With one of the largest populations and economies in the world, China is a major driving force in commerce, finance and technology and has a storied history with Bitcoin (BTC).
“China bans Bitcoin” has graced media headlines repeatedly since the cryptocurrency’s inception, which signifies the government’s severe distaste for a currency beyond institutional control. The banning of Bitcoin use in China has taken the form of severely inhibiting or shutting down Chinese Bitcoin exchanges, which are the main methods of accessing Bitcoin beyond peer-to-peer exchange.
Despite this friction, China has emerged as a key player in the cryptocurrency industry in two wildly different ways.
Firstly, most of the hashing power (i.e., mining operations) of the Bitcoin network is concentrated in China, as miners have access to incredibly cheap hydroelectric power, giving them a sharp advantage over competitors in other locations.
Secondly, the Chinese government is developing its own sovereign digital currency that will reportedly use blockchain, presumably with strict administrative and capital controls antithetical to most cryptocurrencies.