11 ms·

China Bans Financial Companies From Bitcoin Transactions

175 points by kunle 13y ago

simondlr 13y ago
So, in short, they are still allowed to trade with it and use it, as long as they are 'okay' with the 'risk'. It's only financial institutions that can't work with Bitcoin anymore? Is this right?
- be5invis 13y ago
  Yes. I read the full text and it said that websites are people can have and trade bitoins at their own risk. Financial institutions cannot join this market due to the non-currency property.
  - Fuxy 13y ago
    I doubt any financial institutions were using it to begin with so this is a non issue for the moment.
bobbles 13y ago
Difficult to understand at this point what this decision really means. Are bitcoins still able to be traded as a commodity but not currency? What does "The public is free to participate in Internet transactions provided they take on the risk themselves, it said" even mean? Are they saying people deciding to exchange goods and services for bitcoin is ok, but not exchanging it directly into currency? If anyone has actual insight or knowledge here it would be greatly appreciated.
- rtpg 13y ago
  A guess, but I imagine that chinese bank deposits are insured by the central bank, and that The gov't doesn't want to deal with bitcoins losing a bunch of value from one day to the next.
- nazgulnarsil 13y ago
  it might mean that currently operating exchanges need licenses, need to confirm IDs, or even get shut down. Shrug. Wild West.
  - eterm 13y ago
    I read it as the opposite, that trading websites effectively cannot be licensed. This keeps the inherent risk with the buyers.
- rahimnathwani 13y ago
  Reading the original announcement (http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/201312...), three things seems clear: 1) People may buy Bitcoins if they like. 2) People may sell Bitcoins if they like. 3) Banks may not sell Bitcoins as they are not 货币 (money). 4) Products offered for sale may not be priced in Bitcoin, as it is not 货币。 As far as I'm aware, no large ecommerce sites in China display prices in anything other than CNY, and none accept anything other than CNY (cash, bank transfers, bank-issued payment cards, CNY-denominated vouchers). If I could pay for things online using Bitcoin, maybe I (and others in China) would start keeping some Bitcoin in an online wallet, in the same way we currently keep some money in 支付宝 (Alipay). From there, it would be easy to slide into mass speculation, which seems to be what the government doesn't want.
mwilcox 13y ago
BTCChina reaction: http://i.imgur.com/cNuESY7.png http://i.imgur.com/cNuESY7.png
- user24 13y ago
  bounced back pretty quickly: http://bitcoinity.org/markets/btcchina/CNY http://bitcoinity.org/markets/btcchina/CNY
  - wjk 13y ago
    Apparently not... not yet at least, still going down :p
- chrismorgan 13y ago
  So it went down from 6979 to 6200.01 quite quickly. That's about 11%, not the utter plummet that ignoring the scale on your picture would suggest.
  - steveklabnik 13y ago
    If an actual currency was devauled 11% from a news article...
    - user24 13y ago
      What do you think would happen to the XAU/CNY rate if China announced that gold was no longer accepted in banks?
      - steveklabnik 13y ago
        ... which is why they wouldn't do that, because it would be catastrophic.
        user24 13y ago
        so in other words, XBT behaved exactly as you expected XAU would in the same situation, yet somehow to you that reflects badly on XBT but not on XAU.
SwellJoe 13y ago
"Bitcoin prices plunged after the PBOC announcement." Where? It's still trading over $1000 on every exchange I follow. This announcement seems to have almost no perceptible effect on the price of Bitcoin. This is an interestingly biased article, actually. It quotes Alan Greenspan, whose history as a stubborn gold bug (in his Ayn Rand worshiping days) and whose pretty awful performance at the Federal Reserve make his opinion on this matter somewhat expected and mostly moot. I'm willing to believe Bitcoin is overvalued for its current utility. Maybe. But, this article exhibits such a lack of understanding of what it is that I find it hard to take them seriously when they discuss what it might be worth or how this policy in China will effect it.
- maaku 13y ago
  Are you watching the markets now? It just dropped 100 points in a few minutes on the exchange I'm using (coinbase).
- Svip 13y ago
  > Where? It's still trading over $1000 on every exchange I follow. This announcement seems to have almost no perceptible effect on the price of Bitcoin. Well, the prices did drop about $200 on MtGox after the news. It's debatable whether this qualifies as 'plunged'.
  - rtpg 13y ago
    in any other situation a 20% drop in value would be considered a "plunge" I think
    - vidarh 13y ago
