Leo Weese is president of the Bitcoin Association of Hong Kong.
From June to November 2019, Hong Kong experienced its worst civil unrest in 50 years. What began with peaceful marches with nearly two million participants (about a quarter of the territory’s population) degenerated into increasingly violent clashes between demonstrators, police and triads. To date, more than 2,500 people have been injured and at least 7,000 arrested. The vandalism targeted Chinese banks, government buildings, the subway and shops that appeared to be linked to criminal organizations and the Chinese government.
Hong Kong is a key financial center in Asia. Its access to the international banking system, the liquid stock market and its large concentration of wealth have made it an asset not only for the People’s Republic of China, but also for the international bitcoin community.
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Multiple exchanges of cryptocurrencies, symbolic funds, consulting companies and cryptographic events have made Hong Kong their home and benefit from the city’s easy tax regime and lack of capital controls. There are at least 50 ATMs in the city where people can exchange their money for bitcoin, ether or loin without registration or identification.
Before the protests, explaining the value proposition of bitcoin had been difficult. People favored convenience over abstract ideas like “resistance to censorship” and anonymity was seen as something that only criminals wanted. As the protest movement grew, what made bitcoin unique and precious became more and more evident.
As the protest movement grew, what made bitcoin unique and precious became more and more evident.
As the protest movement grew, what made bitcoin unique and precious became more and more evident.
The mass protests of 2014 ended with mass arrests. Prominent figures have been imprisoned and those who have served their sentences continue to be harassed by the authorities. In 2019, few were willing to become organizers and figures. The movement quickly learned to coordinate without central leadership. Objectives are formed by consensus, strategies are created spontaneously. The messages are spread over message boards and group discussions. The Hong Kong protest movement was the first decentralized civilian movement and its tactics were replicated from Beirut to Santiago.
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As authorities began to refuse or even withdraw approval for the planned protests, residents suddenly risked long prison terms for “unauthorized assembly” or even “riot” (ten years), while others feared for their work. Those who support the movement are sometimes dismissed and violently attacked. People started to wear masks to hide their faces.
Fearful of being digitally registered for traveling to and from a demonstration location, protesters began to abandon their stored value electronic tickets, the Octopus card, in favor of money. They even left change by metro ticket distributors so that other passengers can protect their privacy. It was a good idea because the police used electronic payment registers to determine who had participated in a demonstration.
Those with bank accounts have not spared the trouble. In December, police raided an organization that had funded financially to defend arrested protesters, seizing $ 9 million and arresting four people for money laundering. HSBC, with which the Spark Alliance group had banked, found itself in the highly controversial position of complying with the laws and being the target of vandalism. His corporate symbols, “Stephen” and “Stitt”, were to be trapped in a wooden cage following an arson attack.
The largest groups in Hong Kong that used bitcoin at the height of the protests are HK Map Live. The tool, whose iOS application was banned from the App Store, was used to learn more about street barricades, the location of police lines and special equipment such as water cannons and armored vehicles. The data is outsourced and appreciated by both those who seek to support and avoid the protests, but the heavy traffic load was a heavy financial burden for the group. To cover these costs while preserving anonymity, the organizers mainly use bitcoin, gift cards, affiliate commissions for Amazon and donations made via Brave, the browser improving confidentiality.
Hong Kong Free Press, after a difficult attempt to withdraw funds from Bitpay, switched to the open source payment processor BTCPay and lifted near 2 BTC in just a few weeks. Funds that were not immediately needed to run one of the last remaining free media organizations are not converted into a trust to avoid a similar fate for the Spark Alliance.
A Telegram channel for protesters whose name roughly translates to “Hong Kong School of Magic” also raised funds with Bitcoin, while teaching its 30,000 subscribers how to buy masks on Amazon with Bitcoin or buy and sell Bitcoin in Hong Kong.
Hong Kong capital flight was widely anticipated during this crisis, especially since the controversial extradition bill in the center would also have made it easier to scold assets to mainland China, but there is no evidence that bitcoin played a role here. In a system without capital controls, a bank transfer remains the simplest mechanism for sending funds abroad. While some, including prominent speculator Kyle Bass, expected the peg to be broken, the exchange rate remained stable.
Money remains the most useful tool for Hong Kong protesters to remain anonymous, as most transactions occur in the physical world, and money remains widely accepted. Most of the problems encountered by the demonstrators are by no means financial. More pressing are the availability of legal support, the anonymity of online messaging platforms, how to avoid arrests at meetings or abuse at home.
In 2019, Hong Kong, with its generally very reliable civil service, its reliable judicial system and its respected financial system, abandoned trust in its institutions on an unprecedented scale for a rich modern society. The ripple effects will be felt in businesses and individuals for years to come, and much of the trust on which the territory depends will be difficult to rebuild. Cryptocurrencies play only a small role in this area for now, but those who have been able to make them work are working well.
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