CryptoCurrencyWire Editorial Coverage: The widespread adoption of cryptocurrencies and blockchain technologies is all but inevitable. The technologies demonstrate numerous consumer and commercial advantages, particularly in logistics, international trade, and even food-safety and product anti-counterfeiting drives. As global and online commerce expands, so does the need for streamlined verification of product quality, delivery and payments, a few of the many capabilities offered by blockchain technology. An emerging leader in this space is ChineseInvestors.com (CIIX) (CIIX Profile), which, among other cryptocurrency-related endeavors, recently opened a bitcoin ATM at its U.S. headquarters in California. Other companies operating in the cryptocurrency and blockchain space include MGT Capital Investments, Inc. (MGTI), Bitcoin Investment Trust (GBTC), LongFin Corp. (LFIN) and Overstock.com, Inc. (OSTK).
China’s Growing Middle and Upper Classes
Many experts see China as the next big frontier for cryptocurrencies and blockchain technologies. Of course, the big fundamental is that the world’s second-largest economy is now China, topped only by the United States. Moreover, at current annual economic growth rates of just under 7%, China’s gross domestic product (GDP) should about double in the next 10 to 12 years. Given the size of its population, China will eventually eclipse the United States as the world’s largest economy.
The rapid emergence of Chinese middle- and upper-classes creates a large pool of consumers who want assurance of product provenance and delivery, as well as an avalanche of new investors who will seek to place a portion of their portfolios into cryptocurrencies – not only as a pure investment, but to ease investment into other asset classes, and to effect transactions.
“If you carry the trends forward, it is probable that Chinese investors will be the richest group in the world within 20 years or less,” ChineseInvestors.com (CIIX) CEO Warren Wang recently stated.
Since its inception in 1999, CIIX has become a leading financial information website for Chinese-speaking investors in the United States and China. To sharpen its focus on cryptocurrencies and financial education, the company has decided spin-off its CBD Biotechnology and ChineseHempOil.com subsidiaries (http://nnw.fm/sri0Y), which it plans to register as a separate publicly traded company.
This move will enable CIIX to allocate it resources toward educating the Chinese public regarding cryptocurrencies and blockchain technologies, along with related marketing and operational efforts.
Recognizing the Chinese community’s mounting interest in cryptocurrency, CIIX currently broadcasts a daily newscast, “Bitcoin MultiMillionaire,” operates its free bitcoin Chinese language education site, www.newcoins168.com, and recently reached agreement to host a bitcoin ATM in the lobby of its headquarters in San Gabriel, California.
Sino wealth creates prospects for investment products
“The signs of accumulating capital in China are obvious, from soaring condo prices in major cities such as Shanghai, to top dollar paid for authentic Sino antiquities. The Hong Kong Hang Seng Index, which is heavily tied to mainland-listed companies and the Sino economy, is up 50% in the last 12 months,” observes Wang. “Labor is also becoming more expensive—so much so, that some manufacturers are already off-shoring to cheaper platforms, such as in Southeast Asia.”
As incomes rise, Chinese citizens “can accumulate savings, as they have long wanted to. China has a high savings rate,” explains Wang. “The prospects for investment products that are properly positioned in China are extraordinarily bright.”
However, Chinese authorities in a series of rules stretching back into early 2017 have made it increasingly difficult for Sino residents to trade in cryptocurrencies, including a ban in September on exchanges trading in bitcoin. Some of China’s largest cryptocurrency exchanges, including OKCoin and Huobi, halted trading between bitcoin and yuan, awaiting more clarity from financial regulators.
The China-based BTCC was the world’s oldest bitcoin exchange, but closed down last year under pressure from Chinese authorities. New ICOs are also banned in China.
China Investors Adapt
“Despite regulations, Chinese investors have demonstrated they want to bitcoin and other cryptocurrencies to be part of their assets,” observes Wang.
Many Chinese investors are selling and buying cryptocurrencies through unregulated, over-the-counter exchanges, after the official ban on conventional exchanges from trading in the digital currencies. Notably, the unregulated trading is still legal.
“The present environment for cryptocurrencies in China requires for even more-knowledgeable participation by Chinese consumers and investors, and thus even a greater need for education and insightful commentary,” noted Wang. “Evolving environments usually offer more challenges but more opportunities that static situations.”
