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China orders Bitcoin exchanges in capital city to close

241 points by AndrewDucker 9y ago

wyc 9y ago
Right now, I like anything that helps normalize the white-hot hype of cryptocurrencies. There's some real utility in this technology, and we won't get to see it until companies are forced to make sustainable business cases and serve real customers. However, > A website set up by the Chinese central bank warned that cryptocurrencies are "increasingly used as a tool in criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising". That sounds a bit like lip service...are they really just protecting investors and citizens, or is it because the assets are much harder to seize? Recently, there has been a large crackdown on foreign real estate purchases[0]. What other incentives does the party have for this policy? [0] https://www.forbes.com/sites/ellensheng/2017/07/31/chinese-overseas-real-estate-buying-spree-slows-delayed-by-tightened-capital-controls/#1dd5a37514f7 https://www.forbes.com/sites/ellensheng/2017/07/31/chinese-o...
- baldfat 9y ago
  I think all governments hate the crypto part of the currencies. You can't tax what you can't track. You can't manipulate what you don't have. I personally fall a little to the left of currencies. I think these monetary systems are far right Libertarian's dream seeds. I do realize I am probably wrong but this is how they make me feel.
  - wyc 9y ago
    That's a good point about taxes. I wonder how the tax structures of the future will evolve if cryptocurrencies reach full swing. It could be reasonable to expect elaborate tariff systems that skim off the channels bridging wet and dry worlds[0]. With what we have today, there is already slightly less to tax[1], and with the ideas of today, there could be even less. You can't siphon tax if it's not in the contract code. [0] https://unenumerated.blogspot.com/2006/11/wet-code-and-dry.html https://unenumerated.blogspot.com/2006/11/wet-code-and-dry.h... [1] http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/ http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/
  - lojack 9y ago
    > You can't tax what you can't track. Most cryptocurrencies are actually quite trackable. Significantly more trackable than fiat currencies. There are notable exceptions like Monero and currencies specifically meant to protect privacy, but the vast majority are quite public.
    - baddox 9y ago
      I'd say they're only more easily tracked than cash. It doesn't get much easier to track than a bank or credit card account. And of course cash has its own problems (namely, it's difficult or even illegal to get and transport in large quantities while maintaining some anonymity).
      - vasilipupkin 9y ago
        At some point, you want to buy something with your money. The minute you do, tax authorities in your country can detect the discrepancy between your stated income and your lifestyle.
- snitko 9y ago
  The sustainable business case is permissionless nature of Bitcoin. Everything else comes down to it. This talk of blockchain technology being somewhat of a new wonderful invention that's supposed to magically make companies more profitable...? Not so. The reason why Bitcoin exists is because governments want control over money. Bitcoin gives people freedom. Period. Everything else is noise.
  - TeMPOraL 9y ago
    > governments want control over money Of course. And for a good reason. People utter this line as if governments wanting control over money was somehow bad. Money, within all human societies that exist or existed, is pretty much synonymous with power. It is the tool that allows an individual to incent, compel and coordinate other people to do what said individual wants. With $1 you can make someone cook you a hot dog. With $1K you can get someone to give you pretty advanced tech. With $1M you literally make other people build you a house. State by its design is supposed to have monopoly on ultimate power. Since money is synonymous with power, the state needs to control money in order to fulfill its function (and to secure its ability to fulfill that function). So it's obvious that the state may not be happy about technologies that prevent them from controlling the money. It's threatening the state's ability to enforce rules. And despite the popular dystopian rhetoric, state being able to enforce rules is almost always a good thing for the society.
    - snitko 9y ago
      You think it's for good reason. Many people think it's for bad reason. Those people invented and developed Bitcoin. Now the people who think state has no business messing with money and private lives of people have an actual tool upon their hands.
      - TeMPOraL 9y ago
        I will say those people are wrong, and they're only able to think that because they live in stable societies under rule of law, and have time to criticize somewhat abstract issues like this. Now don't get me wrong - I'm not saying the present balance of power between individual and the state is perfectly placed. But thinking about ditching states altogether is, presently, a pretty dumb idea, that only signals a lack of awareness of how the society works.
