The bitcoin exuberance continues today as the value of the digital currency soared up to $1,242 at Japanese bitcoin exchange Mt. Gox. Even CoinBase, a popular U.S.-based bitcoin exchange and digital wallet with prices which have been lower than those at Mt. Gox, recorded bitcoin prices over $1,000 today, marking what appears to be the first day they have topped $1,000 at that exchange.
But as bitcoin prices continue to go through the roof, one expert on the digital currency highlights the role China plays in the digital currency’s future. CNBC questions whether this means trouble could be on the horizon for bitcoins.
Mt. Gox launches informational website about bitcoins
On Thursday, Mt. Gox launched a new bitcoin website Bitcoins.com, which explains exactly what a bitcoin is. Spotted by Greg Kumparak of TechCrunch, the site is mostly informational rather than a big advertisement. The Japanese exchange even includes mentions of a few other exchanges where investors could trade the digital currency if they are interested.
It doesn’t go into detail on how bitcoins are mined, but that may be beyond what the average investor would want to know.
Bitcoins in the Chinese market
One of the reasons bitcoins have soared in value recently is high demand in China. Chinese bitcoin exchange BTC China overtook Mt. Gox as the biggest bitcoin exchange in the world according to volume. Bitcoin Average, an independent bitcoin pricing site, indicates that China now makes up 62% of global volumes for bitcoin trades.
Bitcoin Foundation founder Patrick Murck reportedly told CNBC that the Chinese culture is already acclimated to digital currency, which is why the country has so quickly embraced bitcoins. However, the fact that China is pushing the value of bitcoins so high may be cause for concern. In the past, the Chinese government has apparently taken steps to push back other virtual currencies.
How China moves against digital currencies
Beijing introduced laws in 2009 which banned the use of digital currency to buy tangible items. At that time, the government was taking aim at Q Coin, which was used on the Tencent QQ instant messaging service. Q Coin was first used to buy online games, but it did not take long for the digital currency to start spreading into the mainstream Chinese market.
Yi Gang, deputy governor of People’s Bank of China, said recently that the Chinese central bank wouldn’t be able to officially recognize bitcoins as a legitimate currency any time soon. He did say, however, that people could take part in the bitcoin industry, which some may have seen as a careful agreement to allow their use.
Why bitcoins could be different
Murck doesn’t think China will outlaw bitcoins because he see the situation as being different. He calls bitcoins “a decentralized virtual currency,” while the Q Coin was centralized and controlled by Tencent. Many Chinese investors are interested in bitcoins because of their decentralized nature. Some believe that as Chinese flock to bitcoins, it is less about supporting the digital currency and more about distrusting the yuan, which the government doesn’t allow to float freely.
Murck believes that even if the yuan does become liberalized, the bitcoin could be adopted even more because people will want “fast and low cost methods to transact.” And the more “experts” talk about bitcoins, he believes the more they become legitimized in the public eye.