How to Buy Bitcoin in China
China is the second largest economy in the world and in many ways has established itself as one of the most important cryptocurrency nations.
China is home to 75% of the world’s Bitcoin mining capacity. In fact, mining in the country is so profitable that miners would still make money even if Bitcoin’s value fell by 50%.
Despite this huge amount of activity, the Chinese government has been notoriously strict with regulating Bitcoin and other digital currencies. Last year, they banned all domestic exchanges, outlawed Initial Coin Offerings (ICOs), and clamped down on mining.
It’s still possible to buy Bitcoin and make a profit in China if you follow the right steps. And with Bitcoin’s value currently at 89,269 CNY (at the time of writing) and increasing steadily, it could be a very rewarding decision.
Things to know before you get started
In China, Bitcoin is heavily regulated. This means that it’s very important to learn the rules before you start to buy and sell Bitcoin.
In 2017, the Chinese government banned local cryptocurrency exchanges, so the only way to buy Bitcoin now is by using an offshore or international exchange. There is also some speculation that China will move to ban all centralized exchanges (local and offshore) in future, but this is not confirmed.
There are many reasons for this regulation, which could include a desire to stop people sending money out of China and for the government to have greater control over the economy.
While it’s a little trickier to buy Bitcoin after the bans, it’s still possible with the right methods.
Support for Bitcoin in China
Before the ban, there were many exchanges in China. These included OKCoin, Huobi, and BTC China which have now all shut down.
However, there is still a large cryptocurrency community and many international exchanges still work in China. For people who wish to get involved in Bitcoin China still has an infrastructure for that.
If you want to, for example, go to shops and purchase in Bitcoin China isn’t the place to do this, and you won’t see any Bitcoin ATMs. In fact, many things involving cryptocurrency are illegal, so do your research.
The regulations against cryptocurrency don’t just apply to Bitcoin. They cover all ICOs and all cryptocurrencies, but it’s still possible to invest in many of these. While Bitcoin is the world’s most valuable and well-known cryptocurrency, there are many others which are good options.
Ether (ETH) is the second most valuable and is growing at a fast rate. Many people consider it second only to Bitcoin. Others include Ripple (XRP) and Litecoin (LTC). There are many others, but these are much riskier for investors because of their small trading volume and uncertain future.
Remember, if you want to buy any cryptocurrency including Bitcoin online China is strict. The main thing to remember when buying cryptocurrency in China is that you are working within the law and don’t do anything that could get you into legal trouble.
How to purchase Bitcoin in China
Once you have become familiar with the rules and feel ready to invest in Bitcoin, China has two main options for getting started.
There are advantages and disadvantages to each. The first method is trading as a CFD, and the second is trading on a P2P level directly with other people.
Trading Bitcoin in China as a CFD
CFD stands for contracts for difference, and is a popular way of trading stocks and shares. It can also be used with cryptocurrencies, and has some important advantages over other methods of buying.
- You can trade on leverage. This means that when you make a deposit for a trade it doesn’t need to be the entire amount of the trade. So you can distribute your money across more than one cryptocurrency.
- With CFDs you’re exposed to the liquidity of two markets. When buying directly from an exchange, it’s only one market. What this means is that it’s much harder to sell —you have to wait for a buyer to come along which could take some time. When trading as a CFD you can sell whenever you choose.
- CFDs are more regulated and structured than other trading methods. They’re controlled by powerful regulatory bodies, so there’s plenty of support and help when something goes wrong, and the risk of being scammed or hacked is low.
- The fees are generally lower, and the system is easier for beginners.
Buying Bitcoin from an exchange or P2P
Because of China’s tough legislation, it’s no longer possible to buy Bitcoin or any cryptocurrency from an exchange located in China. The most common way around this is to buy Bitcoin directly from other people, on a P2P level.
China is also fighting against centralized exchanges outside of the country, and many international exchanges like Coinbase are not available in China, but they are allowed in nearby Hong Kong.
One of the best options for people looking to invest in Bitcoin in China is Localbitcoins. This is a platform where people can trade directly with each other. You can even meet up with other users in real life to pay for Bitcoin in cash, and unlike many places where you can buy Bitcoin online, Chinese Yuan (CNY) is an accepted currency.
In addition to that, Localbitcoins is cheaper than most centralised exchanges anyway. It is, however, important to make sure that you can trust the person you’re trading with. This guide will show you how to do that.
Getting a wallet
Before you begin trading cryptocurrency this way, it’s important to get a cryptocurrency wallet. These are basically places to store two security keys, strings of digits that you need to unlock your coins and authorise actions like buying and selling.
There are many different types of wallets. Here are the most common:
- Online wallets are the type you get when you sign up to an online exchange. Because they’re stored online they aren’t as secure as other types of wallet and can be hacked more easily if you don’t take precautions. However, they’re easy to access and often come with support.
- Desktop or software wallets are stored offline but on your computer. They’re a little safer than online wallets because they aren’t connected to the internet, but require you to keep your computer protected.
- Hardware wallets are stored offline and away from the computer, usually on something like a removable disk drive. This makes them very safe as they can’t be hacked; the only time they’re in danger is if somebody steals the physical location of the wallet from you.
- Mobile wallets are becoming more popular. They’re stored on smartphones, which makes them very easy to access from wherever you are. They can also be used to purchase things from shops and restaurants that accept cryptocurrency.
Once you have a wallet, you can start trading on Localbitcoins.com. The process is straightforward and can be done in a small amount of time.
Buying Bitcoin from Localbitcoins.com
Step One – Sign up to localbitcoins. This is a quick process — you just need to visit the website and give your name and email address along with a password.
Step Two – Find someone who is selling Bitcoin. For this part, it’s best to narrow down the users on the site by running a search. This allows you to specify what kind of seller you are looking for based on their country, region, payment methods they accept, the amount you want to buy, and the currency they use. To invest in Bitcoin CNY is accepted (referred to as CNY in the drop-down menu of currencies).
Once you hit search, the site will show you a list of people who match your criteria. This stage of the process is important because it’s where you can see which of the sellers are trustworthy and safe.
You can do this by looking at the numbers next to each seller’s name. The green % number shows their feedback score —higher is better and shows they’re reliable and good to trade with. The number next to this shows how many trades they’ve completed. A high number of trades next to a high feedback score generally means the user is a reliable person.
The small coloured circle next to these scores shows how quickly the user tends to respond. A green circle means they normally respond within 5 minutes, yellow means they typically respond within 30 minutes, and grey means they take longer than 30 minutes.
Step Three – once you’ve found a user who you are happy to trade with, check the price they are selling for. If you’re happy to pay that, click ‘Buy’ at the end of their row in the list.
On the next screen, you can take some time to look over the seller’s profile and see some more in-depth information about them. You can also read the terms and conditions, and send a message to the seller if you wish.
When you’re satisfied with everything, enter how much Bitcoin you want to buy and click ‘Send Trade Request’ to finish the process and be taken to a payment interface.
That’s it! Localbitcoins charges a small fee which is used to pay Bitcoin miners, but there is no commission costs like with many other platforms. If you want to trade Bitcoin China can make this hard, but with Localbitcoins it becomes much easier (and it’s one of the few places where to purchase Bitcoin CNY is accepted).
China may have a lot of strict regulations surrounding Bitcoin, but it also has a large and thriving community of people who support cryptocurrency. It’s important to be cautious and make sure you understand the law fully, but China is a great place to start buying Bitcoin online.