Bitcoin Exchange In China Backed By VC Money Faces Cooldown

By March 28, 2014Bitcoin Business
Click here to view original web page at www.forbes.com

Bitcoin Exchange In China Backed By VC Money Faces Cooldown


The buzz, speculation and volatility over bitcoin as a digital currency is nowhere stronger than in China. Ask Bobby Lee, the CEO of China’s bitcoin exchange BTC China, based in Shanghai.

Bitcoin trading has cooled off considerably in China after a peak last year, when China contributed half the global trading volume in the digital currency, Lee says.

Transactions fell from a high of 100,000 daily late last year to 10,000 by this March 20 while prices dropped by 80 percent from a peak of $1200, he notes. Meanwhile, at least six bitcoin exchanges disappeared over the last two years in China, says Lee. He predicts that another two bitcoin exchanges will go bust over the next years.

China still counts six bitcoin exchanges, and BTC China, formed in 2011, is the largest one, says Lee, a former Yahoo Yahoo engineer in Silicon Valley for eight years and WalMart technology manager in China.

The cooldown has come after China’s central bank ruled that bitcoin can not be used as a currency while  Alibaba determined that the digital currency can’t be used as payment on its Taobao e-commerce website.

While China has not banned the trading of bitcoin, regulations threaten to curtail its development for financial transactions. Interviewed at CoinSummit in San Francisco, Lee cited the main issues with bitcoin in China (and elsewhere) are over transparency, security, solvency and false claims about trading volumes to gain market share. See Silicon Dragon video interview with Lee.

All these risks have not stopped the excitement about bitcoin – akin to the development of the Internet and information highway many moons ago.

Venture capitalists are pouring money into bitcoin exchanges. Some $120 million has been invested in bitcoin during 2014 up from $5 million in 2013, said Adam Draper, speaking at the Global Technology Summit at his father’s recently launched Draper University. He added that he expects that half of the 200 startups his team will incubate at Boost within three years will be bitcoin-related ventures.

Not one to be left out of a global mega trend, VC Bill Tai has made a bet on several bitcoin startups, he told a recent SmartMoney conference in Silicon Valley.

And who’s backing BTC China? That’s Ron Cao, a co-founder and managing director at Shanghai-based Lightspeed China, which has invested $5 million in BTC China. VC Cao will be a featured speaker at Silicon Dragon at Cyberport April 15, telling us more about the ever evolving story of bitcoin’s development and his own deal, BTC China.

Leave a Reply

All Today's Crypto News In One Place