Bitcoin hailed as ‘success' by China in dramatic shift in attitude

Country plans to launch its own cryptocurrency next year

Anthony Cuthbertson
Wednesday 13 November 2019 02:53 GMT
What is cryptocurrency and the technology behind bitcoin and its rivals?

A state-run newspaper in China has published a front-page story hailing bitcoin as the first successful application of blockchain technology.

The praise marks a significant shift in Beijing's stance towards the cryptocurrency and comes as the country prepares to launch its own digital currency.

Monday's edition of Xinhua went into detail about how bitcoin and its underlying blockchain technology works, describing it as "one of the hottest topics in recent years".

China has been slow to acknowledge the potential benefits of cryptocurrency compared to other countries and has typically taken a hardline attitude towards the industry.

In September 2017, as bitcoin was heading towards its record high price, Beijing introduced a ban on all cryptocurrency exchanges to prevent citizens from purchasing digital currencies with Chinese yuan.

The Xinhua article was not wholly positive about bitcoin, claiming that the semi-anonymous nature of the cryptocurrency meant it was used for illicit activities like money laundering.

"People can freely transfer money through bitcoin without having to verify various identity information... However, this feature also makes bitcoin widely used in illegal transactions," the article states.

"Currently, the most important use of bitcoin payments are black market transactions and 'dark web' transactions."

China's change in policy towards cryptocurrency and blockchain began earlier this year, prompting rumours that the country was close to unveiling plans for its own state-backed token.

In October, after years of an effective blackout on the subject, adverts for blockchain course began to appear on popular Chinese apps and across social media sites. Days later, president Xi Jinping described the technology as an "important breakthrough" that should be developed.

A law is also set to be introduced in January that will "facilitate the development of the cryptography business and ensure the security of cyberspace and information".

This is expected to precede the launch of China's cryptocurrency, which is being developed by China's central bank. Previous positive sentiment from China has been credited for boosting bitcoin's price, however the latest market movements suggest bitcoin's value has been unaffected.

China may not not be the only geopolitical power to launch a cryptocurrency next year, after it was revealed last week that the European Union is considering a proposal for its own digital currency.

Draft documents from the European Central bank urged the EU to "explore the opportunities" afforded by the new technology.

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