Amid a turbulent week, a peek inside the world’s busiest Bitcoin exchange
The global price of the digital currency Bitcoin went on a roller coaster ride this week when the world’s biggest Bitcoin exchange was forced by China’s government to stop accepting deposits. Up to now, the exchange, BTC China, was the trading epicenter for the Bitcoin economy.
For a global exchange handling nearly a hundred million dollars worth of trading a day, I was picturing shiny glass offices overlooking an impressive trading floor. But when I arrive to the office of BTC China, I squeeze past two dozen employees cramped inside a fifteen hundred square foot room to get to CEO Bobby Lee. Lee says six months ago when he started BTC China, this tiny space worked fine. “But to our surprise, roughly 6 months, we’re practically full. We have thirty people here and it’s been a wild ride,” says Lee. “Very fast. It’s bitcoin time.”
And in a Bitcoin minute, Lee’s Bitcoin exchange just lost its ability to accept deposits in Chinese currency. The People’s Bank of China told third party payment providers — Chinese equivalents of Paypal — to stop all transactions in Bitcoin, essentially ending their relationship with Bitcoin exchanges.
“A third party payment company is critical to our function,” says Lee. “So if we are ever told that we no longer have the ability to work with third party payment companies, then essentially our business model is going to be at risk.”
Before China’s government became involved, a single Bitcoin was worth more than a thousand dollars. Today it’s worth around half that. This roller coaster ride is thanks to Bitcoin’s enormous popularity in China — a country where people have few good investment options and where speculating is sport. It’s attracted a certain type of person: nine of every ten Chinese who owns Bitcoin are like office worker Xiao Xiao: male, under 40, and college educated. Xiao says he’s not scared of China’s new Bitcoin rules. “China’s government hasn’t completely banned Bitcoin here. In fact, it can’t,” says Xiao. “It can try to ban investment in Bitcoin, but it can’t stop it.”
It is a digital currency after all, says Xiao. As long as you have an internet connection, and at least one place in the world that allows an exchange to operate, Bitcoin will survive. When I tell Xiao how much Bitcoin’s price has fallen this week, he looks surprised — he hasn’t been checking the markets. “I didn’t know the price dropped that much. I think I’ll wait a couple of days and see what happens,” he says.
And if the price of Bitcoin drops further? Xiao says he’ll buy more.