- jaxytee 9y ago
  Over the past couple of years, China has lost around a trillion dollars in foreign reserves (a 4 trillion dollar cash pile earned from exporting all those made in china goods) to capital flight. Whenever a Chinese citizen or business takes yuan and exchanges them for a foreign asset, China's fx cash pile is diminished. If china's "savings account" is bled dry, it would have to choice but to devalue and print its currency to handled some of it local fiscal issues. To prevent "rocking the boat" with a currency devaluation before the Communist Party Meeting this fall, China has locked down it's capital account by blocking foreign company acquisitions, repatriation by multinational corporations (think blocking Apple's yuan accounts from withdrawals to USD), Toronto real estate purchases, etc. Bitcoin was an unregulated and popular means of capital flight. It was just a matter of time before they cracked down on it as well.
- baddox 9y ago
  That strikes me as an odd opinion. It sounds like you're saying that you appreciate an artificial decrease in cryptocurrencies' value or hype because you think there are other things artificially increasing it.
korzun 9y ago
But.. but.. an 'analyst' for CoinDesk said this was normal and the exchanges will just need to get a license and China welcome them back with open arms. The bullshit artists that already 'invested' in this scheme will now tell you that China did not matter and the people under them will parrot it. Anybody that disagrees simply doesn't understand Bitcoin or just mad that they could not get on the choo-choo train at the right time.
- ceejayoz 9y ago
  "This is good news for Bitcoin."
- gruez 9y ago
  >The bullshit artists that already 'invested' in this scheme will now tell you that China did not matter and the people under them will parrot it. If you're so sure that it's bullshit you're free to put your money where your mouth is and short it.
  - korzun 9y ago
    > If you're so sure that it's bullshit you're free to put your money where your mouth is and short it. Let me know when you are back to peddling Amway.
    - sctb 9y ago
      We've already asked you not to post like this, no matter what you're replying to. Could you please stop? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - skinnymuch 9y ago
    I don't agree with OP necessarily but just because one may think it's BS doesn't mean they think the public and traders think that. So shorting it wouldn't work out for a while in that hypothetical. I don't have too much knowledge about cryptos. And the ICOs occurring certainly seem mostly like BS, but I'm still "investing" (more like trading quickly and selling) to make a profit while this gold rush lasts. Doesn't matter how I feel about it.
paulsutter 9y ago
Bitcoin price impact is the best way to gauge the significance of any particular news (this? not much): https://finance.yahoo.com/quote/BTCUSD=X/ https://finance.yahoo.com/quote/BTCUSD=X/
- korzun 9y ago
  > Bitcoin price impact is the best way to gauge the significance of any particular news Not really. Timezones are a thing and I'm pretty sure the majority of those exchanges halted trading.
  - paulsutter 9y ago
    Volume pretty steady https://data.bitcoinity.org/markets/volume/3d?c=e&t=b https://data.bitcoinity.org/markets/volume/3d?c=e&t=b
    - korzun 9y ago
      The graph you linked to shows a dramatic drop in volume from 09/13@20K to 09/13@2K.
- psyc 9y ago
  This isn't new news. It was suspected/known 2 weeks ago and it tanked the price from ~4700 to ~3000, before it rebounded.
  - paulsutter 9y ago
    exactly - these changes were a bigger concern two weeks ago, and all these new stories are now noise We'll know when something meaningful happens by the price impact
haburka 9y ago
I think this is a really good sign that it's a good idea to get out of crypto currencies. China is actually pretty good at making decisions to defend it's country from negative outside influence. Anywhere that hosts a bitcoin exchange is also hosting criminal activity. Consequently, Bitcoin exchanges are going to make areas more dangerous to live. It's just a bad business decision to allow it to exist in your country.
- sova 9y ago
  Many of us analysts who are deep in the game recognize that China is simply shutting them all down to start its own cryptocurrency that (probably) has ID/government name linked to it.
  - intopieces 9y ago
    Interesting. Do you know of any articles about this? I would like to learn more about the potential of a Chinese state-owned crypto currency.
  - tunetine 9y ago
    Cite this please.
    - sova 9y ago
      https://www.neowin.net/news/china-experimenting-with-its-own-cryptocurrency https://www.neowin.net/news/china-experimenting-with-its-own...
      - vasilipupkin 9y ago
        I don't get it. What's the point of a country issuing a cryptocurrency? isn't decentralization the whole point of bitcoin, ethereum, etc. ?
