Chinese Bitcoin market confidence has been struck with a massive blow after Japanese bitcoin exchange MtGox acknowledged that it will file for bankruptcy. This has lead to many Chinese investors questioning Bitcoin’s liability, according to XinHua.net.
On February 25th, MtGox decided to “close all transactions for the time being in order to protect the site and our users”. Without any further updates, earlier today, on February 28th, MtGox filed for bankruptcy protection stating that over 850,000 Bitcoins have been lost.
Protests and social media stirs portrayed the bitcoin community’s expression of frustration towards the exchange company’s ordeal. A blogger, among many, on China’s Sina Weibo; a Twitter-like website, said the site breakdown was “a disaster” for the bitcoin market.
China was introduced to the digital currency in April 2013, after movie star Jet Li’s One Foundation charity received several hundred bitcoins to assist earthquake victims in Sichuan. Investors became intrigued in Bitcoin, and China was on board.
China’s View of the Bitcoin Market
In December 2013, Chinese regulators warned the public of the risks bitcoin posed. The government departments say that bitcoin’s status lacks in comparison to fiat currencies. Therefore it is restricted from circulating throughout China’s market.
Demands came from government officials for merchants to not accept bitcoin for payment, and that goods and services could not be priced using the digital currency.
Investors must take appropriate caution when trading in Bitcoins. Liu Bo, a bitcoin investor said:
“Bitcoins are a string of code and their virtual nature means that they are easy targets for computer viruses and hacker thefts.”
BTC China, the countries main bitcoin exchange platform, has bitcoins being traded at 3,500 yuan, 2% less than just 3 days ago. However, the overall price slipped 50% since November 2013, as prices were maxed at a record 8,000 yuan each. BTC China stated:
“Mt. Gox’s tragic violation of users’ trust was the result of one company’s abhorrent actions and does not reflect the resilience or value of bitcoins and the digital currency industry.”
Though the Chinese exchange shows its confidence in their operations, there is no hiding the fact that bitcoin has been hit with a mighty blow. Experts such as Professor Ding Zhaoyong from Jilin University says that if one major bitcoin exchange crashes, the bitcoin market will definitely feel the effects.
Investment manager at Yeequn Investment Holdings Ltd., Gao Chaoxin, says that there are plenty of better investment options for the Chinese public rather than bitcoin.
Lastly, bitcoin investor from Zhejiang, Zhu Rong, says:
“If Mt. Gox becomes insolvent and the bitcoins can not be withdrawn, it could only be defined as infringement of interests. But the virtual nature means that it would not be easy to get the evidence.”
Chinese bitcoin market experts fear the worst if more bitcoin exchanges were to collapse. For some, hope for bitcoin to flourish has been lost by both the government and the investors alike. Some ‘experts’ and social media bloggers have been disheartened by the MtGox failure.
Only time will tell if Bitcoin will prove to be more than what some ‘experts’ think of it.
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