(This is not the first time, nor the second time, nor the third time, that we've seen the news "china bans bitcoin" or "china cracks down on bitcoin".)
Could be the nineteenth time. This is the logic that BASE jumpers use: I haven't died yet, ergo it's safe.
It only needs to crash once.
And as basically everyone knows but refuses to acknowledge, the liquidity limitations of all this speculation (i.e. there's nowhere near enough demand to buy up a dropping currency) mean that it'll crash all the way to zero when it does.
I'd rephrase the metaphor - someone is saying, "I saw him hit the cliff, he's done for!", and then it turns out he didn't hit the cliff. After a couple times you stop paying attention to this message, it's too unreliable.
I'll grant you bitcoin is volatile and "dangerous". That's true before China "bans" bitcoin. But the question is "did China just ban bitcoin" and the answer is "most probably not".
OK, sure. That part I agree with. I thought you were making the case that because people have been predicting a bitcoin crash for years (they have) and been wrong (they have), that such a crash won't happen (it will).
Speculative investments have boom/bust cycles, they always will. Arguing that bitcoin is somehow immune is silly.
And, specific to bitcoin, when that crash happens it's going to be catastrophic. Daily-trade-to-capitalization ratio for bitcoin is literally 10x lower than it is for any other volatile security. When the owners start fleeing there will be no one to buy.
I've dealt with Americans that would make your skin crawl, but, of course, most are decent, average people. It's the same anywhere. To think otherwise of Chinese people is to give in to our racist, tribal instincts. Resist!
If you aren't exposed to bitcoin currently and view this instability as an opportunity to jump in at the floor of another boom/bust cycle, then that's a good plan (or at least not an insane one).
But that logic only works if you aren't exposed to bitcoin. I expect given your tone and defensiveness that this isn't true and that you're holding a ton of coins right now that you'd be pretty upset to find were worth nothing.
As someone who isn't exposed (I have like .02 bitcoin from a fountain in the early days), but has been an interested observer, the possibility of a crash down to rock bottom does make it seem like a good time to at least be in position to play with cryptocurrencies with some disposable funds. Maybe I'll take out some of my prediction market money that's been sitting since the election.
I wish I would be holding a lot of coins... even if bitcoins drops 50% is still worth a lot, I know the privileged elitist HN guys hate it for some reason, while probably is saving lives as we speak in Venezuela, but my tone is probably due experience dealing with Chinese, and their efficiency in farming every bit of value form everything they touch, for example their recently started to farm pubg.
Yeah, because this totally doesn't go against everything cryptocurrencies are (supposed to be) for. If anything, this is a long-term positive sign, I think.
Depends how badly China wants this stopped. I have a feeling that China is quite a few times worse than IRS--when they want to. Never underestimate what they can do, when they want to.
It would only fail if there was some inherent flaw in the local currency. And, if that were the case, you would likely have a robust alternative economy denominated in dollars.
The Yuan has none of the problems that would allow an alternative currency to really get going.
I suspect Chinese bitcoin usage is mostly a bunch mid-level party bureaucrats attempting to transfer wealth outside China so that they can buy tangible assets that can't be seized.
I agree it's not the first time China's cracked down on virtual currency <--> fiat trading, but if true this could be more intense than their prior efforts.
How does allowing exchanges to operate give them control over domestic cryptocurrency activity?
Chinese capital controls are focused on people trying to move their money overseas. If they can't control a certain pathway, they'll rather shut it down completely.
1. exchanges provide visibility into who is buying and selling crypto along with the ability to integrate crypto activities within real-name systems (i.e. whitelist wallets, etc.). This is the most efficient approach to market regulation as governments simply require exchanges to comply with policies and do not need to code the monitoring infrastructure themselves.
2. exchanges provide an infrastructure for supporting government initiatives -- the Chinese government is developing its own POW-based cryptocoin and has shown an interest in licensing ICOs and taxing transactions. And if China closes down all of the exchanges in the country it is a rather good question how it plans to accomplish either.
3. In the absence of a viable way to operate domestically, Chinese exchanges will simply move overseas (i.e. incorporate in HK), at which point they can continue to serve Chinese customers throughout the world without the need to bother with ANY Chinese policies (such as the elimination of zero-fee trades, KYC policies and data-sharing etc.).
What will happen in crypto is exactly the same thing that happened with video-sharing and group-sales: the government crackdown will be used to push uncooperative companies out of the market, and then licensing requirements will be used to tax those companies that remain while ensuring their compliance with the government fintech agenda. The current back-and-forth is part of an intra-government struggle for political primacy over cryptocurrency activities: the reason the big exchanges are silent is because they have their backers and are working to blunt the impact of these policies on their own businesses and the interests of those with whom they are affiliated. Smaller exchanges without this support are screwed and will close, but that is how China works -- it is not a market economy.
I have always wondered why they have tolerated it for so long. My theory was that high ranking party members use bitcoin to move their bribes out of the country.
On the other hand, high ranking officials might have alternative routes.
(This is not the first time, nor the second time, nor the third time, that we've seen the news "china bans bitcoin" or "china cracks down on bitcoin".)