Connect with us

Entrepreneurship

Bitcoin in China

Published

on

There has been renewed interest in Bitcoin in China as an alternative currency and speculative asset.

Much like the impact of shifts in demand in China on global markets, shifts in the volume and direction of Bitcoin trading in China has been driving the global price of Bitcoin.

Bitcoin’s first major price spike, to over $1000 USD per Bitcoin (BTC) in late 2013, was driven by a sharp rise in demand for Bitcoin in China.

At the end of 2015 Bitcoin’s price made a comeback, climbing to over $400 USD per BTC, and it was driven by another sharp rise in Bitcoin trading volumes and user activity in China.

So what is driving the renewed demand for Bitcoin in China?

Bitcoin's price has been led by sharp shifts in trading in China in 2013 and 2015.
Bitcoin’s price has been led by sharp shifts in trading in China in 2013 and 2015.

Apart from the volatility on China’s A-Share market, some outside observers claim that depreciation pressure on the Chinese currency, the Yuan, is driving the renewed interest in Bitcoin in China.

Zero Hedge, for instance, has also claimed that Chinese users are using Bitcoin to evade China’s capital controls and to move cash out of the country—a question to which we will return.

But first, some background on Bitcoin.

Bitcoin: a quick intro

Bitcoin is a digital currency–a form of digital cash–which enables individuals and businesses to make direct peer-to-peer payments without using banks or other financial intermediaries. Bitcoin is therefore a channel for financial disintermediation.

Bitcoin is also an alternative currency and a speculative asset. Whereas the major world currencies, like the US dollar or the Chinese Yuan, are government-backed fiat currencies, Bitcoin derives its ‘authority’ from an encrypted public ledger system called the blockchain.

The Bitcoin protocol was first outlined in a pseudonymous paper by Satoshi Nakamoto in November 2008 and the first version of the Bitcoin software client was released via a crypto mailing list in 2009.

Compared to traditional bank payments systems, Bitcoin’s blockchain is more secure and the time needed to settle Bitcoin transactions takes minutes rather than days.  Bitcoin is based on an encryption protocol, hence the term cryptocurrency, and all Bitcoin transactions are made through its encryption algorithm.

Bitcoin transactions are recorded on an encrypted public ledger system and verified through a process called mining. Bitcoin mining is the process by which distributed computer nodes compete to solve the encryption problem on the Bitcoin key-chain system. Bitcoin users have public and private keys (payments addresses), and the encryption process is used to match or resolve these keys.

As each transaction is verified it is recorded in the public ledger system as proof of payment, and this proof of payment or settlement is publicly available and accepted in the length of time it takes to solve the first computer node to solve encryption problem – currently about 10 minutes. In contrast, traditional bank payments take anything from 1 business day to settle local payments to 4-5 days to settle international payments.

Bitcoin therefore radically reduces the costs of making cross-currency and cross-border payments and one of the early Bitcoin applications is as a vehicle for migrant workers to make international remittance payments.

Bitcoin-based payments use in developing countries is growing rapidly, especially Latin and South American countries and across Africa, and for good reason.

Today using Bitcoin a Mexican worker earning US dollars in the United States could deposit Bitcoin to their electronic Bitcoin wallet, which is linked to a payments card held by a relative in Mexico, who could then use the card to make payments at the local supermarket chain.

Compared to international bank transfers, or Western Union, all of this could be done in real time at a cost of one per cent or less using current Bitcoin based applications.

It is also cheaper for merchants to accept Bitcoin payments than credit card payments. Whereas merchants are usually charged 2-3 percent per transaction by credit card companies, a business set up to accept Bitcoin can reduce this cost to as little as 0.5 percent.

And because users can make peer-to-peer transactions anywhere in the world without the need for banks or traditional payments companies, Bitcoin can bypass capital controls.

While the current global value of Bitcoin is small—an equivalent of $6.3 billion USD on January 1, 2015–over US $50 billion was invested in Bitcoin-based technology applications in 2015.

Bitcoin in China

Bitcoin in China got off to a slow start. This changed in May 2013, when China’s national CCTV television station aired a highly favourable documentary on Bitcoin.

The result was a flood of Chinese retail investor money into Bitcoin.

Downloads of Bitcoin clients in China for desktop computers, which allow users to buy and sell Bitcoins, surpassed downloads in all other countries.

In October 2013, Bitcoin was even briefly accepted as a means of payment by merchants on China’s e-commerce giant Taobao.com and by Baidui’s Jiasule software security company.

This briefly integrated Bitcoin into China’s payments system.

Chinese Yuan (CNY) denominated Bitcoin trades soon surpassed US-dollar denominated Bitcoin trades and this drove Bitcoin’s market price to an all time high of over $1000 USD per BTC in late 2013.

Bictoin mining also took hold in China as as people downloaded the open source Bitcoin mining software in the hope of turning some new coins into a rapidly increasing asset prices.