        sova 9y ago
        It is! unless you are China and you still want to make money while making sure the company line is toted by all. China is able to track their populous really well, or at least have their population believing so, and thus anything that adds pseudo-anonymity kinda ruins their mission. In the future it is probable that all countries will have their own cryptocurrency, backed by some sort of tangible asset like Au (gold) or Ag (silver). What strikes me as very important for the US is establishment of a national cryptocurrency. It can be anonymous (everyday cash is essentially anonymous), but the consensus on how to regulate one is very much a process of education (elder generation finance people don't really get bitcoin yet). So once regulatory measures can be taken to ensure there's no theft etc, then it'll be easy. China's thinking on the matter is that if it cannot be regulated, shut it down and make a version that can be.
Tepix 9y ago
This isn't news, it's been known for a couple of days.
cs702 9y ago
As soon as I read this, two words came to mind: Capital flight. A growing number of Chinese nationals has been using Bitcoin to siphon money out of China over the past several years.[1][2] Not surprisingly, the Chinese government is cracking down on this innovative form of capital flight. [1] http://www.theepochtimes.com/n3/1891021-how-chinese-use-bitcoin-to-funnel-money-out-of-the-country/ http://www.theepochtimes.com/n3/1891021-how-chinese-use-bitc... [2] http://www.theaustralian.com.au/business/markets/chinese-investors-use-bitcoin-to-get-yuan-out-of-country/news-story/7cd6f89ae7cd84aef91078326b6274cc http://www.theaustralian.com.au/business/markets/chinese-inv...
- dreen 9y ago
  I used it to transfer money between countries with an exchange rate better than any other available. Surely this is not illegal?
  - eloff 9y ago
    It is in China now. Russia too IIRC. Probably several other countries that impose capital controls. In the west this is legal, but the bank may still ask you where the money came from under their enforcement of laws like knowing your customer and money laundering controls. Tax agencies may also get involved if there is automatic reporting.
    - the_mitsuhiko 9y ago
      How is it illegal in Russia?
      - eloff 9y ago
        https://www.bloomberg.com/news/articles/2016-04-28/russian-law-would-send-bitcoin-users-to-jail-as-cybercriminals https://www.bloomberg.com/news/articles/2016-04-28/russian-l...
        flatfilefan 9y ago
harwoodleon 9y ago
Bitcoin and for that matter all crypto currency is a libertarian ideal. Libertarian ideals do not fit in communist societies. Regulation was always coming, as even liberal societies regulate. But regulation is only there to keep the established order. The established order is very afraid of crypto right now in the same way the music industry freaked out over MP3. I can't help it, but I get annoyed when crypto is branded with illegal activities like terrorism, fraud etc. No one talks about USD being used in the same way!
- skummetmaelk 9y ago
  >But regulation is only there to keep the established order. That's a very narrow minded view of what regulation is good for.
- jowiar 9y ago
  The US takes active efforts to prevent USD being used in illegal activities. That's not to say that it isn't, but there are legal red flags if you try to haul a big pile of bills through customs. Cryptocurrency's entire use case so far has focused around illegal activity. Whether said activity is immoral is up for debate (you can certainly deem breaking the laws of some countries to be moral), but illegal? Absolutely.
  - SomeStupidPoint 9y ago
    If you want to know why people associate bitcoin with crime, look no further than the people celebrating that it will be easier to commit tax fraud now in this very thread. That kind of petty criminality and fraud seems to run through the heart of the bitcoin community, and is part of why I think people are reasonable to associate it with questionable activity -- that's what it's advocated as supporting even here on HN!
    - baddox 9y ago
      Come on though, it's not that unreasonable to point it out, and it doesn't mean anyone who points it out is a menace to society like you seem to imply. It's not that different than when people (used to) talk about not paying sales tax on online purchases, but hopefully you wouldn't conclude that "petty criminality and fraud seems to run through the heart of ecommerce."
tannerbrockwell 9y ago