Wang advised industry entrepreneurs to be patient with Chinese investors while Sino residents learn about digital wallet management and the processes for trading in bitcoin and other cryptocurrencies. He also expressed confidence that China will organize a regulated market for cryptocurrency trading in the future.
In addition, Chinese monetary officials appear to be migrating to a national cryptocurrency system, the details of which have yet to be worked out, or at least made public. A researcher at the People’s Bank of China (which is the nation’s central bank and monetary authority) told a public forum in November that it is “crucial” that the country organizes an official central bank-issued cryptocurrency at an early date.
In the past, Beijing has often undertaken initiatives in commerce, but then increasingly relied on the private-sector to bring visions to fruition. Indeed, speaking at the international World Economic Forum in January 25, Liu He, regarded as President Xi Jinping’s top economic planner, told the global financial elite in Davos that China would be even more engaged in economic “reforms” going forward, usually an expression that means increased reliance on market forces. If and when the People’s Bank of China implements a national cryptocurrency, it too may invite increasing participation from the private-sector to make such a currency as efficient and universal as possible. To date, mainland officials have only run trials of a prototype national cryptocurrency.
Meanwhile, the private sector is evolving networks of talent and financiers to help the blockchain industry develop in China. For example, in 2015 the China-based Fenbushi Venture Capital, with Vitalek Butarin, the founder of Ethereum, as adviser. Fenbushi’s general partner is Feng Xiao, founder of Bosera Asset Management, one of the first and largest mutual funds in China. The use of blockchain technology to identify counterfeit goods, and prevent their online dissemination, may be one of the first widely adopted uses of the immutable ledgers enabled by blockchain systems.
“Whatever the shape of the China economy going forward, cryptocurrency and blockchain technologies will play a key and growing role,” said Wang. “There will be a vast and increasing need for informed reporting and education in these topics, for consumers, investors and entrepreneurs.”
Wang added that there is tremendous opportunity for ChineseInvestors.com to bring added revenue and profitability to its shareholders as the huge Far East investment community seeks timely insights into the presently volatile market of bitcoin and other cryptocurrencies. Wang urged entrepreneurs and venture capitalists to be patient in China, both with the population and the government. “Throughout history, in every nation, the best technologies are ultimately adopted,” advised Wang. “Beijing wants the China economy to modernize, to become integrated with the global economy. Cryptocurrencies and blockchain technologies will help with those goals.”
Potential Blockchain Comparables
MGT Capital Investments (MGTI) operates subsidiaries developing a portfolio of cybersecurity technologies. The company address cyber-threats through protection technologies for mobile and personal tech devices, as well as corporate networks. MGTI also operates a bitcoin mining operation.
Bitcoin Investment Trust (GBTC) is a U.S.-based open-ended grantor trust, sponsored by Grayscale Investments, that invests exclusively in bitcoin, which of course, is the pioneering use blockchain technology to verify ownership and confirm transactions. Bitcoin Investment Trust is the first publicly quoted bitcoin investment enterprise, with its shares the first securities to be solely invested in and deriving value from the price of bitcoin. BIT enables investors to gain exposure to bitcoins through a traditional and liquid investment vehicle, without the challenges of buying, storing and safekeeping bitcoins. BIT, along with bitcoin futures-trading recently undertaken by Cboe Global Markets (CBOE) and the CME Group (CME), thus broadens the market and reduces the risk of investing in, owning and or using bitcoins in transactions.
LongFin (LFIN) is working to connect 70 FX and spot exchanges with 300 banks through its electronic market platform. Earlier this month, LongFin announced that its Ziddu Smart Contracts are commercially available on the Ethereum blockchain. Longfin contends Ziddu.com is currently the only venue for decentralized smart contracts. The Ziddu contracts allow for an open but immutable ledger, decentralized verification, and transparent execution. Ziddu also offers micro-finance and lending against collateralized warehouse receipts.
As one of the earliest retailers to accept bitcoin payments, online retailer Overstock.com (OSTK) in December 2017 launched a $250 million initial coin offering (“ICO”). Company CEO Patrick Byrne told CNNMoney he may even consider selling off the better-known online retail business to focus on the 10 blockchain companies it owns.
For more information on ChineseInvestors.com, please visit: ChineseInvestors.com (CIIX)
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