As bitcoin mining became more difficult, requiring more computing power to earn bitcoins, more powerful Bitcoin mining computers were manufactured in China and these also became available through Taobao, China’s largest business to consumer e-commerce platform.

Yet, as Zennon Kapron explains in his book Bitcoin’s explosive growth in China also triggered its downfall.

China’s authorities’ responded to this flood of cash into Bitcoin–which was not under government or centralised company control—by cracking down.

The People’s Bank of China (PBOC) issued a notice prohibiting financial institutions from dealing in Bitcoin on December 5, 2013. The following day, the PBOC also ordered the largest third party payment companies, including Alibaba’s Alipay to halt Bitcoin digital currency transactions. Two days later, BTC China, the largest Bitcoin exchange in China, was forced to stop accepting Renmibi (RMB) deposits.

Not only retail investors, but also Bitcoin miners sold out of Bitcoin as quickly as they could and Bitcoin’s global price fell more than 50 per cent, led by the sell-off in China.

Bitcoin’s future in China appeared to have been bought to early demise. And yet while Bitcoin attracted few new users in China since its 2013 peak, Bitcoin mining and trading activity in China continued to grow. Chinese Bitcoin exchanges now account for over 90 percent of global Bitcoin trading activity and China accounts for as much as half of all global Bitcoin mining activity.

__________________________________________

About the Author

This article was written by Luke Deer of Frontiers of Finance in China.

Callum Connects

Mikyung Kim, TV Commercial Producer

Published

on

Mikyung Kim is a savvy producer who runs her own TV and print production business, based in Hong Kong.

What’s your story?
I am a TV commercial and print producer working with advertising agencies and brands to bring their communication needs to the screen. My background is in film production and I started my career in Hollywood working with Oscar winning directors Michel Gondry and Alejandro González Iñárritu. Before starting my own company last year to produce content directly with agencies and brands, I was with Ogilvy & Mather Hong Kong for nearly five years as the Senior Producer and Head of TV running the film production department.

What excites you most about your industry?
How it’s constantly evolving! Every day is different and it’s certainly never boring. I love that it’s a creative industry and that my job involves talking to people with creative minds on how we can bring a story on paper to life. It’s exciting that the advertising industry places high value on the creativity and effectiveness of content. I’ve produced a few commercials that creatively push the envelope with fun and sometimes wild ideas that have converted into positive brand awareness. Ever heard of KFC Finger Lickin’ Good…Nail Polish that yes, tastes like chicken? https://www.adweek.com/creativity/kfc-just-made-edible-finger-lickin-good-nail-polish-yeah-tastes-chicken-171245/

What’s your connection to Asia?
I was born in Seoul and raised in Hong Kong until graduating from high school at HKIS. I spent my university years in Boston at Emerson College and worked in Los Angeles at Anonymous Content and Partizan Entertainment. But on a brief visit back to Hong Kong in 2010, I decided to move back and continue my career here, and it was the best decision I ever made.

Favourite city in Asia for business and why?
Hong Kong is my home so it will always be my favourite city for business and for me personally. What I love about Hong Kong is that while I am based here, I can actually work with agencies and brands from anywhere in APAC. If I need to attend an important meeting, I can just hop on a quick flight easily. I spent most of 2017 working in Seoul with Korean agency Cheil and Samsung, and currently I am working with Japanese agency ADK and Toyota based in Singapore.

What’s the best piece of advice you ever received?
“Fake it until you become it,” from Amy Cuddy’s TED talk. Worth a watch. This helped me early in my career when I felt like I was under qualified for the job I was in. I learned to fake my confidence and fake a powerful body language until I truly felt that confidence became something real. It was nerve wracking at first but it worked and now I don’t have to fake it.

Who inspires you?
My friends. Noelle who worked part time jobs while being a full time student to pay her own tuition while we were in college together. Osti who is a lawyer focused on supporting developing nations and a board member of Redress, an environmental NGO working to reduce waste in the fashion industry. Vanessa who runs a real estate company, co-owns the gym Crossfit Asphodel, started a health foods business called Quo and NGO The Keep Moving Project to promote wellness in our community. Cathy who will be the first Asian woman to direct a big budget superhero film starring Margot Robbie with Warner Bros and DC. And too many more to name!

What have you just learnt recently that blew you away?
5.2 million plastic bottles are thrown away in Hong Kong every day. Plastic pollution is a major issue for the environment and we as responsible citizens can do our small part by reducing our consumption of unnecessary plastic. I do mine by having a water filter at home and carrying my own reusable water bottle with me everywhere I go. I love the brand Hydroflask because the stainless steel material keeps water hot or cold for hours, so I don’t feel tempted to buy a cold water at 7-11 on those hot, humid days we have here.

If you had your time again, what would you do differently?
About five years ago I purchased my very first stock and put one month’s salary into it, which at the time was a lot of money for me. Knowing how that stock has performed now, I would have put all my savings into it.

How do you unwind?
Exercise is essential in my daily life to help clear my head and de-stress. My go to is a workout at Crossfit Asphodel, running outdoors, yoga and hiking. But a glass of red wine and live music at Soiree in Soho on Sunday night works pretty well too!