      The thing is this is relatively "normal" volatility for Bitcoin. It bounced up 80-90 points again briefly at my broker a short while ago. Back down. Up 50 or so points again since then.
  - SwellJoe 13y ago
    It doesn't look particularly related to this news, to me. It's been bouncing around $1000 for days. http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g2... Someone else posted a chart of the price in China, which does look like a "plunge" though the scale on the image is somewhat misleading (it also only "plunged" 17% or so). I'm having a hard time viewing this level of volatility as surprising for Bitcoin. It's had a number of much larger drops, including recently (when it climbed to 700 and dropped back down to 500, for instance, on no news). I believe one has to view Bitcoin in the context of Bitcoin, and right now it is an extremely volatile creature.
be5invis 13y ago
I read the full text. They said that "Bitcoin is not currency. It is a tradable virtual good. You can buy and sell it, but financial institutions cannot work with BTC."
jackgavigan 13y ago
Well, this was predictable. https://news.ycombinator.com/item?id=6818821 https://news.ycombinator.com/item?id=6818821 Edit: Having read the (Google translation of the) PBOC's Notice, it looks like concern over money laundering contributed to the decision to issue this notice. There's a fairly comprehensive ban on financial institutions doing any kind of Bitcoin-denominated business. It also appears that Bitcoin exchanges must register with the telecommunications regulatory agencies and comply with anti-money laundering provisions (i.e. similar to the approach FinCEN took in the US).
- dmix 13y ago
  Predictable? > the price would plunge. 9 hours later... the prices have stabilized after dropping $100. We can add that to the hundredth time people have predicted the death of Bitcoin.
ddeck 13y ago
The PBOC notice (in Chinese): http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/201312...
eof 13y ago
My read of this is that businesses are not allowed to price their goods in bitcoin which is a huge hit; beyond this nothing seems terribly surprising. > "Notice" requirement, at this stage, financial institutions and payment institutions are not allowed to Bitcoin price for the product or service, edit: from: http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/201312...
- ashray 13y ago
  I'm confused about what constitutes a payment institution. Does this mean that credit card processors cannot price in bitcoin ? Or does this mean that Starbucks cannot price in bitcoin ? There seems to be a distinction between a business and a payment institution. Or maybe what's said here is that a bitcoin transaction is like a 'coupon code' and not governed under the same rules that paying with money would be.
ars 13y ago
Pretty disappointed in this statement from Greenspan: “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.” All money has no intrinsic value, including gold. Things have value because other people want them. That's it. People want bitcoin, then it has value. Pretty much the only thing with intrinsic value is food since people don't want it, they require it. Everything else has value because people say it has value.
- namespace 13y ago
  There is a great post on r/bitcoin on this topic by Erik Voorhees. He talks about the value of network which gives bitcoin its value. A great read: http://www.reddit.com/r/Bitcoin/comments/1rxmk3/my_open_letter_to_peter_schiff_followup_from_the/ http://www.reddit.com/r/Bitcoin/comments/1rxmk3/my_open_lett...
  - ethana 13y ago
    Networks come and go. Hard money, however, can still be found on hundred-years-old wreckage somewhere under the ocean.
    - ars 13y ago
      That's because you happen to value gold just like someone else did 100 years ago. But there are plenty of other forms of money that have vanished, from stone wheels, to shells, to papers. And all of those would be considered hard money.
- wavesounds 13y ago
  Dollars have intrinsic value in that you can burn them to keep warm, gold you can make things out of, Bitcoins have no possible use outside of being a currency, thus no intrinsic value.
  - throwaway2048 13y ago
kunle 13y ago
Don't think strict currency activity was affected by this, but one of the main reasons this is important is that it's really really difficult to convert large amounts of RMB into any other currency. BTC provides an alternative to going through the banking system which I suspect drives some of its popularity in China. A lot of light is made about the problems BTC poses for the dollar - it's much more of a threat to anywhere that currency is controlled, because it's a straight bypass. The volatility is obviously a stumbling block but when you have no other alternative, it's pretty attractive.
ishiboy 13y ago
Down to 860 on coinbase.
- elie_CH 13y ago
  Back beyond 1000 now
dschiptsov 13y ago
The beginning of a great sell off?)
- BrokenPipe 13y ago
