Update: 796 above 1125, mtgox held above 1000

796 1125

So we have had wall street getting into the game as one year closed and another begun, even having a junior bitcoin trader role. China, which has in 2013, pretty much single handedly raised bitcoin to 1200+ highs with American hedge funds gleefully following along, has also pretty much single handedly cleaving it into thirds in a matter of days, dropping to lows of $300-$400+ on certain exchanges.

Having bounced back to a tenuous $700, we have it testing and breaking $1000 just a few days into the new year. It is still going up and down at the $1000 mark, like water waves lapping at a watermark. (for all you know it might go all the way back down after I post this lol)

Could China be back in the game?


We have had China severing off third party payment providers to the China bitcoin exchanges, however, they soon scrambled to find ways around that that would also be in accordance with China regulations.

Huobi uses direct funding to their CEO’s bank account, who takes on legal liability but has in exchange grabbed hold of immense market share. BTC China uses a voucher funding method similar to Mtgox and BTC-E

It seems that both their methods have some measure of tacit China approval, so it remains murky and muddy waters as to China’s intent. Perhaps they were concerned that they had single handedly rushed bitcoin too fast too far, and wanted to “taper” it before the less risk inclined populace got burnt on it? As we open 2014, it remains to be seen how things will unfold!


Litecoin at 25



Huobi used to be one of the lesser market share exchanges, but has since climbed the gap through its method of funding. Funds would go into its CEO’s personal bank account, in a sense bypassing 3rd party payment processing restrictions and in the other this is something that China at the very least does not disagree with. For it would be very easy to shut down his account.

Speculation has it that the China govt likes the funds funnel being through official China banks, as that would somewhat reduce the veil of anonymity that occludes bitcoin previously. (China Construction Bank and China Merchants Bank it seems)



hao123 bitcoin

You can see the great volume difference. Huobi (fire coin) is the listing above okcoin and below btcchina (btcchina is below 796qihuo)


For those unfamiliar with Huobi, it is now the largest BTC exchange in China doing roughly 70,000-80,000 in volume a day (versus 4,000 at OKcoin). Earlier today I spoke with my friend who is building an exchange in Shanghai who explained the volume discrepancy.

The way the current exchanges in China are nearly all set up is that all of the trading is actually conducted using the CEO’s personal bank account. Seriously. That is to say, none of the exchanges (at first) utilized a corporate account. At some point this past year the big exchanges managed to switch to corporate accounts in some form or fashion. So on top of the 3rd party payment provider issues last week, the CEOs at the big exchanges (probably) expect some kind of crackdeown on personal accounts so they are trying to go completely legitimate and avoid that risk.

Thus Li Lin (CEO of Huobi) is shouldering a great deal of risk that neither Bobby Lee nor Xu Mingxing no longer are willing to do any longer (perhaps for good reasons).

The other reason for Lin’s success is that he has an individual account with each bank (ICBC, BoC, ABC, CCB, SPD, etc.) so his system does not utilize an interbank transfer (other exchanges may have used that same method as well, I do not know). Again this is largely due to the current legal policy (which has existed for as long as I lived there) in which you cannot just move money from a corporate account to a personal account without a fapiao.

Note: if you are a big trader, right now you would want to use Huobi to buy BTC (as it is the easiest/fastest way to do so) but use BTCChina for actual trading (due to its features).

If you have any questions, I can relay them to my friend.

[Sidenote: here is my response to Charles Stross’ FUD last week: http://www.ofnumbers.com/2013/12/18/charles-stross-takes-on-the-bitcoin-community/]

As of right now, it does not. But the CEO part is not necessarily the linchpin as outlined by some specific bank policy. The exchanges use the CEO’s personal account due to liability issues, how bank transactions take place (personal versus corporate) and how corporate structures work in China (e.g., you do not ask the intern to use their personal account even though it is roughly the same as the one the CEO uses). The PBOC could restrict that directly if it chose too irrespective of whether or not you have a fapiao.

Which brings up another overlooked issue entirely, why is a fapiao necessary? Basically if you want to move money from a corporate account to your personal account, you need to have an official (notarized) invoice for each transaction. Even if you own the corporate account, in China you have to present this fapiao for each exchange. You can imagine the logistical and paperwork burden that would place on say a bitcoin exchange that processes tens of thousands of transactions a day. Here is an explanation of how a fapiao works: http://www.china-briefing.com/news/2013/08/13/understanding-chinas-fapiao-invoice-system.html

One of the speculations right now is that Bobby Lee and others believe that there will be a crackdown on personal accounts and that is the reason why they stopped doing it (you would have to ask them though).

