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I'm not sure if this is good or bad. On one hand, having the government lay down a set of rules for the exchanges to follow could be seen as a stabilizing forc

I'm not sure if this is good or bad. On one hand, having the government lay down a set of rules for the exchanges to follow could be seen as a stabilizing force. On the other hand, it also, in my mind, increases the likely hood that if the government becomes unhappy with the exchanges that all the exchanges will be shutdown at once, which isn't great for bitcoin. Big question I'd like answered..... If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of weeks. I'm mostly interested in the secondary effects. - ie will it lead to mass redemptions at other exchanges? - which exchanges are fully cashed up? and which are working with fractional cash reserves?

lightedman 10y ago
"If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of weeks." As much as I don't like bitcoin, there is one bit of robustness built-in. If China were to shut down all of the exchanges and farms, the balance of hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges. This would hurt yuan/bitcoin rates, but would probably stabilize rates for the rest of the world economies attempting to utilize it.
- fosco 10y ago
  Thanks for this explanation. What are you thoughts if China had the goal of making the Yuan/bitcoin rate worth less to increase exports...this sounds like it could be one of many actions they could decide to take. I find this incredibly interesting.
  - lightedman 10y ago
    Historically speaking, that's shooting themselves in the foot. They'll drain their own resources, which is truly our ultimate plan (and why a majority of our resources are currently locked up - our national security depends upon exploiting resources outside of our homeland to maximum efficiency.)
- adamu__ 10y ago
  If China were to shut down bitcoing mining, my understanding is that the worst case scenario is much more dire. The network only adjusts the 'difficulty' relative to current network hash power every 2,016 blocks. Depending on the severity of the overall hash power reduction, new block discovery might slow down significantly. This would also delay a recalculation of the new difficulty accommodating the reduction in hash power. The network could be severely throttled for weeks.
  - lightedman 10y ago
    "the worst case scenario" "The network could be severely throttled for weeks" That's exactly what would stabilize it instead of it having the wild multi-hundred dollar swing it's experienced essentially since inception. It's the wild hashing power China currently holds right now that's giving it the dominant influence over the currency. Reduce the dominance, spread the risk, stabilize the currency. This is like a basic lesson that was taught in the TV series "Reboot" with Dot Matrix vs Captain Capacitor - Diversification.
  - josu 10y ago
    How can you actually shut down mining? Maybe they'd make it harder for miners to convert bitcoins to fiat, but that wouldn't stop the mining.
    - Analemma_ 10y ago
      I doubt they actually care about the mining, but they certainly could shut it down if they wanted to. I mean, it's China. It's not exactly difficult to locate the miners either - look for the building using 400 MW that doesn't have any steel or widgets coming out. But I think the parent's point was that, if the Chinese exchanges were shut down, that could have a big impact on price if the hypothesis is true that most bitcoin activity is evading Chinese capital controls. If the hit was big enough it might push mining into unprofitability. This is all speculation, but not impossible.
      - altoz 10y ago
- nonbel 10y ago
  >"I don't like bitcoin...hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges" Exchanges aren't necessarily the miners. Your first phrase suggests you may not know much about bitcoin, but maybe you have info I am missing. Are all the big exchanges also miners now?
  - dmoy 10y ago
    Majority of mining power is in China. If the govt is really cracking down enough to take their exchanges offline, an ancillary effect could be that Chinese miners would get skittish and stop. (Or not, they could well just keep operating in the hopes that the government won't go after them). Hard to say.
    - brilliantcode 10y ago
      Won't guys like this https://www.youtube.com/watch?v=K8kua5B5K3I https://www.youtube.com/watch?v=K8kua5B5K3I get affected? If all they can do is mine but not cash out, what happens to the network transaction speed and the overall difficulty?
      - h1d 10y ago
        How is cashing out got anything to do with processing speed?
Phlarp 10y ago
> which exchanges are fully cashed up? and which are working with fractional cash reserves? If an exchange is running a fractional reserve then they aren't an exchange, they are an insolvent fraud.
- jbmorgado 10y ago
  And you will only know for sure when they finally stop withdrawals all together... just like MtGox did.
  - bdcravens 10y ago
    It's worth noting that Mt. Gox started with blocking fiat withdrawals first. That was a situation of insolvency; this is the heavy hand of government. Apples and Oranges.
    - jbmorgado 10y ago
      And it is much more limiting to move fiat around than it is to move bitcoin. If they stoped fiat withdrawal and kept bitcoin withdrawals it would be mostly fine. You would just move the bitcoin to another exchange outside China and do as you please with it. So it is actually a much bigger deal if a Chinese exchange stops users from moving their bitcoin around. Specially when you are in Europe since you actually stop having any easy means to recover the assets you have there. Some of us that are in bitcoin for a while still remember how in the end the MtGox bitcoin withdrawals stopped for a week, than that week became a month and then that month became an eternity and the bitcoins deposited there where lost forever to their rightful owners. https://en.wikipedia.org/wiki/Mt._Gox https://en.wikipedia.org/wiki/Mt._Gox
      - bdcravens 10y ago
        > Some of us that are in bitcoin for a while still remember how in the end the MtGox bitcoin withdrawals stopped for a week, than that week became a month and then that month became an eternity and the bitcoins deposited there where lost forever to their rightful owners. Yes, I've been in Bitcoin since 2011. Before Mt. Gox stopped Bitcoin withdrawals, they stopped fiat (actually a small trickle could leak out). For months, Gox traded at a significant premium (since you could still withdraw Bitcoin during that time) This situation may be worse, but it has different circumstances and different root causes, so attempting to draw a parallel between the two doesn't provide much value. One was a failed exchange trying desperate measures to attempt survival; the other is a mandated government action.

