The expression 中国 大妈 literally translates as "Chinese auntie." The phenomenon of the zealous and thrifty Chinese middle-aged woman has been known for a long time, but only in the midst of 2013 was a neologism thought up for it.
At the height of the hysteria in November – December of last year, when the crypto-currency’s rate rose from US$200 to US$1200 within a month, the ‘Chinese auntie’ accounted for up to a quarter of the global turnover of Bitcoin. She was not mining coins, buying LSD on Silk Road or order murder from deep inside the Internet. She speculated and had fun.
Rise of China’s beloved bubble
Prior to 2013, Japanese scientists had invented semi-mythical Satoshi Nakamoto and the Bitcoin crypto-currency barely reached US$10 while interesting only a limited number of programmers from the U.S. and Europe. But everything changed in April.
The Winklevoss brothers have finally admitted that they took Mark Zuckerberg's money that they won in court and invested US$11 million into Bitcoin, which increased its price and popularity in the previous months to reach the US$266 mark.
Then, in late-April, it suddenly fell by two-thirds, but nonetheless had achieved greater prominence on the world stage. Just two weeks later there was a terrible earthquake in Sichuan and China learned about Bitcoin.
A small community of crypto-currency users in eastern China - a couple of dozen people, mostly programmers and scientists - appeared in 2010. A year later came the first exchange BTC China. Bitcoin’s chief adopter in China was 40-year-old Beijing English teacher Li Xiaolai.
He was captivated by the idea of a coin produced by performing mathematical operations and invested his savings in Bitcoin. Xiaolai subsequently became actively engaged in Mining and invested in Shenzhen startup ASICminer, producing equipment for mining Bitcoins.
A year ago, Li Xiaolai was not all expensive apartments, cars and mountains of cash, but he did have 100,000 Bitcoins (like Winklevoss) and the belief that using a virtual currency can improve the world. Or at least put the Chinese economy on the road to post-industrialism.
After the Sichuan earthquake Xiaolai helped raise funds for the victims in Bitcoin. Despite the fact that this campaign has brought only 1 % of the donations, Bitcoin was mentioned on Chinese state TV which set off a chain reaction.
By the fall of 2013, China had become a major international Bitcoin market. BTC China accounted for up to 60 % of all transactions in crypto-currencies.
East meets West
At the same time Chinese users were strikingly different from their Western counterparts. According to Coinbase, in the U.S. and Europe 90% of users are male, with most younger than 30 – the standard description of the geeky programmer in pop culture.
In the East, the average age of the Bitcoin owners exceeds 30 years, and there are almost as many women among them as men. Bitcoin is best tracked in places where the government has created special economic zones. Thus, the center of production of coins was the largest industrial city in China - Suzhou. Bitcoin users were mostly residents of wealthy Wenzhou an experimental platform for business.
Accident? Hardly. The Yuan is partially convertible currency. The government tightly controls operations related to the movement of capital, and in such circumstances traders needed a convenient replacement for conventional money, and thus took advantage of the solution offered by Bitcoin. Interest in anonymity or unusual technical network aspects had nothing to do with it. Rather, the Chinese are fond of bubbles and Bitcoin provides an easy tool for speculation.
Peak activity around Bitcoin lasted around three weeks. On November 18 the exchange BTC China raised a US$5 million investment, while the U.S. Federal Reserve Chairman Ben Bernanke spoke in support of crypto-currencies. Bitcoin rates first broke US$600 and then driven on by Chinese users, reached US$900, US$$1,000 and even US$1,200.
The bubble bursts
But the hype was not destined to last. On December 5 PBOC prohibited transactions with the virtual currency Bitcoin and the rate fell by a third. The reason was the fight against speculation and illegal activities. Bitcoin did not yield control and distract us from the Shanghai Free Trade Zone, where there was an experiment with a freely convertible Yuan.
On December 18 BTC China ceased accepting new deposits, and Chinese activity declined sharply. After a couple of days its place had been taken by the new exchange Huobi. Because of freeze on the Chinese market there were less than 10% of all operations being done and the crypto-currency rate stabilized at US$800.
However, the owner of BTC China Bobby Lee, finding a legal loophole, relaunched auctioning and the proportion of transactions in Yuan gradually went up.
Speculation in the East and hype in the West had one important effect - Bitcoin as entertainment for geeks and a symbol of independence from the state has become a familiar part of the agenda. Several thousand companies are working with crypto-currencies in the US and Europe, and the number is growing.
It seems that Bitcoin got more confidence and feels better than ever. But it's not true. Firstly, crypto-currency is anonymous, but it is hardly safe and untracked. Due to the explosive growth Bitcoin began to be stolen - robbers ransacked several exchangers for US$10 million, and at the close of Sheep Marketplace (alias Silk Road) members allegedly lost US$100 million. Thefts harm not only currency holders, but also the entire system through permanently removing its worth.