Bitcoin China Exchanges and the Aftermath

Gong Xi Fa Cai!

Having had the opportunity to digest recent developments in Asia and celebrate Chinese New Year, it is now time that we address the big-fat pink elephant in the room, or simply… the Chinese exchanges.

what happened in China?

If you have followed the developments around the crypto community over the last weeks, you have heard about the regulatory changes that were implemented in China. So now, everyone is wondering what will come next. As mentioned by ZeroHedge, the Chinese bitcoin trading volume crashed 90% over night, which is one of the most significant crashes since the beginning of these exchanges.

looking at some stats:

A couple of days ago, on the 24th of January the exchanges OKCoin, BTCC and Huobi began charging trading fees on their platforms. This was a direct result of the Chinese central bank, which had previously conducted inspections of bitcoin exchanges. As the revision presented violations, companies had no choice, but to implement trading-restriction, in order to keep their operations running. As expected, there was a turbulent and significant decrease in value, hitting $860 and lower, until the 27th of January, where things started to pick up again.

Analyzing the actual bitcoin trade volumes around that time, we witnessed a severe decline, leading back to China’s new implementation of fees. Due to the fact that the above-mentioned exchanges have traded in high volumes until the regulatory changes, now traders have adapted to the new situation:

Surprisingly, it only took a couple of days for investors and traders to find new opportunities, allowing them to continue their business again.

Traders were able to quickly shift their focus to platforms, where there are no trading fees, allowing Chinese based exchanges like BTC100 and bitFlyer to quickly become something of a new exchange standard for the time being. Bellow the new shift in ranks is shown by CoinMarketCap:

way forward?

Having been able to follow the developments in China for some time now, it is interesting to think of approaches by the Chinese, which will allow them to slowly but steadily include bitcoin as a real alternative to other world currencies like the US dollar or, Euro or Pound.

Looking at this possibility, there are two options, which can occur in the future:

1. China will adapt bitcoin as an alternative in order to start building the Chinese economy on the basis of bitcoin.

2. China creates an inherent crypto currency, either backed by bitcoin or ethereum, in order to monopolize on a first-to-market advantage for future global economical possibilities.

As the Chinese regulatory bodies started their active involvement in the above mentioned exchanges, we might be expecting a creation of some kind of new banking model, which will give the government the opportunity to use these exchanges for trades, deposits and other financial tools.

The creation of such a new construct, could become of great interest for other parties, so it is predictable that bitcoin prices will be driven higher than the value that we are currently looking at.


The two scenarios, are shaping a new path for blockchain SaaS projects, to aid companies in creating, as well as deploying secure, fast and scalable applications. nIn this digital age, where even banks cannot keep up with current application requirements, such as instant nano- and micro-payments, it is of pinnacle importance to cater for those specific and fast adapting requirements.

The æternity blockchain is a great example for an implementation of said requirements on such a scale. Using state channels to solve current challenges around scalability, privacy & transaction speed. Æternity offers an innovative approach to tackle issues that companies and governments are currently trying to cope with. The easy accessible native apps on the æternity release schedule will provide businesses and governments with the means to adapt their requirements to the digital age of information.

final words

It will be interesting to follow the developments and see, if my predictions will prevail, however just the chance to witness this new construct, offering such various and vigorous scenarios for the future, is more than exciting.

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