‘Very Little’ Bitcoin Use in China, 99% Speculation According To Bitbank's Lizardo

One dynamic dominates: speculation. Nearly all Chinese bitcoin holders view the asset as a speculative vehicle. "There's very little users," Lizardo said. "I would say 99 percent are speculators." Early Western bitcoin adoption followed a different course. American bitcoin adopters came to the technology for ideological reasons rooted in libertarian thought. That never materialized in China. "There's no ideology," Lizardo explained. "Very few people [in China] get into bitcoin because they believe it's something that's better for the world or something like that, so it's all speculative."

Lizardo attributes this to the Chinese approach to risk and investment. "When it comes to investment, they're very big risk takers," he said. "For them, when they learned about bitcoin, it was like the most speculative asset they've ever seen in their lives. That's the main reason people got into bitcoin here." The earliest wave of Chinese bitcoin adoption came from miners. They benefited from two advantages: cheap electricity and inexpensive hardware. "These guys learned about bitcoin and they were in the hardware industry," Lizardo noted. "They made some miners and they went to the rural parts of China and they set up their mining facilities." China's restrictive stock market accelerated interest. Investors seeking speculative outlets found limited choices in domestic markets.

With speculation as the main force, altcoins and initial coin offerings took off. The trend has persisted in China for roughly two or three years, Lizardo said, but the country's isolation from Western markets kept the movement invisible to outsiders. "Things can be huge in China because it's such a large market and there's so many people, and nobody would ever know about it outside of China," he noted. Several coins drew Chinese interest: Ethereum, Qtum, and Factom. Ethereum distinguished itself. "Ethereum did a very good job from the beginning in engaging China and establishing communities here," Lizardo said. "[Ethereum creator Vitalik Buterin] has been coming here from the beginning." The other coins remained speculative bets. Ethereum appeared to have long-term potential.

Bitcoin still commands the crypto market's center. "I don't think bitcoin is not going to be the reserve currency of [altcoins] and tokens for a long time," Lizardo said. When Chinese traders exchange altcoins, they work through bitcoin pairs rather than converting directly to yuan.