By the Blouin News Technology staff

Bitcoin: Scandal in U.S., opportunity in China

by in Personal Tech.

Getty Images

Getty Images

Good news for bitcoin in one part of the world is usually accompanied by scandal elsewhere, and this week is no exception. Rumors around China’s growing involvement in the global bitcoin market have been bolstered by reports that the Cyberspace Administration of China (C.A.C.) issued an acknowledgement of the digital currency last week. On the other side of the world, the U.S. is witnessing a bitcoin scandal over an ex-agent who was in charge of a task force that pursued the shut-down of the Silk Road.

China has been unsurprisingly leery of bitcoin — not only as a government trying to understand the cryptocurrency but also as a state that traditionally rejects and/or bans disruptive Western technologies. While bitcoin’s origins are difficult to identify, and its impact is global, U.S.-based technology companies are increasingly championing it as the currency of the next generation. Some European countries have opened their doors to bitcoin in a significant way as well, whereas countries in the Asia-Pacific region (largely those with pre-existing issues with internet censorship) have been less open-minded when it comes to integrating the currency.

But various reports have quoted a publication released last week from the C.A.C. as unofficially authorizing the use of bitcoin and bitcoin-based businesses. Part of the C.A.C.’s document reads: “Although some people think that bitcoin and its underlying technology, the blockchain, is not stable, we cannot ignore the revolutionary changes it brought to the financial sector. The new technology has led to the expansion of a distributed payment and settlement mechanism, which will innovate financial transactions.”

While this important admission from the C.A.C. doesn’t necessarily mean China is jumping into the bitcoin market, perhaps it signals acknowledgement of the currency insomuch that China’s pre-existing bitcoin businesses (they exist in almost every country that has vocally denounced the currency) will be able to gain more ground and open more opportunities for business development.

But even if an opportunity in China has emerged, bitcoin will have trouble shedding its controversial status. In the U.S. this week, Carl Force, a former U.S. Drug Enforcement Administration agent, was sentenced to 78 months in prison for stealing bitcoins during the government’s investigation of the Silk Road — one of the world’s largest online black markets, which was shut down in 2013. (Although, imitator sites live on.) Reuters reports that Force interacted with Ross Ulbricht, the creator of the Silk Road, extorted $50,000 in bitcoin from Ulbricht under false pretenses, and did not report that income. Force admitted to charges of extortion, money laundering and obstruction of justice.

Such is the duality of bitcoin; while many see it as a boon for economies, it remains shrouded in notoriety for others.