  Or the beginning of another soar.
obiefernandez 13y ago
There's a lot of money sitting on the sidelines waiting for an entry point. The question is how low will the price go before it all starts piling in.
- wavesounds 13y ago
  Also a lot of people who think its too high and were waiting for a sign it was time to take their profits and get out.
  - obiefernandez 13y ago
    Well, either way, the next few hours should be interesting as the east coast wakes up and sees the headlines. Will they panic sell and push the price down further? Or will they notice that selloff at BTC-China exchange is over and see it as buying signal?
    - alphonse23 13y ago
      I tried logged into coinbase to sell my bitcoins after hearing the news and seeing the price dropping on btcchina. While I was doing this, coinbase's security sms messager took forever to come in, and because I sent in a request too many times coinbase blocked me out and said to try logging in again in 24 hours... oh well, the price for the most part is recovered after the bump (here and in China) -- so I'm luck in some sense, BUT ... It's nice to know that if I ever needed to sell my btc in a jiffy coinbase will try to screw me...
rms 13y ago
From the Google translation of the original source: "However, Bitcoin transaction as a commodity trading behavior on the Internet, ordinary people have the freedom to participate in the premise own risk." The new bitcoin policy here isn't that much more conservative than the USA's bitcoin policy, and Beijing just legalized bitcoin for ordinary citizen gamblers, speculators, savers, and options traders! This is a good sign for bitcoin, and the market is reacting negatively anyways, probably encouraged by whales selling off trying to hit stop loss orders. As the Chinese social-mediasphere dissects this announcement over the next day, the price should recover. Great buying opportunity right now for the short term, even if you're not long on bitcoin.
- salient 13y ago
  I don't see how it's a "good sign for Bitcoin". Until now people thought Bitcoin is going to explode in China, but now China put some serious restrictions on it. Why would that be a good sign? Also, what happens if exchanges won't be allowed to have a bank account with the banks either? That's always been one of the biggest fears regarding Bitcoin - that if the governments decided to go after Bitcoin, that may not kill Bitcoin, but it would seriously slow down its growth and liquidity if they made it illegal for exchange companies to exchange Bitcoin.
  - ashray 13y ago
    The restrictions appear to be placed on banks and other financial institutions creating any bitcoin related instruments (ETFs, etc.) or dealing directly with bitcoin (eg. exchange RMB for BTC or the reverse). Also, it would essentially prevent a bank using it's reserve for a bitcoin investment. Exchanges can still operate as exchanges and can continue to have bank accounts as long as said banks do not deal themselves in bitcoins. Individuals and businesses are free to use bitcoin. This is actually very good news. The government was silent all this while and though they haven't said "Bitcoin is the new reserve currency", the Chinese stance is essentially the exact same stance that the US Senate took last month. I'm sure US banks also cannot deal with something that isn't a 'valid currency'. This is a much better translation of the bitcoin notice: http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/ http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra...
olalonde 13y ago
According to someone on Bitcointalk.org, it might not be as bad as it seems (https://bitcointalk.org/index.php?topic=358341.msg3832549#msg3832549 https://bitcointalk.org/index.php?topic=358341.msg3832549#ms...): No. You Western guys completely misunderstood the news. To me, this is actually BULLISH! TL;DR, the document says: 1. Bitcoin is a virtual commodity, not a real currency 2. People have the freedom to trade bitcoin, but they need to take their own risk 3. At this stage, financial institutions cannot denominate services and products in bitcoin, cannot trade bitcoin, cannot run bitcoin exchange, cannot provide bitcoin related services, cannot store bitcoin for clients, cannot establish bitcoin trust or fund, etc. 4. Bitcoin exchanges must be registered, and follow AML and KYC rules This means major Chinese bitcoin exchanges like BTCChina will stay. You just won't see any Chinese bitcoin ETF anytime soon.
- Grue3 13y ago
  When is anyone at bitcointalk not BULLISH about bitcoin? It's not like they have a financial incentive to let it tank.
  - dwaltrip 13y ago
    While many trolls and the like do roam bitcointalk, one can also find the occasional gem of rationality, insight, and common sense. Some people are there because, if you can believe it, they are actually intellectually interested in the complex and novel dynamics (sociological, economic, technical, etc) found in bitcoin (or that may potentially develop as the system grows).