China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls. I believe this will immediately cause a constriction in supply as those coins will not be sold at least initially on the open market. Look for this messaging to coincide with the pronouncements around the new five-year plan(FYP)[1]. As the first major section of the 13th FYP, innovation is emphasized as a cornerstone of China’s development strategy.[2] Bitcoin is a technology and has already come along way from the Satoshi whitepaper. State-Owned Enterprises will be emphasized as they strengthen SOEs as national champions at home and abroad and protect their interests in this emerging blockchain space. The goal of the One Belt, One Road (OBOR) initiative is to facilitate access to natural resources and encourage economic development in China’s poorer western provinces. While such an initiative can continue without bitcoin, it is interesting to think of how OBOR would be strengthened on the world stage with an instantly settled mechanism such as bitcoin behind its infrastructure. [1] https://en.wikipedia.org/wiki/19th_National_Congress_of_the_Communist_Party_of_China https://en.wikipedia.org/wiki/19th_National_Congress_of_the_... [2] https://www.uscc.gov/sites/default/files/Research/The%2013th%20Five-Year%20Plan.pdf https://www.uscc.gov/sites/default/files/Research/The%2013th...
- ComodoHacker 9y ago
  >China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls Sounds like a good reason for a fork.
  - stefano 9y ago
    But if China has the majority of mining power, they can start mining your fork and do as they please with it.
    - che_shirecat 9y ago
      which (at this point in time and in the foreseeable future) they definitely do.
    - flyGuyOnTheSly 9y ago
lordnacho 9y ago
You gotta wonder if they will go after the miners. I suppose other cryptos have dealt with this issue, and one with the right properties will emerge, but BTC requires huge warehouses full of computers to mine, so the decentralisation part of the argument is a bit flawed. And the big miners happen to be in China, which is pretty convenient for the government. Not sure exactly how much of capacity is in the country, but if a lot of it gets shut down I think there's a 2 week reset window before the difficulty can come back down. If it's a large proportion it will significantly lengthen the time between blocks. Also in the bigger picture, if illicit movements bother the Chinese, will they pressure other countries to stop allowing BTC?
- solotronics 9y ago
  the core dev team for BTC already said they are prepared to either emergency adjust difficulty or change the hashing algo if a disaster happens with the miners .. yes this is technically a hard fork of the block chain but it has happened before in an emergency
  - lawn 9y ago
    Well the core dev team already classifies the miners as attacking the network when they don't vote for them and chooses another fork. I would take what they say with a huge grain of salt.
- fwdslash 9y ago
  > but BTC requires huge warehouses full of computers to mine Currently. It wasn't always that way, and there are many other currencies (Monero) where that isn't the case.
iagooar 9y ago
For those of you who know a bit more about the topic. Is this ban going to stop the large-scale cryptocurrency mining that occurs in China? Isn't it actually something interesting for the rest of the world, as mining could become a bit easier?
- jraines 9y ago
  I don't know, but that's one of the two "real" questions: 1. How will China treat miners? 2. Will they go forward with blocking node communication at the port/GFW level? Re: 1, if they shut down / limit mining it's nbd. If they co-opt it to try & launch 51% attacks it's a big problem, but not, I think, insurmountable and would be a tactical error.
neya 9y ago
I have a different technological perspective on this. Having traveled and lived in Asian, Chinese-majority cities/countries, this is a typical Chinese govt. move. In China, WeChat is a dominant player (by Tencent), a LOT of the transactions in China happen through WeChat, which offers seamless payments integration. The penetration is so strong that even poor, road-side sellers accept money through WeChat. Almost everyone has a WeChat account. This in my personal opinion - is to prevent BitCoin from posing a threat to their homegrown technology industry, which is honestly no match for what we have in the Americas. List of banned companies: Google - Because they want to protect their clone Baidu. Twitter/Facebook - Because they want to protect their clone Weibo. YouTube - Because they want to protect their clone YouKu. . . . (it's a long list) BitCoin banned - Because they want to protect their homegrown WeChat. Just my opinion.
- tboyd47 9y ago
  Interesting - but isn't Bitcoin more of a protocol and WeChat more of an application? Couldn't WeChat offer Bitcoin payments?
  - FractalNerve 9y ago
    I think parent means that china avoids the risks of using theoretically subversive decentral foreign technologies, is this right?
  - baybal2 9y ago
    Try to explain this to an average communist party member
  - alexchantavy 9y ago
    WeChat is kind of a protocol for life there. I'd argue it has a stronger influence in China than Facebook does in the US.
- LeoPanthera 9y ago
  Presumably you meant to type "Twitter" there, which Weibo clones.
AlexCoventry 9y ago
So they're only mentioning bitcoin because every exchange offers bitcoin trading pairs, right? This is effectively suppression of every cryptocurrency, not just bitcoin?

