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Bitcoin China Government Privacy The Almighty Buck

China Cracks Down On Bitcoin, Cuts Off Exchanges' Bank Access 100

Posted by timothy
from the state-is-still-not-your-friend dept.
jfruh (300774) writes "Bitcoin has made many governments and regulators uncomfortable, and the Chinese government is responding to the challenge it poses with its usual lack of subtlety. Two Chinese bitcoin exchanges have found themselves cut off from the money economy, as Chinese banks, under pressure from the government, refuse to do business with them."
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China Cracks Down On Bitcoin, Cuts Off Exchanges' Bank Access

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  • by korbulon (2792438) on Thursday April 03, 2014 @02:17PM (#46651537)
    with the idea of someone else cutting in on their currency manipulation business. Yuan? You can't have.
    • by i kan reed (749298) on Thursday April 03, 2014 @02:19PM (#46651555) Homepage Journal

      Or you know, a well known totalitarian government stamping out a black market currency, you know, to control their citizens, like they've been doing forever.

      • by ackthpt (218170) on Thursday April 03, 2014 @02:23PM (#46651601) Homepage Journal

        Or you know, a well known totalitarian government stamping out a black market currency, you know, to control their citizens, like they've been doing forever.

        Funny how they can be all quiet on things like this, then go at them like a rancor beast.

        Fear is a great motivator. Anything they can't control makes their fearful.

      • Or you know, a well known totalitarian government stamping out a black market currency, you know, to control their citizens, like they've been doing forever.

        This move has nothing to do with controlling their citizens and has everything to do with their continued manipulation of their currency. RMB is very tightly controlled by their government and they have a model that's working for them.

        • by PRMan (959735) on Thursday April 03, 2014 @02:50PM (#46651895)
          Sure. When people are spending all their money building fake malls and fake cities, that's "totally working". [Thumbs up!]
          • Sure. When people are spending all their money building fake malls and fake cities, that's "totally working".

            "Totally working" is undervaluing their currency so that all goods and services that they offer to the US have an inherent built-in 30% discount.

            Its not really the low wages that make manufacturing so attractive in China, its this 30% discount on *everything* compared to domestic US manufacture.

        • by lgw (121541) on Thursday April 03, 2014 @03:01PM (#46651991) Journal

          Communist economies are fake economies. Always. In the bad days of the USSR, you couldn't buy anything you really wanted with Rubles, but of course anything else was quite illegal. China today isn't nearly as bad, and they have a mix of genuine capitalist (owned by individuals, not the government) business and government business, so you can buy some stuff with the yuan. But they still have too much fake economy to allow people to legally buy and sell as they wish, and the black market is still a big deal and threatens government control.

          Contrast that to the US, where the only large black market is for drugs, and it's arguable whether anything significant would change if the popular drugs were legalized. It certainly wouldn't bring down the government.

          • by mlts (1038732)

            China isn't really Communist, nor communist. It definitely is a capitalist society with some vestiges of a command economy left, with the government having a voice as a part of any companies and ventures on their soil.

            (All and all, that's not a bad thing... I wonder how better off the US would be if a FTC or SEC official had a say in all board meetings.)

            It is a different culture. Some of what they have is good (they invested in core infrastructure while here in the US, cars were crushed, and China actuall

            • by lgw (121541)

              They still have all the totalitarian trappings of Communism, is the thing. It's the dictatorial control of the people that bitcoin threatens, not the broader Chinese economy IMO.

              All and all, that's not a bad thing... I wonder how better off the US would be if a FTC or SEC official had a say in all board meetings

              Are you familiar with the concept of regulatory capture? [smbc-comics.com] It would get far, far worse. The power of money to corrupt the government is large, and giving the government more control of companies will be a terrible mistake for as long as that remains true.