    - ashray 13y ago
      Also, I'd like to add that most of the FATAL FLAWS (TM) that the mainstream press is discussing today were discussed in great detail on bitcointalk since 2009. It just happens to be a community that has had a great interest in creating and seeing bitcoin succeed. Of course, with growing numbers, the noise hides the signal, but take a look at the relevant subforums and you will indeed see serious discussions about bitcoin viability, previous challenges, future challenges, network security, scalability, etc.
dutchbrit 13y ago
And the Bitcoin drops... But will rise again :)
deleted 13y ago
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- sickpig 13y ago
  no exchanges? really?
  - ashray 13y ago
    Not sure if you're being sarcastic but just incase.. Exchanges are not banned. They are being regulated with KYC/AML for customers. They also need to register with the telecom authority.
    - deleted 13y ago
      [deleted]
      - josu 13y ago
        For what I've read around, "financial institutions" only refers to banks. Take into account that all these news are translations from the Chinese source, and to translators and journalists "financial institutions" and "banks" may look interchangeable. This is what I got from using google translate on the source[0]: >"Notice" requirement , as the main trading platform Bitcoin Bitcoin Internet sites , should be based on the "PRC Telecommunications Regulations " and " Internet Information Services" , shall be filed in the telecommunications regulatory agencies . [0] http://tech.sina.com.cn/i/2013-12-05/15538979079.shtml http://tech.sina.com.cn/i/2013-12-05/15538979079.shtml
        deleted 13y ago
        [deleted]
    - sickpig 13y ago
      Yes it was a sarcastic comment.
- dwaltrip 13y ago
  This is false, you can still buy/sell bitcoins in China: In addition, websites in China that provide trading services are required to report investors' identities to regulators and take steps to prohibit money laundering. [1] ------------------ Strengthening regulation of Bitcoin websites According to the Telecommunications Act and the Regulation on Internet Information Service, websites that provide Bitcoin services like registration, trading etc should register with the telecommunications regulation authorities. The telecommunications regulation authorities, following the determinations and punishment opinions of the relevant management authorities, close down illegal Bitcoin sites according to law. [2] ------------------ Sources: [1] http://money.cnn.com/2013/12/05/investing/china-bitcoin/ http://money.cnn.com/2013/12/05/investing/china-bitcoin/ [2] http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/ http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra...
deleted 13y ago
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epaga 13y ago
Here is a human-made translation of the actual notice: http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/ http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra... Seems far less dramatic than would justify the price correction we are seeing...
spdy 13y ago
Its a good thing more and more states acknowledge the existence of BTC and its clones. Its not some spooky internet stuff its on the radar of the biggest financial regulators on this planet. Not bad for something created 2009 and only really took off 1-2 years ago. But BTC is still in its infancy.
nbody 13y ago
It's boring to see all these "news" and some trying to manipulate the mass' sentiment. Cba really.
ausjke 13y ago
Bitcoin threatens the dollar system. China bought a lot of US debt in dollar. China has to keep dollar strong to get its money back, anything that could affect US Dollar is a no-no to China. does this simple logic make sense...
the_watcher 13y ago
Am I wrong to read the Chinese comments as essentially "We can't manipulate, control, or interfere with Bitcoin, therefore it is bad?" That sounds like basically the entire argument in favor of BTC to me.
kolev 13y ago
I personally think this is bad news for Bitcoin as it limits it to a speculator tool. With price growing constantly, it's not a good tool for e-commerce either - price in BTC needs to have 20-30%, plus, who'd spend their BTC and not their fiat if fiat stays the same and BTC keeps growing? I think BTC will drop under $1,000 and will stay there for a bit until some "real" positive news come in. Currently at the moment there's a pump-and-dump process going on as not everybody was able to sell yesterday. I'd say, ether buy below $900 or above $1,300 as for days BTC was trying to break $1,200 without success. I don't think there's positive enough news for it to break it today or tomorrow. Volumes of trading dropped significantly above the $1,100 levels, so, that's a good sign of Bitcoin running out of steam.