241 points by AndrewDucker 9y ago

wyc 9y ago

Right now, I like anything that helps normalize the white-hot hype of cryptocurrencies. There's some real utility in this technology, and we won't get to see it until companies are forced to make sustainable business cases and serve real customers. However, > A website set up by the Chinese central bank warned that cryptocurrencies are "increasingly used as a tool in criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising". That sounds a bit like lip service...are they really just protecting investors and citizens, or is it because the assets are much harder to seize? Recently, there has been a large crackdown on foreign real estate purchases[0]. What other incentives does the party have for this policy? [0] https://www.forbes.com/sites/ellensheng/2017/07/31/chinese-overseas-real-estate-buying-spree-slows-delayed-by-tightened-capital-controls/#1dd5a37514f7 https://www.forbes.com/sites/ellensheng/2017/07/31/chinese-o...

baldfat 9y ago
I think all governments hate the crypto part of the currencies. You can't tax what you can't track. You can't manipulate what you don't have. I personally fall a little to the left of currencies. I think these monetary systems are far right Libertarian's dream seeds. I do realize I am probably wrong but this is how they make me feel.
- wyc 9y ago
  That's a good point about taxes. I wonder how the tax structures of the future will evolve if cryptocurrencies reach full swing. It could be reasonable to expect elaborate tariff systems that skim off the channels bridging wet and dry worlds[0]. With what we have today, there is already slightly less to tax[1], and with the ideas of today, there could be even less. You can't siphon tax if it's not in the contract code. [0] https://unenumerated.blogspot.com/2006/11/wet-code-and-dry.html https://unenumerated.blogspot.com/2006/11/wet-code-and-dry.h... [1] http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/ http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/
- lojack 9y ago
  > You can't tax what you can't track. Most cryptocurrencies are actually quite trackable. Significantly more trackable than fiat currencies. There are notable exceptions like Monero and currencies specifically meant to protect privacy, but the vast majority are quite public.
  - baddox 9y ago
    I'd say they're only more easily tracked than cash. It doesn't get much easier to track than a bank or credit card account. And of course cash has its own problems (namely, it's difficult or even illegal to get and transport in large quantities while maintaining some anonymity).
    - vasilipupkin 9y ago
      At some point, you want to buy something with your money. The minute you do, tax authorities in your country can detect the discrepancy between your stated income and your lifestyle.
snitko 9y ago
The sustainable business case is permissionless nature of Bitcoin. Everything else comes down to it. This talk of blockchain technology being somewhat of a new wonderful invention that's supposed to magically make companies more profitable...? Not so. The reason why Bitcoin exists is because governments want control over money. Bitcoin gives people freedom. Period. Everything else is noise.
- TeMPOraL 9y ago
  > governments want control over money Of course. And for a good reason. People utter this line as if governments wanting control over money was somehow bad. Money, within all human societies that exist or existed, is pretty much synonymous with power. It is the tool that allows an individual to incent, compel and coordinate other people to do what said individual wants. With $1 you can make someone cook you a hot dog. With $1K you can get someone to give you pretty advanced tech. With $1M you literally make other people build you a house. State by its design is supposed to have monopoly on ultimate power. Since money is synonymous with power, the state needs to control money in order to fulfill its function (and to secure its ability to fulfill that function). So it's obvious that the state may not be happy about technologies that prevent them from controlling the money. It's threatening the state's ability to enforce rules. And despite the popular dystopian rhetoric, state being able to enforce rules is almost always a good thing for the society.
  - snitko 9y ago
    You think it's for good reason. Many people think it's for bad reason. Those people invented and developed Bitcoin. Now the people who think state has no business messing with money and private lives of people have an actual tool upon their hands.
    - TeMPOraL 9y ago
      I will say those people are wrong, and they're only able to think that because they live in stable societies under rule of law, and have time to criticize somewhat abstract issues like this. Now don't get me wrong - I'm not saying the present balance of power between individual and the state is perfectly placed. But thinking about ditching states altogether is, presently, a pretty dumb idea, that only signals a lack of awareness of how the society works.
jaxytee 9y ago
Over the past couple of years, China has lost around a trillion dollars in foreign reserves (a 4 trillion dollar cash pile earned from exporting all those made in china goods) to capital flight. Whenever a Chinese citizen or business takes yuan and exchanges them for a foreign asset, China's fx cash pile is diminished. If china's "savings account" is bled dry, it would have to choice but to devalue and print its currency to handled some of it local fiscal issues. To prevent "rocking the boat" with a currency devaluation before the Communist Party Meeting this fall, China has locked down it's capital account by blocking foreign company acquisitions, repatriation by multinational corporations (think blocking Apple's yuan accounts from withdrawals to USD), Toronto real estate purchases, etc. Bitcoin was an unregulated and popular means of capital flight. It was just a matter of time before they cracked down on it as well.
baddox 9y ago
That strikes me as an odd opinion. It sounds like you're saying that you appreciate an artificial decrease in cryptocurrencies' value or hype because you think there are other things artificially increasing it.

