Yesterday I looked at Fiatleak.com to see where most Bitcoin activity was happening in the world, and to my surprise most coins were flowing to Chinese exchanges. I thought that could not be right, because Chinese financial institutions and 3rd party payment providers are not allowed to facilitate Bitcoin transactions anymore, so it’s much harder to buy Bitcoins if you are in China.

I assumed it would be a temporary thing and that if I would let fiatleak run longer the percentages would change. But that did not happen, over the past 36 hours 85% of all Bitcoins worldwide were traded in China! The percentage only takes the major exchanges into account, so private trades may make the figure look a bit different, but there is no denying that China is still the biggest source of Bitcoin liquidity.

Interesting is that traditional media do not seem to notice this yet. The recent increase in the Bitcoin price was attributed to Zynga (the game company will start some tests for Bitcoin payments) and Overstock, but I don’t believe that most Chinese users are aware of this.

I can’t explain what’s happening in China, however. I know that over the past weeks most Chinese exchanges found ways to work around the ban. Some, like OKCoin and Huobi, use direct deposits into their corporate bank account as a way to circumvent the existing regulations. Others, like leading exchange BTC China, use a voucher system where users with cash in their account can sell that cash through a voucher to new users that want to buy Bitcoins.

But it’s hard to believe that despite these hurdles to buy Bitcoin, Chinese are still buying the majority of all Bitcoins. What is happening here? Who is buying? I don’t understand it.