175 points by kunle 13y ago

So, in short, they are still allowed to trade with it and use it, as long as they are 'okay' with the 'risk'. It's only financial institutions that can't work with Bitcoin anymore? Is this right?

be5invis 13y ago
Yes. I read the full text and it said that websites are people can have and trade bitoins at their own risk. Financial institutions cannot join this market due to the non-currency property.
- Fuxy 13y ago
  I doubt any financial institutions were using it to begin with so this is a non issue for the moment.

bobbles 13y ago

Difficult to understand at this point what this decision really means. Are bitcoins still able to be traded as a commodity but not currency? What does "The public is free to participate in Internet transactions provided they take on the risk themselves, it said" even mean? Are they saying people deciding to exchange goods and services for bitcoin is ok, but not exchanging it directly into currency? If anyone has actual insight or knowledge here it would be greatly appreciated.

rtpg 13y ago
A guess, but I imagine that chinese bank deposits are insured by the central bank, and that The gov't doesn't want to deal with bitcoins losing a bunch of value from one day to the next.
nazgulnarsil 13y ago
it might mean that currently operating exchanges need licenses, need to confirm IDs, or even get shut down. Shrug. Wild West.
- eterm 13y ago
  I read it as the opposite, that trading websites effectively cannot be licensed. This keeps the inherent risk with the buyers.
rahimnathwani 13y ago
Reading the original announcement (http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/201312...), three things seems clear: 1) People may buy Bitcoins if they like. 2) People may sell Bitcoins if they like. 3) Banks may not sell Bitcoins as they are not 货币 (money). 4) Products offered for sale may not be priced in Bitcoin, as it is not 货币。 As far as I'm aware, no large ecommerce sites in China display prices in anything other than CNY, and none accept anything other than CNY (cash, bank transfers, bank-issued payment cards, CNY-denominated vouchers). If I could pay for things online using Bitcoin, maybe I (and others in China) would start keeping some Bitcoin in an online wallet, in the same way we currently keep some money in 支付宝 (Alipay). From there, it would be easy to slide into mass speculation, which seems to be what the government doesn't want.

mwilcox 13y ago

BTCChina reaction: http://i.imgur.com/cNuESY7.png http://i.imgur.com/cNuESY7.png

user24 13y ago
bounced back pretty quickly: http://bitcoinity.org/markets/btcchina/CNY http://bitcoinity.org/markets/btcchina/CNY
- wjk 13y ago
  Apparently not... not yet at least, still going down :p
chrismorgan 13y ago
So it went down from 6979 to 6200.01 quite quickly. That's about 11%, not the utter plummet that ignoring the scale on your picture would suggest.
- steveklabnik 13y ago
  If an actual currency was devauled 11% from a news article...
  - user24 13y ago
    What do you think would happen to the XAU/CNY rate if China announced that gold was no longer accepted in banks?
    - steveklabnik 13y ago
      ... which is why they wouldn't do that, because it would be catastrophic.
      - user24 13y ago
        so in other words, XBT behaved exactly as you expected XAU would in the same situation, yet somehow to you that reflects badly on XBT but not on XAU.

SwellJoe 13y ago

"Bitcoin prices plunged after the PBOC announcement." Where? It's still trading over $1000 on every exchange I follow. This announcement seems to have almost no perceptible effect on the price of Bitcoin. This is an interestingly biased article, actually. It quotes Alan Greenspan, whose history as a stubborn gold bug (in his Ayn Rand worshiping days) and whose pretty awful performance at the Federal Reserve make his opinion on this matter somewhat expected and mostly moot. I'm willing to believe Bitcoin is overvalued for its current utility. Maybe. But, this article exhibits such a lack of understanding of what it is that I find it hard to take them seriously when they discuss what it might be worth or how this policy in China will effect it.

