Chinese Traders and cryptocurrency enthusiasts based in China have now found ways to circumvent the government’s ban and resistance to cryptocurrency trading by using VPN and Tether.
By enacting a GeoIP ban, which works with the local IP address of an internet user per region, China has restricted traders based in the country from engaging in any trades related to digital currencies.
However, according to a recent report by South China Morning Post, Chinese traders have found a less complicated alternative to going on with their trades.
Referencing reports released by the Shanghai Securities Times, the local media outlet SCMP reports that traders have begun leveraging stable coin, Tether (USDT), to facilitate secure entrance and exit from digital currency markets.
By using a Virtual Private Network, commonly known as VPN, two traders or more can use an exchange platform anonymously, where the exchange platform in use is already registered nationally outside China. Thus, the platform can subsequently act as an intermediary to exchange digital currency for fiat currency and contrariwise.
VPN and Blockchain Improving Privacy
A VPN encrypts data at both ends of a sender and a receiver by making it possible for a computer to connect to a remote server through a tunnel. By encryption, any information that is being, sent, transmitted, or received is protected and cannot be accessed by a third party. This way, a user’s IP address is in effect hidden or concealed. This makes it all the more appealing and preferable because it improves blockchain privacy, and ensures that personal data or any data whatsoever cannot be traced or linked to the account in particular. The publication explains in detail:
“Two individuals who have both completed a ‘know-your-customer’ procedure with an exchange would swap ‘fiat’ currencies […] to Tether.” Then highlighting its advantage, “The exchange plays the role of an overseer of such trades, and stands ready to adjudicate in cases of failed trades, or transactions that are not honoured.”
While the government has notably stepped up necessary measures and surveillance, as highlighted by the recent ban of over 120 local websites, they have found it incredibly difficult to close down smart traders who have resulted to using VPN.
Since the action of the government last year, the utilization of Virtual Private Networks has proved the best alternative, even over the common workaround of using Hong Kong as a home from home platform and employing peer to peer options.