In our previous commentary, we looked at the future of Bitcoin in China and its potential to become a widely adopted and used virtual currency. One aspect of its development which will be critical if the fledgling currency is to really gain traction is the maturation of Bitcoin as a transaction platform.
In February 2013, China became the second largest active Bitcoin market globally as measured by wallet downloads. This has attracted new Bitcoin based businesses to China and what could be a massive market for the developing virtual currency. An example is Bitfash, which was launched in April 2013 and became the first online shopping platform for clothes to accept Bitcoin as payment; one of its key target markets is China. However, will Bitcoin really take off in China? Can the Chinese consumer shift the value of the virtual currency as they did with gold earlier in 2013? What will the government eventually inevitably do to control the currency? It could be a potentially huge market, but will largely depend on its payment function development, the attitude of the Chinese government and the stability of Bitcoin's value.