lightedman 10y ago

"If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of weeks." As much as I don't like bitcoin, there is one bit of robustness built-in. If China were to shut down all of the exchanges and farms, the balance of hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges. This would hurt yuan/bitcoin rates, but would probably stabilize rates for the rest of the world economies attempting to utilize it.

fosco 10y ago
Thanks for this explanation. What are you thoughts if China had the goal of making the Yuan/bitcoin rate worth less to increase exports...this sounds like it could be one of many actions they could decide to take. I find this incredibly interesting.
- lightedman 10y ago
  Historically speaking, that's shooting themselves in the foot. They'll drain their own resources, which is truly our ultimate plan (and why a majority of our resources are currently locked up - our national security depends upon exploiting resources outside of our homeland to maximum efficiency.)
adamu__ 10y ago
If China were to shut down bitcoing mining, my understanding is that the worst case scenario is much more dire. The network only adjusts the 'difficulty' relative to current network hash power every 2,016 blocks. Depending on the severity of the overall hash power reduction, new block discovery might slow down significantly. This would also delay a recalculation of the new difficulty accommodating the reduction in hash power. The network could be severely throttled for weeks.
- lightedman 10y ago
  "the worst case scenario" "The network could be severely throttled for weeks" That's exactly what would stabilize it instead of it having the wild multi-hundred dollar swing it's experienced essentially since inception. It's the wild hashing power China currently holds right now that's giving it the dominant influence over the currency. Reduce the dominance, spread the risk, stabilize the currency. This is like a basic lesson that was taught in the TV series "Reboot" with Dot Matrix vs Captain Capacitor - Diversification.
- josu 10y ago
  How can you actually shut down mining? Maybe they'd make it harder for miners to convert bitcoins to fiat, but that wouldn't stop the mining.
  - Analemma_ 10y ago
    I doubt they actually care about the mining, but they certainly could shut it down if they wanted to. I mean, it's China. It's not exactly difficult to locate the miners either - look for the building using 400 MW that doesn't have any steel or widgets coming out. But I think the parent's point was that, if the Chinese exchanges were shut down, that could have a big impact on price if the hypothesis is true that most bitcoin activity is evading Chinese capital controls. If the hit was big enough it might push mining into unprofitability. This is all speculation, but not impossible.
    - altoz 10y ago
nonbel 10y ago
>"I don't like bitcoin...hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges" Exchanges aren't necessarily the miners. Your first phrase suggests you may not know much about bitcoin, but maybe you have info I am missing. Are all the big exchanges also miners now?
- dmoy 10y ago
  Majority of mining power is in China. If the govt is really cracking down enough to take their exchanges offline, an ancillary effect could be that Chinese miners would get skittish and stop. (Or not, they could well just keep operating in the hopes that the government won't go after them). Hard to say.
  - brilliantcode 10y ago
    Won't guys like this https://www.youtube.com/watch?v=K8kua5B5K3I https://www.youtube.com/watch?v=K8kua5B5K3I get affected? If all they can do is mine but not cash out, what happens to the network transaction speed and the overall difficulty?
    - h1d 10y ago
      How is cashing out got anything to do with processing speed?

Phlarp 10y ago

> which exchanges are fully cashed up? and which are working with fractional cash reserves? If an exchange is running a fractional reserve then they aren't an exchange, they are an insolvent fraud.

jbmorgado 10y ago
And you will only know for sure when they finally stop withdrawals all together... just like MtGox did.
- bdcravens 10y ago
  It's worth noting that Mt. Gox started with blocking fiat withdrawals first. That was a situation of insolvency; this is the heavy hand of government. Apples and Oranges.
  - jbmorgado 10y ago
    And it is much more limiting to move fiat around than it is to move bitcoin. If they stoped fiat withdrawal and kept bitcoin withdrawals it would be mostly fine. You would just move the bitcoin to another exchange outside China and do as you please with it. So it is actually a much bigger deal if a Chinese exchange stops users from moving their bitcoin around. Specially when you are in Europe since you actually stop having any easy means to recover the assets you have there. Some of us that are in bitcoin for a while still remember how in the end the MtGox bitcoin withdrawals stopped for a week, than that week became a month and then that month became an eternity and the bitcoins deposited there where lost forever to their rightful owners. https://en.wikipedia.org/wiki/Mt._Gox https://en.wikipedia.org/wiki/Mt._Gox
    - bdcravens 10y ago
      > Some of us that are in bitcoin for a while still remember how in the end the MtGox bitcoin withdrawals stopped for a week, than that week became a month and then that month became an eternity and the bitcoins deposited there where lost forever to their rightful owners. Yes, I've been in Bitcoin since 2011. Before Mt. Gox stopped Bitcoin withdrawals, they stopped fiat (actually a small trickle could leak out). For months, Gox traded at a significant premium (since you could still withdraw Bitcoin during that time) This situation may be worse, but it has different circumstances and different root causes, so attempting to draw a parallel between the two doesn't provide much value. One was a failed exchange trying desperate measures to attempt survival; the other is a mandated government action.