The history of Chinese involvement with the cryptocurrency market has been tumultuous at best. But new companies are coming onto the market that are able to penetrate that otherwise chilly market, and access the incredible sales potential of 1.3 billion potential customers.
A quick review
China’s relationship with cryptocurrency began almost immediately after the founding of Bitcoin, as a number of Chinese entrepreneurs saw the potential of becoming miners. China grew in mining prominence, and has dominated the industry. In fact, more than 75% of Bitcoin mining happens in China.
However, though one would think that the miners would push for government freedom in cryptocurrencies, China has also harshly curtailed the use of Bitcoin and other cryptocurrencies.
For example, in early 2014 the People’s Bank of China (PBOC) ordered commercial banks and payment companies to close bitcoin trading accounts in two weeks. With the ban in effect, 173 platforms shuttered by January of 2018. What’s more, the State Administration of Foreign Exchange led by Pan Gongsheng had officially begun a more hardline crackdown on all bitcoin operations.
With all the chaos in the political environment, investors have been left wondering if penetrating the Chinese market with cryptocurrencies is even feasible. Further, since only mining and banking activities are under government scrutiny, many new cryptocurrencies see China as a massive market just waiting to be tapped.
Hope for change
The answer, apparently, has not come in the form of government policy changes, or marches in the street. Instead, the way new cryptocurrencies are moving into the Chinese is through social media, influencers, and managed PR plans.
For example, Singapore-based cryptocurrency exchange BiKi has already found ways to penetrate the Chinese market for new coins on the exchange. The company’s main point of access is through its 200,000 strong WeChat following. Such massive grassroots influence allows the company to push out information about new cryptocurrencies quickly and efficiently.
Additionally, the company provides access to its large pool of Chinese crypto-specific news outlets to new exchange additions. This moves the exchange additions into the hands of community influencers, each of whom has a massive online and social networking following. With millions of new users seeing and hearing about the exchange addition for the first time, the market can be penetrated in a matter of hours, rather than months, as with traditional exchanges and platforms.
But BiKi isn’t the only company trying to find inroads into the massive market found in China. Other exchanges like Huobi and OKEx have sought new ways to infiltrate the rapidly closing Chinese market. Predominantly, they have used an over-the-counter (OTC) model in order to provide customers crypto-to-crypto trading options.
These OTC platforms allow customers to trade cryptocurrencies directly with one another in a peer-to-peer (P2P) relationship. China’s already fuzzy guidelines about trading crypto have seen fit to allow these types of interactions. In this way, Huobi and other exchanges are seeking to help Chinese crypto traders find avenues for transfer that don’t set off alarm bells at the PBOC.
Whether the Chinese government may have a desire to ban all cryptocurrencies or not, the future of the market in China will be infinitely difficult to regulate. With the use of digital systems and trade platforms like WeChat and OTC options, the faithful in China will find a way to transfer their cryptocurrencies.
With companies like BiKi providing access into these social networking platforms, new cryptocurrency offerings are now able to move into the Chinese market in a more substantive way. While the future is still murky about what the Chinese government will do, the connections between consumer and crypto has never been stronger.