BEIJING, China–Bitcoin, which is supposed to be a borderless currency that exists beyond the control of any one country, is effectively under the control of several Chinese companies.
According to The New York Times, the companies have gained control of the Bitcoin network through canny investments and vast farms of computer servers dispersed around the country. The Times reported that more than 70% of the transactions on the Bitcoin network were going through just four Chinese companies, known as Bitcoin mining pools — and most flowed through just two of those companies.
“That gives them what amounts to veto power over any changes to the Bitcoin software and technology,” the Times reported.
According to The New York Times, China has become a market for Bitcoin unlike anything in any western country, fueling huge investments in server farms as well as enormous speculative trading on Chinese Bitcoin exchanges. Chinese exchanges have accounted for 42% of all Bitcoin transactions this year, according to an analysis performed for The New York Times by Chainalysis. Just last week, the Chinese internet giant, Baidu, joined with three Chinese banks to invest in the American Bitcoin company Circle, the Times reported.
“But China’s clout is raising worries about Bitcoin’s independence and decentralization, which was supposed to give the technology freedom from the sort of government crackdowns and interventions that are commonplace in the Chinese financial world,” the Times stated.