              Some of what they have is good (they invested in core infrastructure while here in the US, cars were crushed

              The US manufacturing base has never fallen. Don't mistake manufacturing jobs for manufacturing capacity. Manufacturing is now coming back from Chinese workers to US robots - it's why the Chinese economy is on the rocks.

              • by rtb61 (674572)

                They are in fact a fully fascist totalitarian government. With the majority of senior government officials involved in private for profit business operations. They fully use their positions of power within government to give their private for profit businesses competitive advantage. Major example being prior to privatising the government steel manufacturing business, the government bought and stockpiled steel, driving up it's price and hence increase the public price of the steel manufacturing business, pr

                • by lgw (121541)

                  I think you've read one too many Gibson novels. Corruption of the US government by moneyed interests is a real problem, to be sure, but it's been worse historically without a SF dystopia.

                  • by rtb61 (674572)

                    When corporations ie the military industrial complex engage in initiating wars the they extend that battlefield to the boardroom, especially when they engage countries that are capable of targeted them directly. They do most definitely do deserve it, so nothing science fiction about but something decidedly very moral about it. Once personally targeted the chicken hawks that they and the puppet politicians are, will sue for peace not that they can be trusted of course but they can always be readily targeted

                    • by lgw (121541)

                      But it's less of a problem than 100 years ago, and far less than 100 years before that.

                    • by rtb61 (674572)

                      See you just dont get it, it is not about whether it is worse or better than at any particular time in history it is all about how accesible those targets are now. Before, well, you had to go through the whole base and the expanded and finally worn down defence force to get to them, now, well not so much so. Applying modern technology and more open borders, well, basically they can reach out and touch pretty much anyone, no matter how rich or powerful. Personally targeted weapon system from extended ranges

    • by Anonymous Coward

      I love how I warned people this was going to happen in the last Bitcoin post, and the Bitcoin investors modded me to -1.

      I hope that they got out in time...nah. I hope that they lost millions for screwing up my Slashdot karma :)

      • by bhcompy (1877290)
        I'm pretty sure Anonymous Coward's Slashdot karma is already in the shitter
      • by PRMan (959735)
        Get out? Why? Bitcoin still has so far to go. Still haven't lost any money on it. BTW, did you hear that Bitstamp just started taking deposits in Yuan?
        • yes, additionally, btc-e.com as well. That's the nature of this many headed hydra, it cannot be regulated by states so easily.
    • I think their real fear is that it's a perfect vehicle to circumvent capital controls and allows people to transfer significant amounts of cash OUT of the country.

      Many of those doing the transferring are part of the government. So how to reign it in without any official "enforcement?" Eliminate the ability to deposit cash into the exchanges. Solves their immediate problem without any embarrassing prosecutions.

      • by mysidia (191772)

        I think their real fear is that it's a perfect vehicle to circumvent capital controls and allows people to transfer significant amounts of cash OUT of the country.

        In that case they SHOULD have that fear. Because BTC is a nearly perfect mechanism apparently designed to be capable of just that.

        Providing the availability of exchanges willing to cooperate by accepting Yuan/RMB deposits.

        • by dbIII (701233)
          The "perfect" example in use seems to be some sort of jelly based confectionary that's made in China and a barter token for an underground economy in North Korea. The world is strange before you even go anywhere near ponzi scams like Bitcoin.
  • ...has to do with no reliant on existing financial systems and currency, right? Just 'generate the money' and start using it, don't go back and forth then this will be an non-issue... right?
    • Yes, as I understand it, the whole point is that BTC are meant to be spent on goods/services, and the recipients can then spend their BTC on the goods/services they need, and so on, without the need to ever convert to or from other currencies except maybe to pay local taxes. In such a world, the exchanges become far less important.

      But I don't think we're at the point yet where a community of people buy groceries, gasoline, pay rent and utilities, etc. purely by using BTC. And if the exchanges can't be tru

  • Idiots: (Score:5, Insightful)

    by mythosaz (572040) on Thursday April 03, 2014 @02:24PM (#46651621)

    Anyone keeping coins in an exchange for any longer than necessary to exchange them is an idiot.

