MONDAY 25TH NOVEMBER 2013
Why has China been so quick to embrace the virtual currency? It has been down this road before. In 2009, the government moved to staunch the rapidly rising phenomenon known as QQ, the virtual currency from social juggernaut Tencent (TCEHY).
In just a couple of years, QQ had grown to such an extent that some estimates put it at 13% of the Chinese cash economy. It was threatening to supplant the yuan in a viral tsunami that showed no signs of abating. At its height, people similarly gathered in public places to trade QQ, and shopkeepers began accepting it for payment.
Because Tencent controlled QQ through central online reserves, the Communist Party’s response was swift, hobbling QQ at its knees and bringing it well back into line overnight. How did they do it? Since QQ was centrally managed, all the Chinese government had to do was tell Tencent to limit QQ’s use or face a total shutdown of their business. So Tencent reeled it in.
Within months of the chop on QQ, the Bitcoin algorithm was released anonymously online. – Stan Stalnaker