China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”
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China has exchange controls. Internal yuan cannot be easily converted to euros or dollars. There are limits on capital outflows. The controls are leaky; the classic leak is to send all your relatives to Hong Kong loaded up with the maximum allowed amount of yuan in cash. The current limit is about $50K/year/person. Small leaks are thus tolerated. Big leaks get plugged, eventually. Bitcoin has apparently been moved to the "big leak" category.
(The US does not have exchange controls. If you want to wire transfer a million dollars from the US to Switzerland and buy a house in Geneva, the US has no objection, provided that you report it for tax purposes. Some Bitcoin enthusiasts are unclear on this. Why China has tight exchange controls is beyond the scope of this discussion.)
What's a good resource on this?
Bitcoin is irrelevant, compared to still-tolerated and massively-more voluminous alternatives, for capital controls. This is a red herring.
Bitcoin was fine until ICO promoters started pilfering from the masses. In any case, China is currently loosening its capital controls [1].
This isn’t a problem that can be constrained to China. China is just reacting first. The rebranding of this action away from fraud and towards capital controls is dishonest.
[1] http://www.reuters.com/article/us-china-economy-capital-cont...
Disclaimer: I am not a lawyer. This is not legal nor financial advice. Do not launder money.
I honestly don't know what setup it takes to be reasonably certain to be the winning miner these days - does anyone have stats on how many miners and how often one might be expected to "win"?
Not that it really matters! It's not like I have a few mil hanging around looking for something to do...
You can also invoice hundreds of millions in fake orders. This is how the bulk of exfiltration occurs.
Addressing the rounding error before the bulk means other concerns are at work. I am ignoring, in this argument, that recent policy—preceding these orders—calls for more capital export, to keep down the yuan.
I predict that future startups will probably have a small ICO that is covered under Reg CF, and then a bigger token sale under Reg A.
A technical white paper that doesn't bs with buzzwords, or a business plan filled with marketing fluff?
Think about it. You could spend hours working on a business plan that nobody will ever read. With the ICO route, you can reach an audience like never before.
If you are serious about your endeavour, you should ideally do both.
If you proofed the technical side of your idea, it's good, but if you didn't try to see if their was a possibility to make it profitable, then you are not starting a business.
Who would invest in a business if the people responsible for it are not serious about it ?
> With the ICO route, you can reach an audience like never before.
An audience who can understand your whitepaper and what an ICO is is definitly not an audience "like never before".
You mean like this? http://infolab.stanford.edu/~backrub/google.html
I hope this shows you that I am very serious about the "idea".
But is there even a mechanism here?
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My issue with ICO's is that there is neither a mechanism (in fact it's explicitly barred by law) or even an expectation for a company that executes and becomes profitable, to "repay" the people who bought into the ICO, by repurchasing at a multiple.
In other words, if you raise $1 million on coins, the expectation is that if you use it to become a profitable company, you will not rebuy any of those coins.
In financial terms here is what is going on when you raise money for a white paper using an ICO.
You're in two markets: you're in the market of selling collectible, limited-edition playing cards with cool branding. Theoretically you don't really care about the market for them, because selling playing cards isn't the business you're "really" in. The cards don't represent shares in your company. They just happened to be called Virtual Shares Collectible Playing Cards. And you sell them because you're trying to raise money. The "cooler" your white paper, the cooler the cards. The "real" business is just branding for the collectible cards. But what happens later to the cards has no relation to your white paper / real business. They're separate entities.
Separately, you use whatever funds raised, to fund whatever you wrote about in your white paper. There is no promised or expected flow back from the second to the first thing.
It is literally illegal to do an ICO and say that if you become a profitable business, you will repurchase the coins at a 4x multiple to their ICO price. That is illegal.
So while selling collectible playing cards by branding them with a really cool white paper might be a great way to raise money -- and who knows, the market for them might stay strong for a long time -- it really has nothing to do with the financials of the business you use those funds for.
someone correct me if I'm wrong. where is the flow back from a successful business to the coins? They don't represent ownership. The business isn't rebuying them.
What does the success of the business have to do with the coins they're branding? Nothing, right?
My open source project is now receiving funding/sponsorship from a cryptocurrency company.
I had applied to Y Combinator and various incubators in my country many times over the years but was consistently rejected because VCs didn't understand what I was doing - The founders of many of these cryptocurrencies (especially the more popular ones) actually understand technology very profoundly and so I am having much more luck there. I think that some cryptocurrencies are literally 'smart money'.
Whenever big corporations drain resources from the masses and keeps them enslaved by essentially brainwashing them; somehow that's OK. But when something comes along which offers the masses a chance for a quick (obviously high-risk) escape from slavery, that's a scam?