    • by PRMan (959735)
      This. People keep asking me if I lost any bitcoins in the Mt. Gox fiasco. Um, no. Because I don't leave my bitcoins on exchanges. The wallet is pretty easy to use.
      • by Anonymous Coward

        This. People keep asking me if I lost any bitcoins in the Mt. Gox fiasco. Um, no. Because I don't leave my bitcoins on exchanges. The wallet is pretty easy to use.

        That's easy for us nerds to say, but for many people this sort of stuff is hard. They want a website with a login and password, and they want their coins to be reasonably secure. They want to be able to access those coins from any computer where they don't have permission to install programs, but still trust to not have malware - like a well-maintained workplace computer. And when something does go wrong and coins vanish, they want their "bank" to have deposit insurance and fix it for them.

        We can snidely tu

    • by Anonymous Coward

      Good advice, but very much beside the point. Bitcoin deposits and withdrawals are not affected. The Chinese government just doesn't want people trading Renminbi for Bitcoins or vice versa, so they ordered the (fiat) bank accounts of Chinese Bitcoin exchanges shut by April 15th. This means that anyone wanting to buy or sell Bitcoin through one of those exchanges will no longer have an easy way to get money to or from the exchanges. They can get their Bitcoins in and out, but what good is that if you can't pa

    • Anyone keeping coins in an exchange for any longer than necessary to exchange them is an idiot.

      Or a day trader

      • by mythosaz (572040)

        Anyone keeping coins in an exchange for any longer than necessary to exchange them is an idiot.

        Or a day trader

        You mean, people constantly exchanging them?

      • by mysidia (191772)

        Anyone keeping coins in an exchange for any longer than necessary to exchange them is an idiot.

        Or a day trader

        Same thing....

    • by pantaril (1624521)

      Anyone keeping coins in an exchange for any longer than necessary to exchange them is an idiot.

      If nobody kept their coins on the exchange it would be not very usefull because there would be nobody to exchange with.

      • by Rich0 (548339)

        Anyone keeping coins in an exchange for any longer than necessary to exchange them is an idiot.

        If nobody kept their coins on the exchange it would be not very usefull because there would be nobody to exchange with.

        There is no need for an exchange to own the commodity it trades. When you buy/sell stock on an exchange you don't buy/sell it from the exchange itself, and you don't need to keep your money in an account owned/controlled by the exchange.

        And even if it made sense to put the funds into escrow with the exchange while a bid/ask is pending, there is no reason that the money needs to stay in the exchange for any significant period of time.

  • the BiteCon folks wanted to be rebels. let 'em.

  • by bobbied (2522392) on Thursday April 03, 2014 @02:30PM (#46651701)

    So the 2nd largest economy is taking steps to ban BitCoin? Really...

    Can the end be too far away?

    Get back in there at once and sell, sell!!

    • Let me guess... you're buying?

      • by bobbied (2522392)

        LOL

        Trying to quote from a really OLD Eddy Murphy movie..

        Cornering the market on a $1 bet...

      • Re: (Score:3, Interesting)

        Or he just accurately noticed that the commodity has lost value on the exchanges, has no intrinsic value, and may crash completely. Bitcoincharts is down at the moment, but according to other sites, the value has fallen all the way to $455 per btc, which if I recall correctly was at about $550 per btc last Friday. It wasn't that long ago that it was at $1000 per btc.
        • by Anonymous Coward

          I believe the 455$ price is in response to the IRS decision to tax bitcoins as properties and not to China shutting down two bitcoin exchangs.

        • Look at the longer term chart, and look at how similar the current drop is to the drop that occurred about a year ago. Make sure you take a logarithmic chart to see the similarity. It went from $250 down to less than $50, up and down again a few times, then up to $1000 several months later. If you bought at the peak exactly one year ago, you would still have a very nice profit today.

