Facebook, Twitter, the New York Times and…Localbitcoins. In China, they’re all inaccessible behind the ‘great firewall’, which refers to internet censorship in the so-called ‘red dragon’. Since the introduction of revamped regulatory measures by most Chinese Bitcoin exchanges, bitcoin trading seems to have, at least in part, shifted to over the counter markets; in particularly, Localbitcoins.
Chinese bitcoin exchanges introduced new ‘know your customer’ measures and suspended withdrawals indefinitely last month ahead of new People’s Bank of China (PBoC) guidelines. This has seemingly led to increased volume on over-the-counter markets like Localbitcoins, which facilitates trades in local currency across the globe.
Increasing Bitcoin Volume on Localbitcoins in China
Bitcoin analytics website Coin.dance shows transactions as high as $36 million Chinese yuan over the week ending February 18.
That total had exploded to nearly 60 million yuan by last week. The chart, to be sure, also reflects an increasing bitcoin price and an inflating yuan. Nevertheless, increasing bitcoin prices don’t seem to keep investors away from the digital currency. As late as early February 2017, the total trades on the OTC bitcoin website stood below 14,000,000 yuan.
According to the Community Manager for the Finland-based company Localbitcoins, who goes by ‘Max’, transactions on the bitcoin trading platform in China have been done mostly using VPNs.
“We’re already technically blocked in China as our site uses, among other things, Google’s re-captcha system,” according to Max on Reddit. “As all Google resources are blocked in China you can’t log in to our site from mainland China unless you use a VPN.”
Finding a trustworthy VPN might be difficult in China, which banned all unauthorized VPNs earlier this year.
China’s Ministry of Industry and Information Technology stated ahead of the bans, “China’s internet connection service market…has signs of disordered development that require urgent regulation and governance.”
It added that new regulations will “strengthen cyberspace information security management.”
Localbitcoins: One of the First Places Individuals Could Trade Bitcoins Online
Localbitcoins is available virtually everywhere, and facilitates a variety of trades, including in-person trades between people who want bitcoins, and those who wish to sell them.
The vast majority of trades on the site occur with different types of bank-to-bank transfers, but also high risk payments, such as with gift cards. The site has experienced steady growth since it was introduced in 2012, founder Jeremias Kangas recently told Bitcoin.com.
“[Localbitcoins] grows at quite steady, predictable pace,” Mr. Kangas said. “In some countries where inflation is high with big differences in currency exchange rates – like Nigeria, Venezuela and others – the rate at which bitcoins are exchanged can be quite different from what the official rates into fiat are. So, bitcoin might be a more and more relevant tool to get the actual value of a specific currency in the future.”
Despite ongoing fluctuations in the Chinese bitcoin market, bitcoin prices there have increased this week, sitting at more than 8,000 CNY on all main exchanges.
What do you think about Chinese interest in Localbitcoins? Let us know in the comments below.
Images via Shutterstock, Coin.Dance
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