Over the past few months, Hong Kong, a Special Administrative Region of China, has been subject to countless protests by pro-democracy demonstrators.
These individuals fear that the mainland Chinese government, which pledged in 1997 to keep the previously British region separate from Beijing until 2047, are encroaching on their democracy.
So far, the protests have mainly been physical — those involved have taken to the streets, skipped school or work, and have done their best to annoy their opponents. But, it seems that the tides have begun shifting.
While there have been calls for “bank runs” over the past few months, only now have photos started to appear online of ATMs across the city being flooded by locals, who presumably are doing everything in their power to secure their wealth.
The issue is, there have been multiple reports that the ATMs have been running out of money, as many banks have been shut down or closed due to vandalism.
Many in the Bitcoin community have seen this unfortunate occurrence as fuel for the cryptocurrency fire.
Bitcoin Narrative Strengthens As Hong Kong Banks Run Out of Cash
For most in the western world, money is best kept in banks. Banks secure your capital and — if you aren’t in Japan, Europe, or other regions with negative interest rates — provide you with interest for keeping your money in their coffers.
But, this isn’t always the best option. In Cyprus, this was made abundantly clear when thousands began rushing to withdraw capital from banks in anticipation of a collapse.
The crazy thing is, the same is taking place in Hong Kong. If you look at photos posted by users on LIHKG, the city’s Reddit-like forum frequented by pro-democracy netizens, it looks exactly like Cyprus back in 2012-2013. As aforementioned, however, Hong Kong ATMs and banks are running out of cash, with this fact being corroborated by people like Hayman Capital’s Kyle Bass, an avid follower of the whole China narrative.
According to other reports, the ATMs that have cash left have seen their withdrawal limits dramatically reduced by upwards of 75%, presumably to stop the hemorrhaging of cash taking place.
Many in the cryptocurrency community have seen that this is a time to laud Bitcoin. Below is just one of the dozens of tweets from prominent members of the Bitcoin space that have mentioned Hong Kong and Bitcoin in tandem. You see, Bitcoin, if used correctly, allows one to always have control over their wealth, making bank runs impossible.
Bitcoin fixes this! https://t.co/U5Abf4WKCV
— Hailey Lennon (@HaileyLennonBTC) October 7, 2019
There not being enough cash in the system isn’t the only issue in Hong Kong that adds to Bitcoin’s value proposition.
Last week, Carrie Lam, the chief executive of the region, activated an archaic law, the Emergency Regulations Ordinance (ERO), last used over half a century ago in a bid to stem the protest.
The ERO allows the Hong Kong government to “make any regulations whatsoever” that may be in the “public’s interest” if tasked with addressing “an occasion of emergency or public danger.” In this case, Lam banned the use of face masks in protest settings.
While this sounds innocuous in and of itself, the ERO allows for the implementation of media censorship, internet blackouts, police raids without warrants, and most important to Bitcoin and decentralized money, the seizure of assets/property.
There are no clear indications that Lam will extend the use of the ERO to asset seizure. But should this law be activated again for that very purpose, Bitcoin will only make that much more sense for the people of Hong Kong. (Importantly, Bitcoin would be useless if the internet was shut down via the ERO.)
Not Used By HongKongers… Yet
Although Bitcoin is clearly a financial way out of the rapidly-deteriorating situation in Hong Kong, data shows that it isn’t being used in that capacity — at least not yet.
Last week, many in the Bitcoin space were over the moon when they saw that LocalBitcoin’s Hong Kong market saw record volumes, which they saw as a hint that people were rushing to sell their HKD for BTC. This week, the statistic normalized, with Hong Kong volumes on LocalBitcoins falling back to levels deemed “normal”. This implies that locals are not seeing the cryptocurrency as a way to secure their wealth.