As the protests in Hong Kong become an even greater threat to mainland China, so do the prospects of bitcoin and cryptocurrency.
Bitcoin Has a Lot to Offer Hong Kong
For the most part, China has had a very mixed relationship with cryptocurrency. Recently, the country implemented a ban of all foreign exchanges and initial coin offerings (ICOs), citing fears of money laundering and other crime as the primary reason. Furthermore, regulators have spent several years trying to instill a ban on future bitcoin mining, claiming the effects of such mining can seriously hurt the country’s atmosphere. However, this argument has yet to go anywhere and crypto mining is still prominent within China’s borders.
Presently, the protests in Hong Kong are designed to fight against extradition legislation to the Chinese mainland. One of the more “serious” moments to arise from the protests involved persons refusing to utilize a centralized form of payment known as Octopus. Those protesting do not want to leave a trail of their actions and potentially lead themselves right into authoritative hands. They were also concerned about facial recognition which Octopus utilizes to know its users.
These and other issues being faced by protesters on the island has led to what’s known as a premium in digital currencies that are traded against the Hong Kong dollar. The currency first began trading for around $160 during mid-June, when the protests first began. Since then, bitcoin has garnered a trading price of about $11,358 at press time, yet the premium is still in play.
The reason for this is because the Hong Kong dollar is considered a more “unusual” or rarer form of cryptocurrency when compared to the yuan. Therefore, it is subject to certain capital controls, which tend to affect whatever asset or currency trades against it. However, bitcoin remains in strong demand on the island nation, suggesting it’s got a bright future in bringing the protesters the kind of non-controlled environment they’re looking for.
Cryptocurrencies like bitcoin are decentralized, meaning they are not issued by banks or financial institutions. For lack of better terms, financial independence is given to their users in that for money to be offered or received, there are no credit checks, and deposits and withdrawals can be made quickly. Typically, persons depositing money into a standard bank account must wait a day or two before the funds become available.
What Kind of Environment Do the Protesters Want?
In addition to that, granted they do not have sturdy enough credit, they’re likely to be denied any opportunity for a bank account depending on the institution in question.
Citizens living in mainland China cannot trade, sell or purchase bitcoins or other cryptocurrencies on exchanges, which in many ways, is troublesome given how crypto could potentially ease some of the effects of the U.S.-China trade war.