Bank of China (BoC), one of the country’s big four state-run commercial lenders, published an explanatory infographic about bitcoin, including how it works and why its price is volatile, on its website in another signal that the central government’s opinion on the virtual currency is thawing.
Why it matters: This is the latest indication that China’s skepticism of cryptocurrencies is retreating. The country’s financial authorities have been showing a greater willingness to embrace digital tokens in recent months.
- China previously took a tough stance on cryptocurrencies in late 2017, banning trading and initial coin offerings (ICO) among other activities.
- The BoC dabbled in blockchain last year and expressed an interest in applying the technology in areas including trade finance.
Details: The infographic explains how bitcoin works in three sections, describing how it works, its benefits and pitfalls, and featuring prominent figures in the cryptocurrency industry.
- The first segment highlights what bitcoin is, its benefits, and major events in its short history.
- The middle section explains why bitcoin is valuable and its price so volatile. It includes a cartoon figure cautioning that “trading Bitcoin is like going on a roller coaster ride; my heart can’t take it.”
- The final part paints a future with wider adoption of cross-border payments using bitcoin and a payment network that enables people to trade, make transfers with bitcoin, and convert it into other currencies.
- The infographic also features some well-known and controversial figures from China’s cryptocurrency space, including entrepreneur Justin Sun, who reportedly has been placed on a border control list, with a blurb “The biggest problem is having too much money!” It also shows crypto billionaire Li Xiaolai, who has been lying low after a leaked recording of him bashing the most prominent figures in cryptocurrency, lighting a cigarette with a banknote.
Context: The People’s Bank of China recently reaffirmed its commitment to developing a sovereign digital currency prompted by the rise of cryptocurrencies like Bitcoin and the emergence of global blockchain-based payment systems like Facebook’s Libra.
- Earlier this month, Bitcoin was recognized as a virtual property with monetary value for the first time in a Chinese court.
- One month after Facebook released a whitepaper on its cryptocurrency project Libra, officials from China’s central bank reiterated their commitment to planning a national digital currency that could eventually replace the yuan.
- Despite a slow shift in the government opinion of bitcoin, regulators have not loosened oversight on related activities in the country, which have largely been banned since late 2017.
- In April, China’s state planning body proposed to restrict or phase out crypto mining activities.