This is the story of how the Chinese government has increased its regulatory wave against cryptocurrencies. Prohibition of ICOs, strict control of exchange offices, use of firebreaks and prohibition of public events have been the ways in which government entities have tried to control the cryptoactives in the territory. Despite this, Bitcoin has achieved the way to continue being a technology widely used by us.
TO THE MOON
This story begins in 2016. We became one of the countries with the most influence in the cryptocurrency market. It seemed that the future was in our hands. Those of us who knew Bitcoin knew that this was an opportunity that was worth gold, so we took advantage of it. We still had a lot to learn, but little by little we became the territory with the greatest mining power in the world.
By September 2016, we were already processing 70% of the transactions of the Bitcoin network. I was one of the witnesses of the construction of a building near a hydroelectric plant in Tibet. In this place about 10,000 Bitcoin miners settled. Up to 750 thousand dollars a day were generated daily for the company that installed them. Gone were the days when Bitcoin was associated with cybercrime and Deep Web. The interest in Bitcoin had grown so much that even the electric power companies were using the residual energy to mine Bitcoin.
THE GOVERNMENT OF CHINA SHOWS ITS INTEREST IN REGULAR BITCOIN
The government banned the gold trade, and little by little it showed its interest in regulating the cryptocurrencies. 2016 closed with the People's Bank of China (PBOC) requesting experts in distributed accounting technology to help the development of a supposed national cryptocurrency and with the local authorities of Nanjig financing a distributed accounting technology development project.
2017 began with a meeting between the PBOC authorities and representatives of important exchange houses. The objective of that meeting was to reach agreements regarding the legal regulations of Bitcoin and cryptocurrencies. According to some experts, the influence that China had at that time threatened the decentralization of Bitcoin. Some causes of fluctuations in the price of the cryptocurrency could be sought in the events that occurred in this territory.
The meetings resulted in some exchange houses suspending and withdrawing Bitcoin exchange services. They were all waiting for the Chinese government to finally issue regulations for the operations of the exchange houses, or forbid them altogether. The government began to carry out inspections at the exchange offices. Immediately afterwards, a fee was fixed for the commissions on these platforms, a measure that directly affected the price of Bitcoin.
Meanwhile, the bitcoiners were looking for alternatives that would allow us to continue using the cryptocurrency. Thus, in the month of February 2017, LocalBitcoins recorded a historical maximum in terms of the volume of bitcoins traded on that platform. Since March 2015, LocalBitcoins had an average of 350 BTC traded weekly. From February 18, the platform went on to trade about 5,000 BTC.
The Chinese government increasingly showed interest in Bitcoin. And for the month of April, he helped finance the Global Blockchain Finance Summit 2017. This was a worldwide event that brought together influential personalities from the crypto-world, such as Vitalik Buterin. I followed the event on television, and I did not miss a single blockchain application proposals in the city of Hangzhou.
BEGINNING OF PROHIBITIONS
Everything seemed to go smoothly. For the month of June, the experts in distributed accounting technology were the stars of the Chinese labor market. They were so valued, that their salaries could be around 175 thousand dollars. In July, the Central Bank opened a Digital Currency Research Center, dedicated to the investigation of cryptocurrencies and their methods of application. In August, it was announced that the Chinese government would collect taxes through an application developed with distributed accounting technology. This news was positive, since the process of traditional tax collection is quite cumbersome on these sides.
The news that ignited the alarms of the community arrived in the month of September. The authorities finally took a radical step around the regulation of cryptoactives. Since September 4, it was forbidden to make Initial Currency Offers (ICO) in the country. In addition to a direct impact on the cryptoactive market, this decision also led to the closure of multiple exchange houses that operated with cryptoactives in the country.
For the month of December 2017, the vice president of the Central Bank - a bank that had made several advances in the adoption of distributed accounting technology - set a negative position regarding Bitcoin. In his opinion, the cryptocurrency was a bubble that would disappear at any moment. While we watched with concern as little by little we closed the doors of progress, bitcoiners around the world were happy that we no longer had in our hands the "control of the cryptoactive market".
In January 2018, spokespersons of the Central Bank announced that a regulation of the electricity supply for the cryptocurrency mining would be applied. To do this, they would call on the help of local authorities. In the month of February, the authorities announced that the operations of the exchange offices would be blocked. The measure would apply to both national and foreign exchange houses. With this, it was also determined that advertising related to cryptocurrencies and ICOs would be completely prohibited on the internet. Subsequently, the scope of Chinese regulation would pretend to go much further. In March, it was revealed that the country's public security was even monitoring operations with cryptocurrencies carried out abroad.
However, we looked at how the government's interest conflicted with the regulations that they themselves had created. The China Investment Association -IAC- was working on the establishment of the International Blockchain Investment Development Center. Due to a conflict with the legislation, the conformation of this institution had to be postponed.
By April, the hostility of the government was such that the police interrupted and canceled the FinTech and Blockchain Global Expo that was taking place in the city of Shanghai without giving a clear reason. A wave of rumors was generated by this event, but the reasons were not clear. In those days, a miner was shot and accused the regulations that the government applied to the exchange houses, since he could not convert his bitcoins into fiat money. According to him, he could not pay his debt to the mobsters with whom he had been involved.
Despite the strong measures taken by the authorities, the president of the country gave statements in May 2018. For the first time, the head of government of China spoke about the cryptoactives. To our surprise, Xi Jinping spoke optimistically of distributed accounting technology. In his opinion, it is a technological revolution that accelerates progress in the life sciences. Once again, a government of the world adopted the position of "Blockchain yes, Bitcoin no". In fact, an initiative was developed to monitor ex-prisoners with cryptoactive technology. The Central Bank, in turn, announced that it would use the blockchain in checking checks. Months later we would find out about an initiative to "alphabetize Blockchain" to public officials.
THE PROHIBITION OF THE GOVERNMENT OF CHINA
And if it was not enough with the obstacles that the government put on us every day, in the month of July it started to rain. The floods in Sichuan, the province that concentrates the largest amount of mining equipment in the country, affected a mining farm. A significant amount of equipment remained unrecoverable. For that month, the balance of the witch hunt that the government was carrying out was 88 closed exchange houses and 85 suspended ICOs.
Finally, the last blows to our financial freedom came with the banning of events related to the promotion of cryptoactives in Beijing and Guangzhou City. In addition, the closing of chats and forums in which technology was discussed was operated.
The means we have to communicate are very limited, but we still have the Telegram application, for example. With it we communicate to trade Bitcoin, and, in the face of censorship, we have developed a special jargon to talk about cryptoactives, in which Panqueque grande means Bitcoin.
The ideals of this technology point to the fact that no government, however aggressive it may be with its attempts at regulation, can dominate it. The Chinese government has been dual in its intentions. On the one hand it prohibits cryptocurrencies to the population but takes advantage of a part of its technology, the chain of blocks, to try to improve the functioning of its institutions.
But in China, for many years in the code we believe - this phrase is used by the bitcoiners of the world - and we know that this is the moment in which we can demonstrate the decentralization of Bitcoin can circumvent the prohibitions. While we resist, we will continue eating large pancakes without the government preventing us.
