By
Bhushan Akolkar
April 12th, 2024
Nearly 80% of all bitcoin trading volume is driven by the Chinese national currency.
The Chinese yuan has become the highest trading currency for the bitcoin, Goldman Sachs stated in a new report on the future of money. According to the study, 80% of world digital currency trading volume comes out of China.
Besides, the majority of all bitcoin trading is taking place on Chinese exchanges, such as OKCoin, BTC China and Huobi. Meantime, US dollar became the second-highest trading currency in the country, followed by yen and euro.
In the new report, Goldman Sachs says bitcoin is one of the “megatrends” changing the global system of payments by reducing costs of transactions, which is the main risk for such companies as Western Union and Moneygram.
The bitcoin trading activity has significantly increased in China, despite the dramatic decrease of the cryptocurrency’s price and the government restrictions imposed on the adoption of bitcoin.
In 2013, the Chinese central bank prohibited merchants, payment firms and financial institutions to handle digital currency transactions and deal with bitcoin businesses. The ban reflected the government concerns about the risk the digital currency may pose to China’s financial situation.
In an interview to Lets Talk Bitcoin, Chinese cryptocurrency lawyer Roland Sun commented the bank’s decision to ban bitcoin: “The only restriction imposed here is to block financial institutions and third-party payment processors from aiding crypto currency businesses (yet there are still many loopholes in reality to circumvent or even penetrate that restriction).”
In order to see further growth of cryptocurrency adoption and usage in China, the government has to clarify its position on bitcoin and its regulation.
Nowadays, China’s economy is facing a downward trend, with the national currency steadily weakening against the improving dollar. Furthermore, the capital outflows recorded the highest rate during the last ten years and amounted to $91 billion in the fourth quarter of 2014.
Despite the tough economic situation in the country, the bitcoin industry is still growing here. According to the report developed by the U.S.-China Economic and Security Review Commission last year, China turned into a center of bitcoin mining, which also contributed to the growth of cryptocurrency usage.
“China surpassed all other countries in the number of downloads of desktop Bitcoin clients, or computer programs, that allow users to trade and store Bitcoins in digital “wallets”. By September, China logged the second-highest number of nodes, or servers, which keep track of the public transaction ledger, accounting for 11.3 percent of the global total,” the report says.
The report also stated that bitcoin has attracted a large number of traders who might not have the opportunity to invest in property or lack the understanding of how to invest in the stock market.