At the beginning of this year, the government in China was tightening Bitcoin trading rules. All Bitcoin exchanges in China have stopped processing Bitcoin withdrawals. Everyone are very pessimistic.
But two months later, Bitcoin wasn’t taken down. Instead it gets an unexpected benefit, the trading decentralization has been achieved.
1. Bitcoin trading decentralization is very important
Bitcoin want to be a successful currency, it must be used by people. The first thing is let people get the bitcoin, which requires the bitcoin exchange existence.
From the history of the development of bitcoin, the type of event that affects the most price of a bitcoin is the exchange accident. For example, Mt.Gox bankruptcy, Bitfinex stolen, Bitstamp stolen, the PBOC checked the Chinese bitcoin exchanges…. All these events have led to the price crash.
The so-called centralization is that existence of a central node for the enemy to combat, or existence of a single node failure, will lead to serious damage to the entire system.
Even there are many exchanges around the world, the impact of the exchange on Bitcoin price is too great, this is the embodiment of centralization.
Bitcoin trading need to be decentralization.
There are proposed that use technology to make bitcoin trading decentralization, including bitshares and bitsquare. But the design is too complex, it is too difficult to understand for ordinary people. Bitsquare can only be used if someone has bitcoin, people who want to buy bitcoin must first hold bitcoin, that is a resistance. And the BTS and bitsquare have no professional marketing. That’s why almost nobody uses them.
It can be said that through the design of sophisticated technology, we can’t make the bitcoin trading decentralized. People do not like complicated thing, that leads to use complex technology to solve the problem is very difficult.
2.Bitcoin trading decentralization successfully achieved in China
Earlier this year, the Chinese government suddenly strengthened supervision over the exchange. Then all exchanges in China banned bitcoin withdrawals. All bitcoin exchanges exist in name only.
But the free market is strong, there is demand, there is supply, the market will give a tool to match demand and supply. The Exchanges can match them, then another tool is booming, that is OTC.
Now the bitcoin community in China call buy and sell bitcoins in everywhere. Including a variety of WeChat group, WeChat moments, QQ group, forums, OTC platform. Very hot.
Bitcoin trading tools from the exchanges into WeChat group, Wechat moments, QQ group, OTC platform and forum posts. The traders are almost all over the community. A lot of friends of mine are more or less involved in OTC trade.
These people are looking for buyers and sellers on the market, seeking a 20—100 RMB profit per coin.
The trading depth and volume is not much less to the exchanges. In each group we can always see over 100 bitcoin transaction, even 1000. It would be embarrassing to ask for only a few coins. While the volume of the OTC trading platform is amazing. You must to know that the amount of these transactions can not be brush, it’s all real deal.
Yesterday, bitcoin exchange Bitfinex announced that USD deposit would be blocked. It looks like Bitfinex faces the same problem of Mt.Gox’s in 2013. But when the news came out, the price of bitcoin rose instead of falling.
This is the benefits of the trading decentralization.
3.Bitcoin promotion is also more successful
The accident also brings another advantage: lot of volunteers emerge from the community to promote bitcoin.
In the past we are shy to be a bitcoin player. Few people are willing to tell the family that he is a bitcoin holder. If you want your friends to share a bitcoin article in his WeChat moments, few people would do that.
Now my WeChat moments have a large number of posts to buy or sell bitcoin, we are not afraid to be a bitcoin holders anymore.
When a lot of my former friends that used to trade on exchanges are now engaged in OTC and they are talking about how he introduce bitcoin to his friends and family.
Bitcoin got free exposure to lots of people as a result of tightening Bitcoin trading rules. What a surprise it is!
Every cloud has a silver lining.
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