Beijing vs bitcoin: why China is cracking down on crypto
How to Become a Bitcoin Millionaire ”is a common theme in the videos on TikTok, the app created by Beijing-based company ByteDance. Clip after clip of young influencers teaching others how to follow in their footsteps, showing lifestyles funded by crypto wealth.
Yet the experience when I open ByteDance’s Chinese sister app, Douyin, is a contrast. As I search for Bitebi (Chinese for bitcoin), the platform offers me some negative videos to watch.
In the first, the racks of roaring bitcoin-mining computers are captioned with a note informing me that each year they consume more power than 100 countries. In another, the speaker ends a bitcoin monologue: “Why don’t we just play with a bunch of air instead? You buy mine and I buy yours.
Why are the two apps so different? It’s not that young people in China are so different from their foreign peers. But Beijing controls what content they can see, and ByteDance must censor its sites in line with government priorities. Increasingly, this means keeping a close eye on content related to digital coins such as bitcoin.
Last month, the People’s Bank of China and nine other agencies, including the Public Security Bureau, made all cryptocurrency transactions illegal. Major exchanges where investors buy and sell digital currencies have started severing ties with their Chinese users. This continued a campaign started earlier this year, where Chinese authorities shut down power-hungry computer farms in the country where bitcoins are mined.
This is a significant turnaround for a country that five years ago accounted for 90% of the global bitcoin trade. Until this spring, nearly half of the world’s bitcoin was mined by computer farms in China, while the country’s digital wallets received $ 150 billion in cryptocurrency in the first half of the year, just behind the United States, according to the data provider Chainalysis.
The crackdown in China pits the unlimited power of an authoritarian government against a key selling point of cryptocurrencies – that the decentralized networks of computers that manage digital currencies take them out of the control of any central authority.
From Beijing’s perspective, bitcoin allows Chinese citizens to bypass the country’s strict capital controls limiting overseas transfers to $ 50,000 per year. Even at the national level, it offers ordinary people the ability to transfer money or make investments without government oversight. At one time, it was possible to buy coffee in the Chinese capital with bitcoin.
When Beijing first banned cryptocurrency exchanges in 2017, online digital coin exchanges fled overseas. Flaws allowed Chinese users to continue buying and selling bitcoin with a few extra steps added. But the latest rules have prompted the websites and apps that serve them to move on their own to cut off Chinese users.
Perhaps fearing that their China-based employees would be targeted, offshore exchanges have started to turn away Chinese clients. And several digital wallets, where individuals store cryptocurrency, disconnect users from the mainland.
Douyin is just one of many Chinese media platforms now filtering out what users can learn about digital coins. Another leading site, ChainNode, is advising users of an “upgrade” that will change its focus. Posts on its cryptocurrency forum, such as a list of establishments in Beijing that accept bitcoin, have disappeared.
In any case, the deleted content seems to have been late. Topping the list was a Beijing cafe in the heart of the city’s tech hub, which was once famous for accepting bitcoin. But a barista told me it had been several years since customers could pay with it. “You can’t even come here to talk about it,” he said. “We used to have bitcoin events but the government doesn’t let us anymore.”
While it remains possible for Chinese users to send bitcoins to each other, validating the confidence of crypto believers in the distributed network of computers that hold the currency, the bigger question is whether people will continue to sell themselves. bother. Beijing has been very successful in marginalizing ideas that don’t fit its narrative.
Meanwhile, on Douyin, online influencers are much more positive about the new digital renminbi, an electronic currency being rolled out by China’s own central bank, which is expected to give authorities an unprecedented ability to trace transactions. .
When I talk to a Chinese official, he tells me that the country no longer needs bitcoin. “We now have our own digital currency,” he says.
Ryan McMorrow is FT’s technical correspondent in China
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