China is about to take drastic steps against Bitcoins as reports reveal that the country will prevent anyone from trading in Bitcoins in all forms. Bitcoin exchanges for trading in the country were ordered to be shut down recently, and latest reports indicate that things could get even grimmer for Bitcoin enthusiasts in the country.
It was earlier believed that the Chinese government will only move against commercial Bitcoin trading within the country. People were of the opinion that OTC (over the counter) and peer-to-peer (P2P) exchanging would continue. OTC and P2P do not involve a trading platform. They require the buyers and sellers to come in contact and conduct business themselves. Services like Telegram are often used for P2P bitcoin exchanging within China.
However, if insider reports are to be believed, then things are even murkier than previously thought. The Chinese government is reportedly about to block access to Bitcoin exchanges and services outside the country. This will prevent people from trading in and using Bitcoins altogether. The country was once the leading trading sector in the Bitcoin industry, but has since fallen to fourth following the Bitcoin exchange ban by the government.
Since China accounted for a large portion of the global Bitcoin trade volume, Bitcoin prices fell after the country’s announcement against Bitcoin exchanges. The price has recovered in the few days’ time since, but Bitcoin exchanges in the country are shutting down rapidly. Following the government’s orders, bitcoin exchanges like Huobi, Btcchina, and Okcoin have already shut down. Bitkan suspended its service on September 14.
The government’s reported plan to block access to overseas exchanges and services is not as far-fetched as it may seem. It is reported that by September 30, the Great Firewall of China will block access to these services. They will do so by analysing DNS and IPs of websites and apps. They will also analyse APIs of all foreign Bitcoin exchanges before restricting access to them.
The Chinese government will then try to disrupt P2P network for Bitcoin within the country. This will be done by monitoring the communication between international and domestic nodes. They will try to prevent these two from syncing. Moreover, it is believed that communication bridges over VPNs and Tor will also be monitored. These are the two paths people take in China to circumvent government censorship. However, the government there has a history of making doing either a lot difficult in recent years. People have spent time in jail for selling VPN software in China.
Uncertainty for Chinese miners
While the reports about China trying to block bitcoin exchange within the country altogether appear to be true, there is uncertainty as to the fate of bitcoin miners. Chinese bitcoin miners account for the largest percentage of the global bitcoin mining populace. As of now, merchants are reporting that sales of mining equipment are suffering following the government’s strike against bitcoin exchange.
The decision of the government had initially caused Chinese traders to switch to overseas exchanges, particularly in South Korea and Hong Kong. OTC trading saw a huge spike as well. But these reports could soon put an end to all that, since the government is about to become proactive in its tryst to block Bitcoin trading from and within China altogether. Amidst all this turmoil, other countries have grabbed the opportunity to oust China from the zenith of Bitcoin trading. While China has fallen to fourth in the aftermath of its vendetta, Japan has pounced on the chance and is now the leading trader in Bitcoin globally. It is followed by USA and Korea.
This sudden turn of events has left Bitcoin traders bamboozled in China. They are fast running out of options to continue their practice of trading in Bitcoins.