          So what if it went from $1000 back to $400? Given the history of the prices, that's peanuts. Last year was much worse.

  • Sink or swim moment (Score:5, Interesting)

    by Lost Race (681080) on Thursday April 03, 2014 @02:59PM (#46651981)
    Well, this is it -- an early test of whether Bitcoin can stand on its own as an underground currency. The crutch of traditional currency exchange has been kicked out from under it. Will the bitcoins currently in China be abandoned? smuggled out? or actually used as money like Satoshi intended?
    • Re: (Score:3, Interesting)

      They'll be sold on LocalBitcoins.com. Most of the sellers accepting Western Union are either in China or Vietnam. I don't think the Chinese government can stop its citizens from receiving WU transfers without raising all kinds of hell.
    • Bitcoins can be "in China" and need to be "smuggled out"?
      • Yes, they can be owned by people in China. People who solely have access to said bitcoins. The Bitcoins can be considered "in China".

        And yes, they need to be smuggled out. If China decrees that anyone trading Bitcoins for money is a criminal, then you can't simply exchange your bitcoins for Renminbi. If China comes down really hard, ASKING for someone to trade money for Bitcoins could be illegal. This would, presumably, convince normal people to simply no longer deal with Bitcoins.

        Maybe. Just maybe, someone

    • Perhaps Bitcoin has more power than China. Sometimes a new idea or item has enormous muscle.
  • The CEO of Bitcoin [coindesk.com] has already decided to ban China as a countermeasure. So who's the fool now?
  • I see a different possible reason for this than "bad totalitarian government gets scared of loss of control", but my sample size is small so I may be very wrong here. I know some Chinese citizens and they are unusually interested in the stock market and money making schemes. They don't really understand even a little bit how the stock market works, yet they remain convinced that it's easy to invest a pittance and come out rich. It may be simply that the government is tired of dealing with citizens who do
  • Unsubtle how? (Score:5, Interesting)

    by St.Creed (853824) on Thursday April 03, 2014 @03:59PM (#46652511)

    If the Chinese government had been unsubtle, the police would have arrested the owners and they'd be doing hard labour in a punishment camp in Tibet right now. Telling banks to stop doing business with them is a very very moderate slap on the wrist for people who've been slightly naughty.

    • by troll -1 (956834)
      This is an affront to freedom my friend. Banning technology is bad for everyone. They are basically saying a P2P computer program cannot be run because wise people have determined it's bad. Reminds me of a Kafka novel.
      • by St.Creed (853824)

        I agree with you and I'm not at all saying they were treated well. But if the Chinese government wanted to be unsubtle, they'd be beaten up and jailed without further discussion. Apart from that: the cases at Mt. Gox and the other thieves... sorry, money changers, show that regulation is going to be needed pronto. The Chinese version of regulation, however, is to ban it.

  • by Animats (122034) on Thursday April 03, 2014 @07:02PM (#46655469) Homepage

    Bitcoin is about as important as the Segway. Bitcoin works, and it does what it's supposed to do - allow one-way irrevocable value transfers between anonymous parties. That's a poor basis for practical commerce, although a boon to a broad range of crooks. It's especially bad that over half of Bitcoin exchanges have gone bust, despite the fact that they shouldn't be at financial risk.

    It looks like Bitcoin will be around for a while, but it's not growing. The block chain transaction rate now is about what it was a year ago. Like the Segway, Bitcoin is kind of cool, and has niche applications, but it's not changing the world.

    • by Tubepunk (3568899)
      More like the Google Glass of money. Opinions about Segway have never been as polarized as opinions about Bitcoin.
  • The bank has issued no decision and will not make a decision until April 15th. Although it is highly speculated that the outcome will remain true, it is still.....speculation.

"Floggings will continue until morale improves." -- anonymous flyer being distributed at Exxon USA

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