maaku 13y ago
Are you watching the markets now? It just dropped 100 points in a few minutes on the exchange I'm using (coinbase).
Svip 13y ago
> Where? It's still trading over $1000 on every exchange I follow. This announcement seems to have almost no perceptible effect on the price of Bitcoin. Well, the prices did drop about $200 on MtGox after the news. It's debatable whether this qualifies as 'plunged'.
- rtpg 13y ago
  in any other situation a 20% drop in value would be considered a "plunge" I think
  - vidarh 13y ago
    The thing is this is relatively "normal" volatility for Bitcoin. It bounced up 80-90 points again briefly at my broker a short while ago. Back down. Up 50 or so points again since then.
- SwellJoe 13y ago
  It doesn't look particularly related to this news, to me. It's been bouncing around $1000 for days. http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g2... Someone else posted a chart of the price in China, which does look like a "plunge" though the scale on the image is somewhat misleading (it also only "plunged" 17% or so). I'm having a hard time viewing this level of volatility as surprising for Bitcoin. It's had a number of much larger drops, including recently (when it climbed to 700 and dropped back down to 500, for instance, on no news). I believe one has to view Bitcoin in the context of Bitcoin, and right now it is an extremely volatile creature.

be5invis 13y ago

I read the full text. They said that "Bitcoin is not currency. It is a tradable virtual good. You can buy and sell it, but financial institutions cannot work with BTC."

jackgavigan 13y ago

Well, this was predictable. https://news.ycombinator.com/item?id=6818821 https://news.ycombinator.com/item?id=6818821 Edit: Having read the (Google translation of the) PBOC's Notice, it looks like concern over money laundering contributed to the decision to issue this notice. There's a fairly comprehensive ban on financial institutions doing any kind of Bitcoin-denominated business. It also appears that Bitcoin exchanges must register with the telecommunications regulatory agencies and comply with anti-money laundering provisions (i.e. similar to the approach FinCEN took in the US).

dmix 13y ago
Predictable? > the price would plunge. 9 hours later... the prices have stabilized after dropping $100. We can add that to the hundredth time people have predicted the death of Bitcoin.

ddeck 13y ago

The PBOC notice (in Chinese): http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/201312...

eof 13y ago

My read of this is that businesses are not allowed to price their goods in bitcoin which is a huge hit; beyond this nothing seems terribly surprising. > "Notice" requirement, at this stage, financial institutions and payment institutions are not allowed to Bitcoin price for the product or service, edit: from: http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/201312...

ashray 13y ago
I'm confused about what constitutes a payment institution. Does this mean that credit card processors cannot price in bitcoin ? Or does this mean that Starbucks cannot price in bitcoin ? There seems to be a distinction between a business and a payment institution. Or maybe what's said here is that a bitcoin transaction is like a 'coupon code' and not governed under the same rules that paying with money would be.

ars 13y ago

Pretty disappointed in this statement from Greenspan: “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.” All money has no intrinsic value, including gold. Things have value because other people want them. That's it. People want bitcoin, then it has value. Pretty much the only thing with intrinsic value is food since people don't want it, they require it. Everything else has value because people say it has value.

namespace 13y ago
There is a great post on r/bitcoin on this topic by Erik Voorhees. He talks about the value of network which gives bitcoin its value. A great read: http://www.reddit.com/r/Bitcoin/comments/1rxmk3/my_open_letter_to_peter_schiff_followup_from_the/ http://www.reddit.com/r/Bitcoin/comments/1rxmk3/my_open_lett...
- ethana 13y ago
  Networks come and go. Hard money, however, can still be found on hundred-years-old wreckage somewhere under the ocean.
  - ars 13y ago
    That's because you happen to value gold just like someone else did 100 years ago. But there are plenty of other forms of money that have vanished, from stone wheels, to shells, to papers. And all of those would be considered hard money.
wavesounds 13y ago
Dollars have intrinsic value in that you can burn them to keep warm, gold you can make things out of, Bitcoins have no possible use outside of being a currency, thus no intrinsic value.
- throwaway2048 13y ago

kunle 13y ago

Don't think strict currency activity was affected by this, but one of the main reasons this is important is that it's really really difficult to convert large amounts of RMB into any other currency. BTC provides an alternative to going through the banking system which I suspect drives some of its popularity in China. A lot of light is made about the problems BTC poses for the dollar - it's much more of a threat to anywhere that currency is controlled, because it's a straight bypass. The volatility is obviously a stumbling block but when you have no other alternative, it's pretty attractive.

ishiboy 13y ago

Down to 860 on coinbase.

elie_CH 13y ago
Back beyond 1000 now

dschiptsov 13y ago

The beginning of a great sell off?)

BrokenPipe 13y ago
Or the beginning of another soar.

obiefernandez 13y ago

There's a lot of money sitting on the sidelines waiting for an entry point. The question is how low will the price go before it all starts piling in.

wavesounds 13y ago
Also a lot of people who think its too high and were waiting for a sign it was time to take their profits and get out.
- obiefernandez 13y ago
  Well, either way, the next few hours should be interesting as the east coast wakes up and sees the headlines. Will they panic sell and push the price down further? Or will they notice that selloff at BTC-China exchange is over and see it as buying signal?
  - alphonse23 13y ago
    I tried logged into coinbase to sell my bitcoins after hearing the news and seeing the price dropping on btcchina. While I was doing this, coinbase's security sms messager took forever to come in, and because I sent in a request too many times coinbase blocked me out and said to try logging in again in 24 hours... oh well, the price for the most part is recovered after the bump (here and in China) -- so I'm luck in some sense, BUT ... It's nice to know that if I ever needed to sell my btc in a jiffy coinbase will try to screw me...

rms 13y ago

From the Google translation of the original source: "However, Bitcoin transaction as a commodity trading behavior on the Internet, ordinary people have the freedom to participate in the premise own risk." The new bitcoin policy here isn't that much more conservative than the USA's bitcoin policy, and Beijing just legalized bitcoin for ordinary citizen gamblers, speculators, savers, and options traders! This is a good sign for bitcoin, and the market is reacting negatively anyways, probably encouraged by whales selling off trying to hit stop loss orders. As the Chinese social-mediasphere dissects this announcement over the next day, the price should recover. Great buying opportunity right now for the short term, even if you're not long on bitcoin.

salient 13y ago
I don't see how it's a "good sign for Bitcoin". Until now people thought Bitcoin is going to explode in China, but now China put some serious restrictions on it. Why would that be a good sign? Also, what happens if exchanges won't be allowed to have a bank account with the banks either? That's always been one of the biggest fears regarding Bitcoin - that if the governments decided to go after Bitcoin, that may not kill Bitcoin, but it would seriously slow down its growth and liquidity if they made it illegal for exchange companies to exchange Bitcoin.
- ashray 13y ago
  The restrictions appear to be placed on banks and other financial institutions creating any bitcoin related instruments (ETFs, etc.) or dealing directly with bitcoin (eg. exchange RMB for BTC or the reverse). Also, it would essentially prevent a bank using it's reserve for a bitcoin investment. Exchanges can still operate as exchanges and can continue to have bank accounts as long as said banks do not deal themselves in bitcoins. Individuals and businesses are free to use bitcoin. This is actually very good news. The government was silent all this while and though they haven't said "Bitcoin is the new reserve currency", the Chinese stance is essentially the exact same stance that the US Senate took last month. I'm sure US banks also cannot deal with something that isn't a 'valid currency'. This is a much better translation of the bitcoin notice: http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/ http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra...

olalonde 13y ago

According to someone on Bitcointalk.org, it might not be as bad as it seems (https://bitcointalk.org/index.php?topic=358341.msg3832549#msg3832549 https://bitcointalk.org/index.php?topic=358341.msg3832549#ms...): No. You Western guys completely misunderstood the news. To me, this is actually BULLISH! TL;DR, the document says: 1. Bitcoin is a virtual commodity, not a real currency 2. People have the freedom to trade bitcoin, but they need to take their own risk 3. At this stage, financial institutions cannot denominate services and products in bitcoin, cannot trade bitcoin, cannot run bitcoin exchange, cannot provide bitcoin related services, cannot store bitcoin for clients, cannot establish bitcoin trust or fund, etc. 4. Bitcoin exchanges must be registered, and follow AML and KYC rules This means major Chinese bitcoin exchanges like BTCChina will stay. You just won't see any Chinese bitcoin ETF anytime soon.

