China: What the new Blockchain Association means for Bitcoin

The Bitcoin stock exchange Huobi joined the Chinese Blockchain Services Network on 1 December. With this step, something is growing that could become the largest blockchain data octopus. What this can mean for the Bitcoin course.

 

It is safe to assume that news from China will influence the Bitcoin course in one way or another. One recalls the autumn of 2017, for example. After the Communist Party had imposed a ban on Initial Coin Offerings (ICO), the first break-ins on the crypto market occurred.

 

China and the Bitcoin Course

The Bitcoin share price had recovered in the medium term and reached record highs a few months later. But when the crypto market crashed at the beginning of 2018, further news emerged from China. A threatening mining ban (which, however, was not introduced) was high on the agenda as possible reasons alongside manipulation rumours.

 

On October 25 of this year, the latest entanglements between Bitcoin’s share price and China News occurred. The Chinese government announced through Xi Jinping the blockchain strategy of the Communist Party. At that time, it was said, they wanted to invest more in research and the expansion of the blockchain strategy in China. The Bitcoin course reacted with a 40 percent increase at times. However, the positive mood was not to last long. Shortly after Jinping had stressed that the blockchain technology itself was at stake and that China considered Bitcoin to be questionable, the Bitcoin course rattled downwards again – the bears recaptured the crypto forest.

 

China’s Blockchain Services Network

There seems to be a strategy behind this approach: The well-known credo “Blockchain yes, Bitcoin no” is also adopted by the Chinese government. One of the reasons for this is the plan to secure a place in the sun of the international economy with the E-Yuan. The digital equivalent of the state-owned currency would open the door to (even) better state control of money flows.

 

The establishment of the Blockchain Services Network (BSN) can also be classified under this project. As the Chinese financial magazine Fintech News reported on 1 December, the network was one of the first members to welcome the Bitcoin stock exchange Huobi. Under the auspices of the State Information Center, the network also includes the payment network UnionPay, the telecommunications provider China Mobile, China Merchants Bank and WeBank. In short, the Blockchain Services Network is a network that covers most of the country’s most important payment channels.

 

What grows there will soon develop into perhaps the country’s largest data octopus – after all, (meta) data can be irrevocably chiseled onto the blockchain and checked again and again. Since this is supposed to be a network consisting of different blockchain solutions, this verifiability is potentiated.

 

If the country’s tendencies to abolish cash completely prevail, the government in China will soon be able to monitor payment transactions seamlessly.

 

This will ultimately have an impact on the Bitcoin ecosystem. The merger of the Bitcoin exchange Huobi with a state-controlled payment network makes – at the latest now – unobserved Bitcoin trading increasingly difficult. Chinese traders and Chinese Bitcoin miners will have to be particularly vigilant in the future.

 

A potentially huge market thus falls under the watchful eye of the Communist Party. It is unlikely that the Communist Party will change its restrictive Bitcoin course.

 

Bitcoin course in focus

Meanwhile, the Bitcoin price on this Monday, 2 December, is relatively subdued. With a slight minus of one percent compared to the previous day, the largest crypto currency by market capitalization is quoted at 7,290 US dollars. In the seven-day retrospect, the Bitcoin exchange rate is now in positive territory. Thus the crypto currency could win within one week 4,5 per cent at travel.