China Bans Financial Companies From Bitcoin Transactions 110
quantr writes with this excerpt from Bloomberg: "China's central bank barred financial institutions from handling Bitcoin transactions, moving to regulate the virtual currency after an 89-fold jump in its value sparked a surge of investor interest in the country. Bitcoin plunged more than 20 percent to below $1,000 on the BitStamp Internet exchange after the People's Bank of China said it isn't a currency with 'real meaning' and doesn't have the same legal status. The public is free to participate in Internet transactions provided they take on the risk themselves, it said. The ban reflects concern about the risk the digital currency may pose to China's capital controls and financial stability after a surge in trading this year made the country the world's biggest trader of Bitcoin, according to exchange operator BTC China. Bitcoin's price jumped more than ninefold in the past two months alone, prompting former Federal Reserve Chairman Alan Greenspan to call it a 'bubble.' 'The concern is that it interferes with normal monetary policy operation,' said Hao Hong, head of China research at Bocom International Holdings Co. in Hong Kong. 'It represents an unofficial leakage to the current monetary system and trades globally. It is difficult to regulate and could be used for money laundering.'"
The public is free to participate in Internet tran (Score:5, Insightful)
"The public is free to participate in Internet transactions provided they take on the risk themselves,"
that should actually be a green sign.
any method that can be legally used to turn yuan into something else that can be turned into money - and can be moved electronically - is in big demand...
(no, I don't have any bc)
Went down, then came back. (Score:4, Insightful)
Regulated like a commodity rather than currency (Score:4, Insightful)
Re:Went down, then came back. (Score:0, Insightful)
You still don't understand that money can't be majicked out of thin air and be worth something?
The only thing keeping it afloat is other people believing the same fairy story.
Re:COMMIES AT HEART !! (Score:4, Insightful)
Fear the unknown !!
The reality is Bitcoin is stateless so China can't exert influence on it. Scares them, it does. Yes.
Re: Went down, then came back. (Score:4, Insightful)
Exactly. But that's true of any transaction-token regardless of expression; money, stocks, bitcoins, camels. (The last has other uses too.) Money is a technology.
You're failing to see what bitcoin is changing money-technology _into_.
Re:The public is free to participate in Internet t (Score:4, Insightful)
Re:Went down, then came back. (Score:4, Insightful)
The US dollar is backed by the full faith and credit of the US government. Bitcoin is backed by absolutely no one.
Re:translation (Score:3, Insightful)
This might be a weakness of BitCoin eventually. As blockchains get longer and longer, it gets more unwieldy to keep everything updated.
The closest thing is having to calculate every transaction (vending machine, gas station, bank, etc.) a Loonie [1] coin has been through since it was struck at the mint. Even though big-O is a linear function, after a while, the cryptographic calculations required for each transaction can add up over time, and when a BitCoin is broken into subunits, each subunit down to the satoshi will have its own separate chain that has to be run through.
Not a big problem now, but as BitCoins circulate through large amounts of users, it might become an issue, especially for large volumes.
[1]: Or quarter, or Euro, but Loonies are a decent unit for an arbitrary example.
Re:Sounds like a GOOD thing for Bitcoin (Score:2, Insightful)
Bitcoin exists because many people don't trust a) the major world governments or b) the major banking institutions.
oh wait your serious...
Bitcoin is pure speculation at its finest. When it crashes (and it will). You may want to change your tune.
Gov controlled money was created to stop fluctuation in price (it works to a degree). Price along the lines of I dont know if I can buy a loaf a bread today or a Ferrari. Everyone pretty much demanded the Gov do *something* anything. They lucked into the particular one they have now. You can also see how they are overusing particular things and making the same mistakes over and over again too.
Bitcoin will have a different problem eventually. The size of the chain will be so big it will carry its own burden of time along with it to use. Most currencies do not have the problem of having to carry around the baggage of everyone who has ever had a dollar bill. Just so you can say 100% for sure you own it.
Even their attempts to undermine it seem likely to strengthen it.
What will crush it is the same thing that crushed the gold standard dollar. Inflation. The market is a harsh mistress.
Right now you can use Bitcoin to do some 'anonymous' transactions. However, that is strictly predicated on a bubble of good will. You can see it in day to day news. News story comes out value falls. Over and over. So yeah go for it. Load up on those beanie babies.
Though I think it is an interesting experiment. My guess the bubble bursts when they 'give away' the last bitcoin. I hope it doesnt as it would be an interesting experiment in a fixed size monetary economy. But history is unfortunately on the side of 'it will crash'.
Re:Went down, then came back. (Score:4, Insightful)
Re:Went down, then came back. (Score:4, Insightful)
The power of Bitcoin is often what people point to as its weakness - the fact that it isnt backed by any ~one~ conventional govt/issuer.
No, it's a weakness.
Any number of entities (governments, Columbian drug cartels, Russian Mafia, etc.) could have been quietly buying up bitcoins for the last six months and sitting on them. Lack of liquidity creates a seller's market so bitcoin prices skyrocket as a result. When the time is right they can dump all their coins on the market for a massive profit. The price of bitcoin will crash and they can buy back their stock at a fraction of the price just in case it ever recovers.
This trick only works if you can do it in secret (so people mistake the lack of liquidity for market confidence - nobody wants to sell!!)
Bitcoin is a perfect target for it.
Re:Went down, then came back. (Score:3, Insightful)
The government collects taxes in USD. If you want to stay out of jail, you need USD.
Maybe YOUR government does... I'm pretty sure most governments don't.
And many multinational corporations use means other than USD to "pay" their taxes, and never see jail.
I think there's a lot of room for a global fiat quantum currency; for numerous international trade situations, it beats USD (and the yuan, which is pegged to USD).