In a recent interview, Bobby Lee outlined the reasons he believes that Bitcoin has garnered considerable interest in China over the last several weeks. Lee has a front row seat to this phenomena from his post at BTC China and cites two main reasons that the Chinese have taken a keen interest in the crypto currency.
First, the Chinese are, on whole, extremely gifted in math and sciences, which makes the concept of a digital currency fit into the cultural nomenclature more readily. As simply understanding what Bitcoin is may be the biggest hurdle to adopting and using it, the Chinese have a cultural leg up on many other cultures.
Second, and perhaps more importantly, is that the Chinese are net savers. As such, they are constantly seeking out investments and places to park their savings for a rainy day. Bitcoins appear to offer a strange form of asset protection, despite the breathtaking volatility in their price, as they are limited in the number that will be created by an algorithm.
Finally, one must remember that China does still impose capital controls on its citizens. Bitcoin, while not its chief aim, gives the Chinese investor a handy tool by which to move his or her capital out of the country with their mobile phone or PC. Something that simply cannot be accomplished with a bank account.
The Chinese, like the Cypriots and Argentines, are finding their culturally specific use for the world's most popular crypto currency, and the price action, which has ranged from $1,200 USD to $700 during the past 72 hours, reflects just how volatile a freely traded, finite global currency can be.
Bitcoins are a rough equivalent to gold in the digital realm, and, as Lee notes, volatility is not going away any time soon. Yet if one can see past the price movements to understand the value in what is essentially the world's largest collective math problem, one will see that Bitcoins at any price serve a very important purpose: They capture the monetary premium in action.