I don't agree with how bureaucrats spin this; as though people need to be protected from themselves. Maybe the government should ban entrepreneurship too - that's very high risk and very random/unpredictable too.
At one point all crypto had reached $160B in market cap. Not small at all and risked getting much larger.
Lesson #1: if China wants something done they will do it. No courts, no public discussion, nothing.
Don't be surprised if these execs end up in jail.
I'll remind you of how refreshing it is when I drag your family off the gulag without warrant. Its not "refreshing", its scary.
same is as true for N. Korea
Despite the horrors history will offer up, we as a species continue to fail to comprehend the danger of a government unrestrained by its populace. We somehow think that we will create a government that can "move fast" but not abuse its capability to do so while we are proven wrong time and time again. Thus, limited governments ever suspect by their populace are necessary to ensure opinions as illustrated above do not come to bear...
Once you really consider that idea a bit more you may realize it's actually the exact opposite - it's refreshing when a powerful country can't move quickly, can't get anything done fast, and has tons of gridlock due to differing opinions combined with strongly institutionalized laws and procedures. Human beings are terribly whimsical creatures, and institutions that prevent us from acting on our whims and instead force us to go through a thoroughly deliberative process are one of mankind's greatest inventions.
It seems like either you're accusing `Animats of arguing in bad faith or you worded that rather poorly. Or my reading comprehension is on the blink.
I think it is a little bit of 1. China understanding the risks posed by bitcoin capital flight and 2. bitcoin turning from a small community to $100bn+ market thing.
Needless to say this is about all crypto and not just bitcoin.
Cash on hand + Money people owe the bank >= Cash bank owes its customers.
If an exchange is operating in such a manner, this means that:
Cash + BTC on hand < Cash + BTC exchange owes its customers.
We don't call that a fractional reserve. We call it insolvency (And knowingly accepting new deposits in such an exchange is called 'Fraud.')
The executives of the exchanges were told not to try to leave China. Somebody foresaw this problem.
[1] http://fortune.com/2017/09/15/china-shutting-down-beijing-bi...
You can however buy computers and power using INR quite easily. The government won't know what you are doing with your computers and power.
What do you mean? To whom are you showing a paper trail? Do you have to account for cash withdrawals from a bank?
Do you have to show a paper trail if you take out some money from the bank, and use it to buy a motorcycle, or twenty barrels of grain, or ten iPhones?
There is a separate provision[1] that requires the reporting of foreign accounts but I think it's specific to bank and financial accounts. I don't think direct ownership of real estate in a foreign country is required to be reported (as opposed to ownership through a REIT).
[1]: https://www.irs.gov/businesses/small-businesses-self-employe...
you can find friendly shop abroad willing to charge your card fake sale for commission and bank fees, until recently this was petty much unlimited by those 50K USD yearly limit per person, but I think they put there already some limit
there is also 100K RMB per bank card yearly withdrawal limit, so there is that
personally I just maxxed limits of my wife through years to get money outside China even without involving extended family, my own account in China stands on 130RMB now :))
Weighted by volume or capital flow, most markets are 24/7.
And if miners in china close operations won't time between block increase?
Thus maybe BTC is actually responding slower than other market... what do you think?
I'm by far not a keychain expert so I will gladly be corrected if I'm wrong.
However to answer the question: If mining in China went offline, it would affect time to blocks. However, difficulty adjusts every 2016 blocks (about 2 weeks), so if China has 75% of mining, at worst, it'd be 8 weeks before everything went back to normal in terms of block times. Bitcoin Cash actually has mechanism to adjust far more frequently, within a few hours if necessary. (but also subject to miner manipulation)
The bitcoin hashrate has remained more or less the same in last 2 months: https://blockchain.info/charts/hash-rate?timespan=60days
This is in contrast with last 3 months where the hashrate nearly doubled: https://blockchain.info/charts/hash-rate?timespan=180days
Fees peaked around 25th August but still pretty high: https://bitinfocharts.com/comparison/bitcoin-transactionfees...
- 7 day avg of last 3 mo: https://blockchain.info/charts/hash-rate?timespan=180days&da...
- 7 day avg of last 2 mo: https://blockchain.info/charts/hash-rate?timespan=30days&day...
Going from 6 to 7.5 EH/s it's not more or less the same (it's a 25% increase)
Trying to fit models to that picture (or the other way around) seems like trouble, but it stuck out as interesting.
How often have you read "Company XYZ beat estimates -- stock price falls?"
This is what btc was created for, ie such government actions are fundamentally priced and architected in. At least that is what cypherpunk religion is about.
