By Nina Huang
In September 2017, China cracked down bitcoin trading and Initial Coin Offering(ICO), sending shock waves through the cryptocurrency market. At the same time, China has endorsed blockchain, which drives bitcoins, as a strategically important technology. Once the biggest miner of bitcoins in the world, China has raised a challenging question: Can a country on one hand embrace the blockchain technology but on the other hand outlaw its most obvious commercial application?
In the discussion “On Contradictions: China’s Bitcoin Crackdown and the Global Cryptocurrency Boom” at China Institute on June 5, panelists discussed various government approaches.
Make no mistake: China may have cracked down bitcoin transactions and ICO, but plenty of Chinese traders have continued to find ways to do their business. Some use VPNs to get around the internet firewall, and others literally moved abroad. “You can take bitcoin out of China, but you can’t take the Chinese out of bitcoin,” said Mitchell Dong, who runs a cryptocurrency arbitrage fund. Transactions are moving offshore from mainland China to Hong Kong, Japan, the U.S. and many other countries.
The reason for the crackdown is partly government concerns over outbound flow of capitals, as well as speculation and fraud, according to Dong.
Japan is doing the opposite. It not only allows people to use bitcoins as currency, but also taxes gains from bitcoin transactions. According to Harumi Urata-Thompson, founder of HUT Consulting, as Japan is aging rapidly, people have to develop new technology to solve the problem of lack of labor and resources.
Why is blockchain important, anyway? For its quality of being the source of truth, according to Stamford Hwang, an executive at AirSwap, a decentralized cryptocurrency trading platform. The blockchain technology wipes out the middleman, allowing for transactions to be totally transparent—and thereby preventing fraud.
“It hurts me [as a Chinese] that China might fall behind in the new technology because experts left China,” said Dong. However, China’s crackdown might be a way to buy time to figure out a way to regulate. “China’s crackdown might be just a pause,” said Emily Parker, a former journalist who co-founded Longhash, a global blockchain startup.
Can bitcoin be separated from blockchain technology? In May, Chinese President Xi Jinping endorsed blockchain technology in a speech at the Chinese Academy of Sciences, saying it has “accelerated breakthroughs in applications.”
But the panelists argued that it will be difficult to forbid bitcoin trading while doubling down on its underlying technology. Why? Developing blockchain is a lot of work, according to Parker. “Miners are receiving bitcoins as the reward,” she added. “That’s the incentive of the system.”
On Contradictions: China’s Bitcoin Crackdown and the Global Cryptocurrency Boom
Moderator: Emily Parker, Co-founder, Longhash
Speakers: Mitchell Dong, Managing Director, Pythagoras Investment Management; Harumi Urata-Thompson, HUT Consulting; Stamford Hwang
Event Fee: FREE, but advanced registration is requested
Location: 40 Rector Street, 2nd Floor, New York, NY 10006
While Beijing cracked down on Bitcoin trading last September, the government has embraced blockchain, whose technology drives cryptocurrencies, as a key strategic industry. Will China, which was the biggest miner of bitcoins before the ban, be able to contain the industry? How can China on one hand embrace the technology but on the other hand outlaw its most obvious commercial application? Ultimately, will governments allow decentralized and unregulated virtual currencies to survive, and how can they manage their national economic policies? Join cryptocurrency investors and experts to find out the future of Bitcoin and the blockchain technology.
Emily Parker, formerly of the Wall Street Journal, New York Times and US State Department, is co-founder of Longhash, a global blockchain startup. She is author of “Now I Know Who My Comrades Are: Voices From the Internet Underground.”
Mitchell Dong runs a cryptocurrency arbitrage fund which trades across 20 exchanges in China, Korea, Japan and the U.S., employing automated programs to buy low and sell high every second. He is a serial entrepreneur who has started a dozen businesses over the last 40 years in alternative energy, technology and finance. Mitchell is a graduate of Harvard College and the OPM program at Harvard Business School.
Harumi Urata-Thompson is founder and CEO of HUT Consulting. She specializes in leading and advising companies on taking innovative paths to achieve strategic, operational and marketing success in their businesses. She also speaks about subjects including artificial intelligence, blockchain, cryptocurrency, cybersecurity, cross-border business, and diversity and inclusion.
Stamford Hwang leads general, legal, and community operations for AirSwap. With a formal background in electrical engineering and law, Hwang brings exceptional experience navigating and mitigating risk across local, federal and international jurisdictions. Hwang holds degrees from the University of Illinois and the George Washington University Law School.