korzun 9y ago

But.. but.. an 'analyst' for CoinDesk said this was normal and the exchanges will just need to get a license and China welcome them back with open arms. The bullshit artists that already 'invested' in this scheme will now tell you that China did not matter and the people under them will parrot it. Anybody that disagrees simply doesn't understand Bitcoin or just mad that they could not get on the choo-choo train at the right time.

ceejayoz 9y ago
"This is good news for Bitcoin."
gruez 9y ago
>The bullshit artists that already 'invested' in this scheme will now tell you that China did not matter and the people under them will parrot it. If you're so sure that it's bullshit you're free to put your money where your mouth is and short it.
- korzun 9y ago
  > If you're so sure that it's bullshit you're free to put your money where your mouth is and short it. Let me know when you are back to peddling Amway.
  - sctb 9y ago
    We've already asked you not to post like this, no matter what you're replying to. Could you please stop? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- skinnymuch 9y ago
  I don't agree with OP necessarily but just because one may think it's BS doesn't mean they think the public and traders think that. So shorting it wouldn't work out for a while in that hypothetical. I don't have too much knowledge about cryptos. And the ICOs occurring certainly seem mostly like BS, but I'm still "investing" (more like trading quickly and selling) to make a profit while this gold rush lasts. Doesn't matter how I feel about it.

paulsutter 9y ago

Bitcoin price impact is the best way to gauge the significance of any particular news (this? not much): https://finance.yahoo.com/quote/BTCUSD=X/ https://finance.yahoo.com/quote/BTCUSD=X/

korzun 9y ago
> Bitcoin price impact is the best way to gauge the significance of any particular news Not really. Timezones are a thing and I'm pretty sure the majority of those exchanges halted trading.
- paulsutter 9y ago
  Volume pretty steady https://data.bitcoinity.org/markets/volume/3d?c=e&t=b https://data.bitcoinity.org/markets/volume/3d?c=e&t=b
  - korzun 9y ago
    The graph you linked to shows a dramatic drop in volume from 09/13@20K to 09/13@2K.
psyc 9y ago
This isn't new news. It was suspected/known 2 weeks ago and it tanked the price from ~4700 to ~3000, before it rebounded.
- paulsutter 9y ago
  exactly - these changes were a bigger concern two weeks ago, and all these new stories are now noise We'll know when something meaningful happens by the price impact

haburka 9y ago

I think this is a really good sign that it's a good idea to get out of crypto currencies. China is actually pretty good at making decisions to defend it's country from negative outside influence. Anywhere that hosts a bitcoin exchange is also hosting criminal activity. Consequently, Bitcoin exchanges are going to make areas more dangerous to live. It's just a bad business decision to allow it to exist in your country.

sova 9y ago
Many of us analysts who are deep in the game recognize that China is simply shutting them all down to start its own cryptocurrency that (probably) has ID/government name linked to it.
- intopieces 9y ago
  Interesting. Do you know of any articles about this? I would like to learn more about the potential of a Chinese state-owned crypto currency.
- tunetine 9y ago
  Cite this please.
  - sova 9y ago
    https://www.neowin.net/news/china-experimenting-with-its-own-cryptocurrency https://www.neowin.net/news/china-experimenting-with-its-own...
    - vasilipupkin 9y ago
      I don't get it. What's the point of a country issuing a cryptocurrency? isn't decentralization the whole point of bitcoin, ethereum, etc. ?
      - sova 9y ago
        It is! unless you are China and you still want to make money while making sure the company line is toted by all. China is able to track their populous really well, or at least have their population believing so, and thus anything that adds pseudo-anonymity kinda ruins their mission. In the future it is probable that all countries will have their own cryptocurrency, backed by some sort of tangible asset like Au (gold) or Ag (silver). What strikes me as very important for the US is establishment of a national cryptocurrency. It can be anonymous (everyday cash is essentially anonymous), but the consensus on how to regulate one is very much a process of education (elder generation finance people don't really get bitcoin yet). So once regulatory measures can be taken to ensure there's no theft etc, then it'll be easy. China's thinking on the matter is that if it cannot be regulated, shut it down and make a version that can be.

