Bitcoin's fate is in the hands of China

Bitcoin's fate is in the hands of China

Cihan Wu still remember the feeling of joy and inspiration that he felt in 2011, when he first learned about Bitcoin.

Computer nerd that recently finished one of the best Chinese universities, Wu absorbed everything he can about digital cryptocurrency and its mysterious creator. He was particularly struck by the idea that can transform the entire global financial system. A year later, Wu resigned from the private equity firm and launched a bitcoin startup, now known as AntPool.

Now, in 2016, the firm Wu is one of the world's largest players in the market of mining bitcoins - a computer process that makes it possible transaction cryptocurrency. While these guys are Mine, bitcoins work.

However, Wu and inspiration all kriptosoobschestva quickly replaced by concerns about the future prospects of Bitcoin. Ahead loomed the obstacle that can be a major barrier to the development of this cryptocurrency since its inception in 2009. The volume of data processed in a one-time Bitcoin network is limited at the program level. As a result, the current system payments are necessary to dramatically increase the bandwidth, or the time the transaction will increase exponentially and threatens to affect the course cryptocurrency that grew by 4475% in the last 5 years.

In theory, everything is simple - a little bit source code changes and transactions continue to run on the network. However, any changes in the architecture of Bitcoin will lead to what will be affected. As a result, Miner, software developers, libertarians and crypto-entrepreneurs - all these guys that form the universe cryptocurrency - will have to find a consensus that will satisfy everyone. Over the past year has been made 5 attempts, and a few will have this year.

And what is interesting: any decision will require the support of China, where more than 70% of digital farms extraction (mining) bitcoins. Not only that: 90% of all trading Bitcoin is also carried out in China.
Consequently, the bitcoin - is, above all, the Chinese cryptocurrency.

According to Wu, agree all market participants will be very difficult. And he knows what he is talking about, because Wu - Owner AntPool, the second largest bitcoin farm in the world, it is also one of the largest manufacturers of related equipment for mining. a lot of money rotates in the industry, and emotional involvement is very high - as a result, in the air a lot of ideas, but the final decision is not visible at all.

It is likely that all depends on Wu and his comrades. Chinese miners enjoy all the benefits of their country - cheap labor, gratuitous electricity and local factories about the microchip production. All this has allowed the Chinese essentially determine the competitors in the problem of the implementation of all these incredibly complex calculations required to confirm bitcoin transactions. For this service they receive remuneration in the form of "freshly baked" bitcoins.

When the price cryptocurrency with $ 1,000 in 2013 dropped to less than $ 200 in 2015, but the low cost of Chinese miners enabled them to not only stay afloat, but also to take the lead, while the western miners began to suffer losses.

Rabid volatility of Bitcoin attracted him a lot of Chinese speculators, who are eager to diversify their assets in yuan after the currency plummeted in 2015.

Chinese Mining

Two-thirds of all mining Bitcoins facilities located in China. And this is just fear. Will all kriptovalyutnaya system to withstand the pressure of China's ruling Communist Party, which limits the flow of capital abroad and tightly controls the Internet?

It is particularly twitch libertarians, for which Bitcoin - a symbol of digital freedom. Unlike regular exchanges Bitcoins have no single point of management and control, such as a central bank that controls the emission. The maximum number of Bitcoins is strictly limited and 21 million coins.

And that's what we have - all these coins are now generated in China, and this is a very dangerous situation, said Peter Todd, an active member of Bitcoin community of Canada. In fact, Bitcoin belongs to the Chinese government, and this can cause cryptocurrency fatal blow at any moment.

Currently, Bank of China does not consider this Bitcoin currency and has taken steps to limit the penetration cryptocurrency primary financial system. However, explicit steps for the control and management of Bitcoins from China has not.

Control is entirely in the hands of Chinese miners. They are the deciding vote and any decision concerning changes in the architecture of Bitcoins will require their approval.

Photos of the two largest mining Bitcoins-farms in the world - AntPool and BW.com, responsible for 19.2% and 7.9% of the capacity calculation hashrate recently posted on the Chinese blog service Weibo: