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This move seems obvious. Bitcoin's popularity has far more negative consequences for Chinese government (or any other government) than benefit. Bitcoin might to

by thkim 13y ago

This move seems obvious. Bitcoin's popularity has far more negative consequences for Chinese government (or any other government) than benefit. Bitcoin might topple the dollar hegemony if popularized, which might be what China wants, but central banks lose their power to control the money flow in the system. Why would any government want that? Any money goes into Bitcoin is essentially money gone offline right now so it reduces tax revenue and adds noise to national statistics. Bitcoin or any other crypto-coin has real chance of adoption only when it's sponsored by government.

vitobcn 13y ago
I am not so sure that no governments would like to sponsor cryptocurrencies. Obviously, not states with dominant currencies for the reasons you mentioned, but I could see other countries jumping into the opportunity of altering the status quo.
- SwellJoe 13y ago
  This is an interesting take on it. I assumed all governments would want to destroy Bitcoin (once they see its impact), but that really only applies to nations that have a dominant currency to defend, as well as a need for inflationary debt-based currency to support massive deficit spending for war and/or empire building (so, the US, China...maybe nobody else).
SwellJoe 13y ago
"Bitcoin or any other crypto-coin has real chance of adoption only when it's sponsored by government." While I agree with your assertion that governments have no reason to support Bitcoin, I don't believe it follows that government sponsorship is necessary for the success of Bitcoin. I suspect most people betting on Bitcoin are aware that at some point, governments are going to act forcefully to kill Bitcoin, and the fallout will be utterly unpredictable. But, I don't think it's something that can be put back in the bottle. We're crossing into uncharted waters here. Nothing like Bitcoin has ever happened before...so, we don't know how it's going to play out. I'm bullish even with the expectation that major world governments will collude with current financial elites to kill Bitcoin, because I suspect there is no way they can actually kill it.
- hershel 13y ago
  One option for the US would be a crypto coin that is pegged to the dollar(by controlling global exchanges) . While not fit for speculators, it would be very stable and the level of anonymity can be controlled(anonymous to all but law enforcement), and declare bitcoin exchanges illegal. While I don't see it going this way because the US politicians are bought by bankers , it seems like something that can kill bitcoin.
- jasonwocky 13y ago
  > governments are going to act forcefully to kill Bitcoin, and the fallout will be utterly unpredictable. I don't think so. I think it's quite predictable that, if that happens, Bitcoin will lose. In the sense that it will ultimately become a cryptocurrency also-ran. Something else will probably rise to take its place after it's been bloodied, something designed to be resistant to whatever response the world's governments bring to bear.
  - SwellJoe 13y ago
    In the same way that peer-to-peer file sharing lost?
    - jasonwocky 13y ago
      In the same way that Napster lost. Imagine if you'd invested in that one after the mainstream noticed it.
seanmcdirmid 13y ago
> Bitcoin might topple the dollar hegemony if popularized, which might be what China wants Why would China want this? The current system works in their favor, even they admit RMB isn't ready to be a world currency yet by disallowing full convertibility. > but central banks lose their power to control the money flow in the system Exactly. Also, this is a big loophole over the RMB's non-convertibility limitation/feature.
- rahimnathwani 13y ago
  Who is taking the other side of the trade with these Bitcoin/RMB exchanges? I mean, I often come across people who have RMB but want USD. Far less often do I come across people who have USD but want RMB.
  - seanmcdirmid 13y ago
    Huh? Plenty of people are trying to buy RMB (so called "hot money") to take positions in the Chinese economy and perhaps to speculate on currency a bit. When I came to China 6 years, the exchange rate with about 7.5 RMB to 1 USD, now its like 6 RMB to 1 USD. Plenty of people think that the RMB has a lot of room to appreciate, especially if the Chinese gov. gets tired of buying treasuries.
    - rahimnathwani 13y ago
      Clearly my sample size is too small! Any insight into how foreigners take positions in the Chinese economy with RMB they obtained through USD->Bitcoin->RMB transactions? - Currency: easy, as you just need a passport to open a bank account - Starting a company: harder, as I thought that opening a WFOE required the capital to be injected in a specific way at a specific step in the process - High interest deposits: these seem either risky (some of the bonds sold by banks) or unavailable to foreigners (yu'ebao 余额宝) - Real estate: some cities require a hukou or minimum duration of residence - A shares: need to be a PRC national - Angel investments and unofficial loans to small businesses? What else?
      - 13y ago
DustinCalim 13y ago
This. I can see many governments banning Bitcoin before it rises to it's full potential and then the governments accepting it.
deleted 13y ago
[deleted]

by thkim 13y ago

vitobcn 13y ago

I am not so sure that no governments would like to sponsor cryptocurrencies. Obviously, not states with dominant currencies for the reasons you mentioned, but I could see other countries jumping into the opportunity of altering the status quo.

SwellJoe 13y ago
This is an interesting take on it. I assumed all governments would want to destroy Bitcoin (once they see its impact), but that really only applies to nations that have a dominant currency to defend, as well as a need for inflationary debt-based currency to support massive deficit spending for war and/or empire building (so, the US, China...maybe nobody else).

SwellJoe 13y ago

"Bitcoin or any other crypto-coin has real chance of adoption only when it's sponsored by government." While I agree with your assertion that governments have no reason to support Bitcoin, I don't believe it follows that government sponsorship is necessary for the success of Bitcoin. I suspect most people betting on Bitcoin are aware that at some point, governments are going to act forcefully to kill Bitcoin, and the fallout will be utterly unpredictable. But, I don't think it's something that can be put back in the bottle. We're crossing into uncharted waters here. Nothing like Bitcoin has ever happened before...so, we don't know how it's going to play out. I'm bullish even with the expectation that major world governments will collude with current financial elites to kill Bitcoin, because I suspect there is no way they can actually kill it.

hershel 13y ago
One option for the US would be a crypto coin that is pegged to the dollar(by controlling global exchanges) . While not fit for speculators, it would be very stable and the level of anonymity can be controlled(anonymous to all but law enforcement), and declare bitcoin exchanges illegal. While I don't see it going this way because the US politicians are bought by bankers , it seems like something that can kill bitcoin.
jasonwocky 13y ago
> governments are going to act forcefully to kill Bitcoin, and the fallout will be utterly unpredictable. I don't think so. I think it's quite predictable that, if that happens, Bitcoin will lose. In the sense that it will ultimately become a cryptocurrency also-ran. Something else will probably rise to take its place after it's been bloodied, something designed to be resistant to whatever response the world's governments bring to bear.
- SwellJoe 13y ago
  In the same way that peer-to-peer file sharing lost?
  - jasonwocky 13y ago
    In the same way that Napster lost. Imagine if you'd invested in that one after the mainstream noticed it.

seanmcdirmid 13y ago

> Bitcoin might topple the dollar hegemony if popularized, which might be what China wants Why would China want this? The current system works in their favor, even they admit RMB isn't ready to be a world currency yet by disallowing full convertibility. > but central banks lose their power to control the money flow in the system Exactly. Also, this is a big loophole over the RMB's non-convertibility limitation/feature.

rahimnathwani 13y ago
Who is taking the other side of the trade with these Bitcoin/RMB exchanges? I mean, I often come across people who have RMB but want USD. Far less often do I come across people who have USD but want RMB.
- seanmcdirmid 13y ago
  Huh? Plenty of people are trying to buy RMB (so called "hot money") to take positions in the Chinese economy and perhaps to speculate on currency a bit. When I came to China 6 years, the exchange rate with about 7.5 RMB to 1 USD, now its like 6 RMB to 1 USD. Plenty of people think that the RMB has a lot of room to appreciate, especially if the Chinese gov. gets tired of buying treasuries.
  - rahimnathwani 13y ago
    Clearly my sample size is too small! Any insight into how foreigners take positions in the Chinese economy with RMB they obtained through USD->Bitcoin->RMB transactions? - Currency: easy, as you just need a passport to open a bank account - Starting a company: harder, as I thought that opening a WFOE required the capital to be injected in a specific way at a specific step in the process - High interest deposits: these seem either risky (some of the bonds sold by banks) or unavailable to foreigners (yu'ebao 余额宝) - Real estate: some cities require a hukou or minimum duration of residence - A shares: need to be a PRC national - Angel investments and unofficial loans to small businesses? What else?
    - 13y ago

DustinCalim 13y ago

This. I can see many governments banning Bitcoin before it rises to it's full potential and then the governments accepting it.

deleted 13y ago

[deleted]