A handful of Chinese companies have effectively assumed majority control of the Bitcoin network. They have done so through investments and vast farms of computer servers dispersed around the country.
According to the New York Times US executives are now having to travel to China to talk to the real powers behind the throne.
More than 70 percent of the transactions on the Bitcoin network were going through just four Chinese companies, known as Bitcoin mining pools. 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.
Bitcoin is fuelling huge investments in server farms as well as enormous speculative trading on Chinese Bitcoin exchanges. Chinese exchanges have accounted for 42 percent 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.
All this is weird given that Bitcoin was supposed to be independent and decentralized. It was supposed to be away around the sorts of crackdowns that government’s like the Chinese favour.