In the year 2000, Bill Clinton famously quipped that trying to control the internet in China would be like "trying to nail Jello to a wall".
Fourteen years later and, for the most part at least , the Chinese government has managed to pull off what was then deemed impossible and make it stick.
The same phenomenon is repeating itself with the latest digital disruptor de jour, the crypto-currency bitcoin.
Many analysts believe bitcoin is at around the same level of development and recognition as the internet was when Clinton made those remarks.
Recognising the game-changing economic upside to the internet, the Chinese government accepted it, but on its own terms. Bitcoin has followed a similar logic.
In his new book Chomping at the Bitcoin, Shanghai-based financial analyst Zennon Kapron charts the recent history of bitcoin in China and sketches out the contours of its likely future there.
In mid to late 2013, China entered the bitcoin story in a big way. Chinese retail investors, always on the look out for the next get-rich-scheme jumped onto the bitcoin bandwagon with gusto, sending the price sky-rocketing to a high near $US1,200.
It’s easy to see why bitcoin took off in China. Chinese people are eager investors, but with limited investment vehicles at their disposal, many are eager to jump head-first into get-rich-quick schemes.
The Chinese stock market has been in the doldrums for years and real-estate, though booming at the time, presented a high barrier of entry to smaller players.
It was against this backdrop, he argues, that the main state-owned TV station CCTV broadcast a documentary about the new craze in May 2013, this exposure sent prices soaring.
When, in October 2013, US authorities shut down the Silk Road website – on which bitcoin was used to buy illegal drugs and services, bitcoin was dealt another body blow. But, as Zapron writes, people's memories are short.
"Only a few weeks after the Silk Road shut down, the press announced that Baidu was to start accepting coins and the price of bitcoins rapidly recovered" he writes.
In late 2013 the price of the virtual currency in China became more expensive than on Mt Gox, the Japan-based exchange that was the biggest at the time, but has since crashed and burned in spectacular fashion.
The Bitcoin frenzy was so out of control that it was only a matter of time till the regulators stepped in, writes Kapron.
The short-termism of the exchanges saw them competing by offering no-fee trading which fuelled the price but also increased the likelihood of the regulatory axe falling.
In the ensuing months, the government released new regulations that saw the price fall precipitously to where it hovers today at around $US340.
Essentially, Kapron argues, the spigot was turned off making it more difficult -- but not impossible -- for people to buy and sell the currency.
The media too has been instructed to “not hype” bitcoin.
Specifically, the regulations sought to classify bitcoin as a commodity, not a currency, and stated that Bitcoin exchanges should be registered and that banks and other third-party operators should not engage with the crypto-currency.
Crucially, the regulations were aimed at protecting the Chinese economy rather than at completely banning the currency.
In other words, the regulations put bitcoin in China at a crossroads, but not at a dead-end.
Kapron is careful not to prognosticate too specifically what the future holds for bitcoin in China.
But he does point to the fact that the government wants exchanges to be registered as a good thing, and an indication of the maturity of the technology.
The regulations may have looked punitive, Kapron writes, but they weren't all that different to the regulations other online financial products had received -- or for that matter what regulators around the world have introduced.
The Chinese exchanges soon figured out alternative, albeit much less efficient ways, for investors to purchase bitcoins like vouchers.
The one area in which China is almost certain to dominate is bitcoin mining. Once done on personal computers, huge mining factories in China now do the bulk of the work.
The Chinese market is almost the perfect place for bitcoin mining to take off -- there are plentiful supplies of cheap, subsidised power and a manufacturing base that can easily churn out new and improved machines.
But it’s with bitcoin’s potential as a means of payment that China is likely to hold back its development of the currency.
With Alipay and mobile payment solutions already hugely popular, "how do you offer an easier solution to payments than what is already available?" he writes.
Bitcoin is likely to remain reasonably popular with investors, but, without an ecosystem to support its development as a payment system, its growth will be stunted.
Importantly, Kapron pours cold water on the theory that corrupt officials are using the currency to squirrel wealth out of the country and avoid capital controls, arguing that its cheaper to use more traditional (and illegal) methods.
But speculation, he notes, has a limited shelf life. With a near media black-out imposed, people are more likely to go on to the next big thing.
Ultimately, bitcoin was a financial innovation that brought a lot of value to the market but also unacceptable risk.
China’s economic mandarins already have the unenviable task of navigating the country’s financial system through a series of reforms.
In the end, "bitcoin got in the way."
