Although the trade of bitcoins in China has almost disappeared due to the tightening of regulation, the country has managed to increase its influence over its development dominating the mining (the creation of currencies).
The debate is whether bitcoin should work more as a commodity or as a currency. A faction supported by some Chinese miners prefers the latter, as it could make it a more practical tool for online payments. The Chinese exchange and mining house ViaBTC has just enabled the exchange of a new criptomoneda, bitcoin cash, bifurcation of the original bitcoin. The hope of its creators is that it drives volumes of transactions and liquidity. The spot price of bitcoin has more than doubled in 2017, to around $ 3,000.
The other part of the bitcoin community would prefer to upgrade existing software and forget the new currency. Bitcoin cash may prove to be a failure: it is already trading below $ 300.
However, the uproar shows how Chinese miners are setting the agenda. The world's second-largest bitcoin exchange company, China's BTCC, estimates that the country's engineers and entrepreneurs handle around 70% of the country's global mining activity, including facilitating transactions.
The irony is that the bitcoins trade seems to have collapsed in China. Regulators took action in January, worried about speculation and perhaps capital flight. Yen-denominated trading has remained close to zero since then.
But the government has not tried to eliminate mining, on the contrary: it considers blockchain technology very interesting. Last month a central bank expert said that the criptomonedas could be active, although he said that bitcoin itself is not useful for modern economic needs. Another required the IMF to convert its special drawing rights into a virtual currency.
China thus retains its options of influencing technology, without having to worry about the disadvantage of speculation.
The authors are columnists for Reuters Breakingviews. The opinions are yours. The translation, by Carlos Gómez Abajo, is the responsibility of CincoDías.