Tepix 9y ago

This isn't news, it's been known for a couple of days.

cs702 9y ago

As soon as I read this, two words came to mind: Capital flight. A growing number of Chinese nationals has been using Bitcoin to siphon money out of China over the past several years.[1][2] Not surprisingly, the Chinese government is cracking down on this innovative form of capital flight. [1] http://www.theepochtimes.com/n3/1891021-how-chinese-use-bitcoin-to-funnel-money-out-of-the-country/ http://www.theepochtimes.com/n3/1891021-how-chinese-use-bitc... [2] http://www.theaustralian.com.au/business/markets/chinese-investors-use-bitcoin-to-get-yuan-out-of-country/news-story/7cd6f89ae7cd84aef91078326b6274cc http://www.theaustralian.com.au/business/markets/chinese-inv...

dreen 9y ago
I used it to transfer money between countries with an exchange rate better than any other available. Surely this is not illegal?
- eloff 9y ago
  It is in China now. Russia too IIRC. Probably several other countries that impose capital controls. In the west this is legal, but the bank may still ask you where the money came from under their enforcement of laws like knowing your customer and money laundering controls. Tax agencies may also get involved if there is automatic reporting.
  - the_mitsuhiko 9y ago
    How is it illegal in Russia?
    - eloff 9y ago
      https://www.bloomberg.com/news/articles/2016-04-28/russian-law-would-send-bitcoin-users-to-jail-as-cybercriminals https://www.bloomberg.com/news/articles/2016-04-28/russian-l...
      - flatfilefan 9y ago

harwoodleon 9y ago

Bitcoin and for that matter all crypto currency is a libertarian ideal. Libertarian ideals do not fit in communist societies. Regulation was always coming, as even liberal societies regulate. But regulation is only there to keep the established order. The established order is very afraid of crypto right now in the same way the music industry freaked out over MP3. I can't help it, but I get annoyed when crypto is branded with illegal activities like terrorism, fraud etc. No one talks about USD being used in the same way!

skummetmaelk 9y ago
>But regulation is only there to keep the established order. That's a very narrow minded view of what regulation is good for.
jowiar 9y ago
The US takes active efforts to prevent USD being used in illegal activities. That's not to say that it isn't, but there are legal red flags if you try to haul a big pile of bills through customs. Cryptocurrency's entire use case so far has focused around illegal activity. Whether said activity is immoral is up for debate (you can certainly deem breaking the laws of some countries to be moral), but illegal? Absolutely.
- SomeStupidPoint 9y ago
  If you want to know why people associate bitcoin with crime, look no further than the people celebrating that it will be easier to commit tax fraud now in this very thread. That kind of petty criminality and fraud seems to run through the heart of the bitcoin community, and is part of why I think people are reasonable to associate it with questionable activity -- that's what it's advocated as supporting even here on HN!
  - baddox 9y ago
    Come on though, it's not that unreasonable to point it out, and it doesn't mean anyone who points it out is a menace to society like you seem to imply. It's not that different than when people (used to) talk about not paying sales tax on online purchases, but hopefully you wouldn't conclude that "petty criminality and fraud seems to run through the heart of ecommerce."