Favourite Asian destination for relaxation? Why?
One of the best trips I ever took was to the island of Lombok in Indonesia. Two girl friends and I did a 3 day 2 night hiking and camping trip to summit the Mount Rinjani Volcano. It was physically challenging but mentally relaxing. There was no cellphone reception, no distractions, we had the company of nature and nights with skies full of shooting stars. It was pretty magical. We then went to the Gili Islands for a few days of scuba diving, yoga and sitting on the beach doing nothing but sipping on coconuts. That was pretty relaxing too.

Everyone in business should read this book:
“Nice Girls Don’t Get the Corner Office” by Lois P. Frankel and “Lean In” by Sheryl Sandberg. Essential reads for every working woman and/or man who wants to know how to support the working women in their life.

Shameless plug for your business:
I am a TV commercial and print producer that can plug into an existing advertising agency or brand team to produce their communication needs. Many advertising agencies these days are scaling down so they have creative directors and account services but may not have an in-house producer, so I can fill that gap by becoming a part of the existing agency team. For brands that want to produce content directly without involving an agency, I can also bridge the gap by bringing my production knowledge in-house and working as part of the marketing/brand team and liaising with the other departments in the company such as product team and ecomm.

How can people connect with you?
They can email me at [email protected]
or visit my website at mkimproducer.com

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

Continue Reading

Callum Connects

Renne Ballard, Owner of Renée Ballard Communications

Published

on

Renne Ballard runs a social media agency working with business women, helping them find their business’s voice.

What’s your story?
I began my career in PR/communications ten years ago in Australia, after arriving home from two years in Dubai. In Dubai I was working for Emirates Airlines as a flight attendant and flying around the world non-stop for two years. This really sparked my interest for how people communicate. I started out as a community manager for an online advertising company, then moved into the corporate world of outdoor advertising, managing internal and external PR and communications. After having a baby four years ago, I decided to leave the safety net of corporate, and stride out on my own. I now run a social media agency and I specialise in working with business women, helping to find their business’ voice so they can use social media to achieve their business goals.

What excites you most about your industry?
I love the open accessibility online provides. It’s free for businesses to get online and connect with their target audience. Twenty years ago, advertising and PR was insanely expensive and quite elitist, but through incredible platforms like Facebook or Twitter, any business can connect with who is looking for their product/solution. Social media is particularly effective for small businesses because they have the edge when it comes to authenticity and a clear voice.

What’s your connection to Asia?
I’m in Hong Kong because I’m a trailing spouse. I know it’s such a daggy term, but I love it, it makes me sound so dedicated to my husband! Alas, we came to Hong Kong for my husband’s work. He’s the Design Director of Asia for an international retail design agency. We’ve been here for almost two years and it’s been a huge learning curve in terms of business and culture. We love the fast-paced nature of Hong Kong and the fact that everything is open late – it suits me perfectly because I’m nocturnal.

Favourite city in Asia for business and why?
That’s easy, Hong Kong. It’s the perfect blend of start-ups and mothership-sized institutions. I love the small business side, watching the collaborations between workshare spaces with galleries, networking groups and foodies; it’s a hothouse of creative partnerships here.

What’s the best piece of advice you ever received?
When you’re are feeling scared about your next step, lean in and feel the difference. Is it fear mixed with excitement? Or fear mixed with dread? Always go with the former and cut loose the latter.

Who inspires you?
I love Tamara Mellon (Jimmy Choo founder). She has created multiple empires and she never stops trying new business models and pushing her limits. It helps that I love shoes too.

What have you just learnt recently that blew you away?
I just turned 40 years old. At best, I’m probably halfway through my life. It makes me constantly question, “Am I where I want to be?”

If you had your time again, what would you do differently?
I would have asked more questions to the people I looked up to, and listened less to the people telling me I won’t achieve my goals.

How do you unwind?
In this day and age, it’s scandalous to say, but I love sunbaking. At any chance, you’ll find me poolside, laying in the sun in a trance-like state.

Favourite Asian destination for relaxation? Why?
Northern Danang in Vietnam. We were there at Christmas, at the foot of the mountains and it was beautiful. Heaps of wildlife and jungles and enough five star resorts that I was never parched once.

Everyone in business should read this book:
‘The E Myth’ by Michael Gerber. It’s an oldie but a goodie because it succinctly outlines how to transition from a one person operation to a global business like McDonalds. Once you see how important systems and processes are, you can recognise shambolic companies a mile off.

Shameless plug for your business:
Renée Ballard Communications is a social media agency that works with business women who are ready to make social media work for them. We create effective, powerful social media strategies that are tailored to the people who will be breathing life into them. We hand on heart promise to never use annoying, marketing buzzwords and that we value laughter above everything else.

How can people connect with you?
[email protected] or www.reneeballard.com or +85296670115

Twitter handle?
@ballard_comms

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

Continue Reading

Trending