The ban of all bitcoin and virtual currency-related advertising from the online portals of China’s largest search engine, Baidu, has thrown the fate of cryptocurrencies into a dicey state in the world’s largest market for bitcoin trading and mining.
As China literally controls the bitcoin market, this move is likely to have a multiplier effect on the entire ecosystem.
Though the reported reasons behind a blanket cryptocurrency-related advertising ban could still be said to stem from speculation, there is a claim that Baidu’s action was in line with recent efforts by Chinese authorities to combat widespread financial crime.
Aside that the People’s Bank of China (PBOC) had revealed plans to launch its own digital currency, it could be recalled that the China Banking Regulatory Commission had warned financial companies not to use the word “bank” loosely in their names. China’s authorities had also pledged to clamp down on online fraud in March.
So when the tragic death of Wei Zexi, a college student with cancer who sought treatment from a hospital found through an online advertisement, came to light, it was a difficult situation for Baidu. Zexi stated in a post before his death that Baidu had mislead him to seek treatment from a hospital that had advertised a treatment researched in collaboration with Stanford.
This turned out to be untrue but Baidu was heavily criticized by the Chinese public over paid ads. China’s Cyberspace Administration launched an investigation and within just a week had ordered Baidu to “revamp the way it handles advertising results in online searches,” according to the Wall Street Journal.
However, according to OKCoin, the impact of Baidu’s move would be small even though China accounts for at least 30% of the global bitcoin trading. The Chinese exchange says this is because bitcoin trade was not overly dependent on internet advertising but dominated by a relatively small number of traders.
It added that bitcoin trading was spreading mainly among people working in the industry who already knew about it through word-of-mouth.
Ross O’Brien, a technology analyst and managing director at Intercedent Hong Kong, suggested that the ban could be a part of the plot for the Chinese government to marginalize bitcoins while utilizing its technologies to eventually create its own digital currency as earlier revealed.
Some of the touted advantages of the Chinese government’s proposed digital currency include to reduce the significant costs of issuing and circulating traditional currencies, improve the convenience and transparency of economic transactions, reduce money laundering, tax evasion and other criminal acts. It also plans to use the currency to enhance the Chinese central bank’s control of over the money supply and currency circulation, better support economic and social development and aid in extending financial services to under-served populations.
Featured image from Shutterstock.
Last modified: June 10, 2020 9:26 PM UTC