dialect, “close your eyes, don’t look at the price, there ain’t no plunge if there ain’t no price.” On another track, he disses the rampant scams in the crypto world, with lyrics that roughly translate as, “fakers are everywhere, I’ll break their legs when I bump into them.”
Chen Weixing, a 35-year-old serial entrepreneur, made waves on Chinese social media last year when he lashed out at blockchain projects he suspected to be outright scams. The founder of Kuaidi Dache, the one-time rival of China’s ride-hailing giant Didi, is now building a blockchain-powered on-demand service platform. But he has yet to deliver a real product six months into his new venture.
“We didn’t raise any money when crypto was the hottest topic, and we are still insisting on sticking to ourselves during the bear market,” he said. “Now everyone can tell who is doing the real job here.”
As bitcoin prices have stabilised at around US$3,500 in recent weeks, the social networks where Chinese cryptocurrency enthusiasts gather are full of people who believe the next bull run is just a matter of time.
After his recent job move, Zhang, the Hangzhou-based engineer, has resumed his plan to invest several thousand yuan every month in EOS as he thinks applications like gaming and gambling are gaining momentum on the blockchain platform.
Wu, the ex-Huobi employee, is planning to join her boyfriend in launching their own start-up in blockchain education after the Lunar New Year. Although she is not yet sure of the business model, some friends in the community have agreed to fund the project and will offer free office space.
Pan, the vlogger, is figuring out how to use her network to build a blockchain consultancy business. After the dating show ended, she kept in touch with the hip hop dancer on WeChat for a couple of weeks but decided not to start dating because they live in different cities and she prefers a partner who is not into blockchain.
“It’s already very tiring to be an entrepreneur,” she said. “Why would I find someone to talk about work every day?”