tannerbrockwell 9y ago

China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls. I believe this will immediately cause a constriction in supply as those coins will not be sold at least initially on the open market. Look for this messaging to coincide with the pronouncements around the new five-year plan(FYP)[1]. As the first major section of the 13th FYP, innovation is emphasized as a cornerstone of China’s development strategy.[2] Bitcoin is a technology and has already come along way from the Satoshi whitepaper. State-Owned Enterprises will be emphasized as they strengthen SOEs as national champions at home and abroad and protect their interests in this emerging blockchain space. The goal of the One Belt, One Road (OBOR) initiative is to facilitate access to natural resources and encourage economic development in China’s poorer western provinces. While such an initiative can continue without bitcoin, it is interesting to think of how OBOR would be strengthened on the world stage with an instantly settled mechanism such as bitcoin behind its infrastructure. [1] https://en.wikipedia.org/wiki/19th_National_Congress_of_the_Communist_Party_of_China https://en.wikipedia.org/wiki/19th_National_Congress_of_the_... [2] https://www.uscc.gov/sites/default/files/Research/The%2013th%20Five-Year%20Plan.pdf https://www.uscc.gov/sites/default/files/Research/The%2013th...

ComodoHacker 9y ago
>China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls Sounds like a good reason for a fork.
- stefano 9y ago
  But if China has the majority of mining power, they can start mining your fork and do as they please with it.
  - che_shirecat 9y ago
    which (at this point in time and in the foreseeable future) they definitely do.
  - flyGuyOnTheSly 9y ago

lordnacho 9y ago

You gotta wonder if they will go after the miners. I suppose other cryptos have dealt with this issue, and one with the right properties will emerge, but BTC requires huge warehouses full of computers to mine, so the decentralisation part of the argument is a bit flawed. And the big miners happen to be in China, which is pretty convenient for the government. Not sure exactly how much of capacity is in the country, but if a lot of it gets shut down I think there's a 2 week reset window before the difficulty can come back down. If it's a large proportion it will significantly lengthen the time between blocks. Also in the bigger picture, if illicit movements bother the Chinese, will they pressure other countries to stop allowing BTC?

solotronics 9y ago
the core dev team for BTC already said they are prepared to either emergency adjust difficulty or change the hashing algo if a disaster happens with the miners .. yes this is technically a hard fork of the block chain but it has happened before in an emergency
- lawn 9y ago
  Well the core dev team already classifies the miners as attacking the network when they don't vote for them and chooses another fork. I would take what they say with a huge grain of salt.
fwdslash 9y ago
> but BTC requires huge warehouses full of computers to mine Currently. It wasn't always that way, and there are many other currencies (Monero) where that isn't the case.

iagooar 9y ago

For those of you who know a bit more about the topic. Is this ban going to stop the large-scale cryptocurrency mining that occurs in China? Isn't it actually something interesting for the rest of the world, as mining could become a bit easier?

jraines 9y ago
I don't know, but that's one of the two "real" questions: 1. How will China treat miners? 2. Will they go forward with blocking node communication at the port/GFW level? Re: 1, if they shut down / limit mining it's nbd. If they co-opt it to try & launch 51% attacks it's a big problem, but not, I think, insurmountable and would be a tactical error.

neya 9y ago

I have a different technological perspective on this. Having traveled and lived in Asian, Chinese-majority cities/countries, this is a typical Chinese govt. move. In China, WeChat is a dominant player (by Tencent), a LOT of the transactions in China happen through WeChat, which offers seamless payments integration. The penetration is so strong that even poor, road-side sellers accept money through WeChat. Almost everyone has a WeChat account. This in my personal opinion - is to prevent BitCoin from posing a threat to their homegrown technology industry, which is honestly no match for what we have in the Americas. List of banned companies: Google - Because they want to protect their clone Baidu. Twitter/Facebook - Because they want to protect their clone Weibo. YouTube - Because they want to protect their clone YouKu. . . . (it's a long list) BitCoin banned - Because they want to protect their homegrown WeChat. Just my opinion.

tboyd47 9y ago
Interesting - but isn't Bitcoin more of a protocol and WeChat more of an application? Couldn't WeChat offer Bitcoin payments?
- FractalNerve 9y ago
  I think parent means that china avoids the risks of using theoretically subversive decentral foreign technologies, is this right?
- baybal2 9y ago
  Try to explain this to an average communist party member
- alexchantavy 9y ago
  WeChat is kind of a protocol for life there. I'd argue it has a stronger influence in China than Facebook does in the US.
LeoPanthera 9y ago
Presumably you meant to type "Twitter" there, which Weibo clones.

AlexCoventry 9y ago

So they're only mentioning bitcoin because every exchange offers bitcoin trading pairs, right? This is effectively suppression of every cryptocurrency, not just bitcoin?