I personally would never allow my account to be used like that as it really puts you in a bad legal liability position if someone you sent/received money from ends up doing something illegal. You could be held liable as accessory to whatever crime or even more directly, enabled money laundering to take place.

BTCChina on the other hand has gone a different route

It seems to be taking a leaf out of btc/e/mtgox’s books and using BTCC Voucher


Account: http://i.imgur.com/QbZekwa.png

Recent forum posts:




May be somebody from China can explain how does this work? Where to buy them? How to change them to CNY?

Edit: BTC-E uses similar system BTC-E code which can be bought on several exchanges: https://www.alfacashier.com/ , http://24change.com/ etc who accept banking deposits and all traditional virtual money

Edit1: A bit off topic but as an example how things work in China: I remember one guy told me about money transfers from China to Hong Kong. He said it is instant, they transfer millions of dollars daily and if I want he can give me 50 different accounts to deposit to. I am saying this because in China people are moving quite freely in the grey zone, so honestly I share bobby lee’s confidence that something will come up, just need to wait for final govt’s stand because govt itself said that bitcoin is legal for all except financial entities.

Edit2: Btcchina starts selling BTCC Voucher (BTCC码) on paipai.com. Traditional payment methods are accepted

Can somebody confirm if the seller is legit?

Edit3: Confirmed: http://www.btc38.com/btc/btc_news/520.html

btcc voucher

关于BTCC 中AB码的详细说明


btcc码解释:btcc码目前是我们平台推出的客户间人民币充值额 度交易方式。它允许客户将自己在平台账户内未提现且可购买Btc的人民币额度转换成两段Btcc代码,再将代码作为商品,与想买Btc又无法充值的客户进 行交易。买方在交易完成时,即可获得所买Btcc码代表的人民币额度,进行Btc买入操作。

Their process seems to operate similarly, buy the vouchers off an auction site/ebay/ecommerce site, as a “good”, then go BTC China to redeem it for RMB points and use it for bitcoin trading.

(what seems to be their announcement below)




在12月20日比特币中国终于推出了新项目“币加锁”——“币加锁”,是比特币中国全新打造的安全比特币钱包服务,令用户管理钱包无需了解繁琐 的技术难题。币加锁”以最安全的方式离线存储用户的比特币, 这个过程被称为冷存储,它能确保您的钱包不被黑客在线盗取。对您的“币加锁”账户我们也提供了银行级的安全保护。 今后,比特币中国(BTC China)的用户可以把您的比特币放心地存放在比特币中国(BTC China)的“币加锁”内。
这虽然解决比特币存储的安全性问题,但并不能解决人民币的充值问题。李启元曾表示,如果比特币中国没有找到任何合作方,则公司可能探索在没有第 三方公司合作的情况下接受人民币储值的方式。这表明李启元想寻求一种人民币的储值方式,这和国外一些大的交易平台的充值提现方式不谋而合。在美国由于银行 禁止给比特币相关的企业开设银行账户,他们不得不寻求一种新的充值方式——兑换码。目前,BTC-E、796 、MT.GOX等均支持兑换码。于此同时,比特币中国人民币充值和提现出现了一种新型方式——BTCC充值码。
[translating just one part: 在美国由于银行 禁止给比特币相关的企业开设银行账户,他们不得不寻求一种新的充值方式——兑换码。目前,BTC-E、796 、MT.GOX等均支持兑换码。于此同时,比特币中国人民币充值和提现出现了一种新型方式——BTCC充值码。
In America, as the banks prohibit bitcoin related companies from opening a bank account, they have had no choice but to seek out a new funding source, exchange voucher/redemption code/coupon. Currently, BTC-E, 796 and Mtgox (+ other exchanges) uses such methods. We will also be implementing BTCC voucher.
我们提供你的BTCC码将分为两段,前半段你可以提供给买方用户在比特币中国平台人民币充值页面中查询BTCC码中所存储的现金,后半段如果提供给对方后,对方将在BTC China完成充值。
这或许与李启元的国际视野是分不开的,他可能不想比特币中国重蹈MT.GOX 的覆辙。在比特币大火的时候寻求国家的监管,在国家开始监管的时候积极响应,并在符合法律的情况下开展新的相关业业务。