Grue3 13y ago
When is anyone at bitcointalk not BULLISH about bitcoin? It's not like they have a financial incentive to let it tank.
- dwaltrip 13y ago
  While many trolls and the like do roam bitcointalk, one can also find the occasional gem of rationality, insight, and common sense. Some people are there because, if you can believe it, they are actually intellectually interested in the complex and novel dynamics (sociological, economic, technical, etc) found in bitcoin (or that may potentially develop as the system grows).
  - ashray 13y ago
    Also, I'd like to add that most of the FATAL FLAWS (TM) that the mainstream press is discussing today were discussed in great detail on bitcointalk since 2009. It just happens to be a community that has had a great interest in creating and seeing bitcoin succeed. Of course, with growing numbers, the noise hides the signal, but take a look at the relevant subforums and you will indeed see serious discussions about bitcoin viability, previous challenges, future challenges, network security, scalability, etc.

dutchbrit 13y ago

And the Bitcoin drops... But will rise again :)

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sickpig 13y ago
no exchanges? really?
- ashray 13y ago
  Not sure if you're being sarcastic but just incase.. Exchanges are not banned. They are being regulated with KYC/AML for customers. They also need to register with the telecom authority.
  - deleted 13y ago
    [deleted]
    - josu 13y ago
      For what I've read around, "financial institutions" only refers to banks. Take into account that all these news are translations from the Chinese source, and to translators and journalists "financial institutions" and "banks" may look interchangeable. This is what I got from using google translate on the source[0]: >"Notice" requirement , as the main trading platform Bitcoin Bitcoin Internet sites , should be based on the "PRC Telecommunications Regulations " and " Internet Information Services" , shall be filed in the telecommunications regulatory agencies . [0] http://tech.sina.com.cn/i/2013-12-05/15538979079.shtml http://tech.sina.com.cn/i/2013-12-05/15538979079.shtml
      - deleted 13y ago
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  - sickpig 13y ago
    Yes it was a sarcastic comment.
dwaltrip 13y ago
This is false, you can still buy/sell bitcoins in China: In addition, websites in China that provide trading services are required to report investors' identities to regulators and take steps to prohibit money laundering. [1] ------------------ Strengthening regulation of Bitcoin websites According to the Telecommunications Act and the Regulation on Internet Information Service, websites that provide Bitcoin services like registration, trading etc should register with the telecommunications regulation authorities. The telecommunications regulation authorities, following the determinations and punishment opinions of the relevant management authorities, close down illegal Bitcoin sites according to law. [2] ------------------ Sources: [1] http://money.cnn.com/2013/12/05/investing/china-bitcoin/ http://money.cnn.com/2013/12/05/investing/china-bitcoin/ [2] http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/ http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra...

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epaga 13y ago

Here is a human-made translation of the actual notice: http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/ http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra... Seems far less dramatic than would justify the price correction we are seeing...

spdy 13y ago

Its a good thing more and more states acknowledge the existence of BTC and its clones. Its not some spooky internet stuff its on the radar of the biggest financial regulators on this planet. Not bad for something created 2009 and only really took off 1-2 years ago. But BTC is still in its infancy.

nbody 13y ago

It's boring to see all these "news" and some trying to manipulate the mass' sentiment. Cba really.

ausjke 13y ago

Bitcoin threatens the dollar system. China bought a lot of US debt in dollar. China has to keep dollar strong to get its money back, anything that could affect US Dollar is a no-no to China. does this simple logic make sense...

the_watcher 13y ago

Am I wrong to read the Chinese comments as essentially "We can't manipulate, control, or interfere with Bitcoin, therefore it is bad?" That sounds like basically the entire argument in favor of BTC to me.

kolev 13y ago

I personally think this is bad news for Bitcoin as it limits it to a speculator tool. With price growing constantly, it's not a good tool for e-commerce either - price in BTC needs to have 20-30%, plus, who'd spend their BTC and not their fiat if fiat stays the same and BTC keeps growing? I think BTC will drop under $1,000 and will stay there for a bit until some "real" positive news come in. Currently at the moment there's a pump-and-dump process going on as not everybody was able to sell yesterday. I'd say, ether buy below $900 or above $1,300 as for days BTC was trying to break $1,200 without success. I don't think there's positive enough news for it to break it today or tomorrow. Volumes of trading dropped significantly above the $1,100 levels, so, that's a good sign of Bitcoin running out of steam.