Due to the pseudonymous nature of bitcoin, it is sometimes difficult to figure out who is using the digital currency and for what reason. In a recent interview with Chris DeRose, Bitbank Group Vice President of International Affairs Virgilio Lizardo Jr. discussed the type of people using bitcoin in China.
Bitbank Group is behind some of the most well-known bitcoin companies in China such as cryptocurrency mining company BW and cryptocurrency exchange Bter.
Bitcoin Use in China Comes Down to Speculation
According to Lizardo, the use of bitcoin for price speculation is the main thing that has attracted people to the digital asset in China.
“There’s very little users,” Lizardo told DeRose during the recent interview. “I would say 99 percent are speculators.”
In the United States and other parts of the western world, many of the early bitcoin adopters had ideological reasons for getting into this new technology, mostly from a libertarian viewpoint. According to Lizardo, this mindset is not as popular in China.
“There’s no ideology,” said Lizardo. “Very few people [in China] get into bitcoin because they believe it’s something that’s better for the world or something like that, so it’s all speculative.”
From Lizardo’s view, the prevalence of gambling and financial risk-taking in China is what led a section of the population to bitcoin.
“When it comes to investment, they’re very big risk takers,” said Lizardo. “For them, when they learned about bitcoin, it was like the most speculative asset they’ve ever seen in their lives . . . That’s the main reason people got into bitcoin here.”
Lizardo added that the first people to get into bitcoin in China were miners, mainly due to the cheap electricity and cheap hardware available in the country.
“These guys learned about bitcoin and they were in the hardware industry,” said Lizardo. “They made some miners and they went to the rural parts of China and they set up their mining facilities.”
Lizardo would later add that the restrictive nature of the Chinese stock market is something that has helped interest in bitcoin as a speculative asset grow in China.
Speculation Continues with Altcoins and ICOs
If speculation is the main driving force behind China’s interest in bitcoin, then it should be no surprise to hear that altcoins and initial coin offerings (ICOs) are also popular in the country. According to Lizardo, speculation on these alternatives to bitcoin has been going on in China for the past two or three years, but the sometimes isolated nature of the Asian nation may have led this trend to go unnoticed in the western world.
“Things can be huge in China because it’s such a large market and there’s so many people, and nobody would ever know about it outside of China,” said Lizardo.
In terms of specific bitcoin alternatives that have shown up in China, Lizardo pointed to Ethereum, Qtum, and Factom, with Ethereum being the only one where there is a sense there could be some actual long-term promise and not just complete speculation.
“Ethereum did a very good job from the beginning in engaging China and establishing communities here,” said Lizardo. “[Ethereum creator Vitalik Buterin] has been coming here from the beginning.”
Bitcoin is the Reserve Currency of the Crypto Markets
Although China’s appetite for speculation has led to interest in altcoins, Lizardo claimed bitcoin is still viewed as the reserve currency of the cryptocurrency space across the world.
“I don’t think bitcoin is not going to be the reserve currency of [altcoins] and tokens for a long time,” said Lizardo.
To this point, Lizardo added that altcoin trading is mostly done through bitcoin pairs rather than directly with Chinese yuan.