Although you may think that everything is equal on the blockchain, you’d be wrong. For example, there is a huge difference between the ways blockchain projects are valued in China compared with western countries.
David Li of Trinity explained why: “For the Chinese who are working on blockchain projects, the price of the underlying project means nothing to them — since they can’t own it. They are focused solely on the tech.”
As a result, trading in Chinese Yuan to bitcoin only amounts to 0.79% of the daily trade volume. That is pretty low for a country the size of China, but then its citizens have not had a way to directly trade Yuan to BTC since December 2013, and the impact is clear to see.
2013 was the year that mainland China stopped the traditional financial institutions from trading in bitcoin, but here’s an interesting fact; when the Chinese public was able to directly buy BTC the total crypto market cap rose by 881% in six months. And over the five years when they have not been able to participate directly, the market cap has risen by 1310%.
There is also something else to consider; the project that constitute the crypto market today are very different to five years ago. Also, the total market cap in 2013 was $15.7 billion, whereas in 2018 it is around $221 billion.
Radigan Carter also points out in one of a series of article on medium about the Chinese blockchain market: “just the four Chinese projects below in today’s Top 25 by market cap would have equaled 44% of the entire market capitalization of all blockchain projects in 2013.” Those projects are Tron, NEO, Binance and Vechain. Significantly for these projects most of their valuation comes from western investors, since Chinese people can’t put money into them, not even the people working on these projects are able to own any of the company they work for.
There are some questions to be asked about the Chinese market. First, since no Chinese citizens can buy into any projects, are the current valuations accurate? Second, would China want a more accurate valuation before it allows its people to buy into Chinese projects, and third, is it possible to establish the level of western institutional involvement in the Chinese blockchain market?