The relationship between Bitcoin and China has a coloured past, to say the least. The People’s Bank of China has ordered third-party payment processors to stay away from Bitcoin companies; whilst China still remains the world’s largest trading market for the virtual currency. It looks like more and more people in China see Bitcoin as a safe haven, especially now that the Chinese Yuan is devaluating in spectacular fashion.
Bitcoin Not Tied To The Value of Chinese Yuan
Whenever a fiat currency starts losing its value, traditional stock markets will automatically reflect that change and start losing ground as well. In the case of the Chinese Yuan devaluation, Chinese stock exchanges have had a hard time keeping the losses to a minimum in recent days, and there is no improvement in sight anytime soon.
Bitcoin is a different creature in this regard, as the devaluation of the Chinese Yuan is doing absolutely nothing to push Bitcoin adoption to new levels. However, Bitcoin is not gaining or losing ground based on the value of the Chinese Yuan either, making it an interesting investment vehicle from a speculative point of view. With the Chinese Yuan losing value, Bitcoin would automatically become more expensive in China, which would have an adverse effect on the market.
“In fact, for the past five years, we’ve seen a strong bear market in commodities and part of that trend is driven by structural changes in China. Bitcoin prices have also declined over the same period, although it hasn’t been shown that this is correlated with traditional commodity indices.” – BTCChina’s Greg Wolfson told the media.
One of the things that is taking place in China right now is a mind shift, in which people start to see Bitcoin as a viable alternative for the Chinese Yuan. Many businesses are investing a portion of their holdings in Bitcoin to diversify their portfolio, as well as having an option to avoid financial uncertainty in the country.
“There are a growing number of people who feel that bitcoin is a safe haven of sorts, analogous to the role that gold played historically. If this is true, economic turmoil in China could cause speculators and perhaps some businesses to buy more bitcoin in a ‘flight to safety.’ Bitcoin has some properties that make it attractive during times of economic uncertainty and uncertainty in Chinese stock markets, foreign exchange rates, and the overall economy could create more demand for bitcoin and buoy prices.” – BTCChina’s Greg Wolfson continued.
Bitcoin’s PR Problem Is Not Helping At All
Before everyone gets their hopes up about Bitcoin becoming the new national currency, rest assured there is still a very long way to go. Bitcoin has a checkered past and a major PR problem, which is not helping matters in China at all. The country has been plagued by a myriad of Ponzi schemes and scams involving Bitcoin, and virtual currency still carries the moniker of being used for illegal trades.
It comes as no surprise to find out the Chinese population is very wary of anything that could be perceived as a scam these days. Having no regulatory framework in place is not helping Bitcoin at all right now and there is no better time than now to up the public relations game to showcase the benefits of virtual currency.
Additionally, China is a bit of an odd country when it comes to financial applications and payment systems. The entire financial aspect in China operates in a strict and unique way, making it hard to predict any Bitcoin growth in the country. Valid and relevant implementations of the disruptive virtual currency could be what Bitcoin needs to gain mainstream adoption status. Despite most of the trading and mining taking place in China, Bitcoin is far from a mainstream payment method in the country right now.
Source: Press Release via Email
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