> price fluctuations seem dominated by sentiment
Are these not two contradictory statements?
> Chinese trading volumes now account for only around 5% – 10% of bitcoin’s or ethereum’s global trading volumes. With price there significantly lower.
Price is determined by market forces, and the Chinese part of the Bitcoin market is relatively small. So it makes sense when this type of news doesn't really impact it.
If the only people dealing with Bitcoin are the people trying to prop up Bitcoin then it makes sense why the price isn't affected much in the long run. The loyalist have no plans to dump their Bitcoin (and realistically couldn't if they wanted to) and there are not really any normal traders in the system who would buy and sell things like this based on actual value.
I understand arbitrage so I'm sure there's a step I'm missing, and I know there's often a delay between the order and fulfillment, fees etc, but a 21.5% spread between Huobi and LakeBTC seems like a lot.
>The impact of the Chinese ruling on LakeBTC is limited. The only major change is that our services to all Chinese citizens will be suspended. LakeBTC is a legitimate business which follows applicable laws and regulations.
Source: https://www.lakebtc.com/p/9352
The type of arbitrage you described has been going on for years, especially for ETH where 20% price differential isn't uncommon at all. The difficult part, however, is getting money in and out of China without raising suspicion. By the time you have paid off all middleman the margin isn't that great anymore.
https://www.google.com/amp/www.telegraph.co.uk/business/2017...
http://www.telegraph.co.uk/business/2017/08/15/chinas-debt-b...
Do you think real estate can really be sustained at it's current levels? Much of it has been bought as a speculative asset (no property taxes makes that easy) with the idea that it can only keep going up because of urbanization. However, farmers are generally poor not rich, it is not clear where the "bigger idiots" are going to come from.
China's tax burden is already high for those that pay them. Going after those that don't at the high end is difficult because they tend to be officials or highly connected to officials in the first place.
The housing market may crash: I was talking about the claim that economy in general crashing. But I think the PRC might see a housing market crash as desirable, as it would raise the standard of living for most citizens. They certainly seem bent on slowing it down. https://www.reuters.com/article/us-china-economy-property-in...
China does have economic problems, but they are more problems of political will, not intractable from a strictly economic perspective. The solution involves the country's elite taking a haircut.
Now maybe the argument is that in a crisis this would all become sovereign debt (i.e. the government would bail the companies out and assume their debts). But that has its own issues, including the need for higher taxation to service the debt.
- promise to block all VPN services from accessing blocked website
- law to hold chat group owners responsible to what the members say (controverse political talk or gambling for example can lead to arrests)
- most of casual barbecue that were held in the streets last summer have been forced to close this year in my area
- tightening and more scrutinity on visa applications for foreigners (there has been some abuse so this is legitimate)
- more random drug tests and work visa checks on foreigners (again there are many illegal teachers so can't blame them)
- ban of many cheeses (like blue cheese)
- ban of Winnie the pooh from social media following a picture mocking Xi as looking like Winnie
China is getting more and more authoritarian and strict. Some of these moves are because of the big party congress in one month where Xi is excepted to renew his term
Is drug use high among foreigners or is that just a harrassement control to keep them in mental check, so they fear the unpredictability of the government and the power they hold over individual fate?
Not only might that logic work in China too, but the culture is less tolerant of a food-stuff what is after all curdled milk with a fungal infection. (And we in the west get grossed out by chicken feet!).
Raw milk products are certainly not as safe as pasteurised products but many people are willing to take the risk to enjoy the product.
But blue cheese, many blue stuff is banned in China, not only cheese.
http://www.independent.co.uk/news/world/asia/chinas-pollutio...
It happens but it's still pretty rare
The scary thing is that if you are tested positive I believe you would end up in jail for a month before getting deported, even if you consumed legal drugs in your country (ie cannabis)
If you deny to take the test you would definitively be in trouble, at best you would get deported
This would probably happen in many countries. If I were to smoke cannabis legally and this showed up in a drug test in the US (e.g. stopped while driving) you could also be arrested as a foreigner. With many drugs the effects are not as clear as with alcohol, a test can show up positive even though effects are long gone.
For example, I think the Venezuelan leadership has made crazy decisions that are being borne out now.
But, I would not put a ban on BBQ in that same category.
Look at the way the word is used in this context. "Crazy regulatory..." That doesn't insult the culture or people, that's specifically talking about regulations. It's widely accepted that laws can be "crazy", i.e. silly, stupid, unreasonable, in every country. It's not a personal attack on the people.
Contributed to ruin...wow
It's even anachronistic, the concept itself is recent: https://en.wikipedia.org/wiki/Totalitarianism
1912 - National Assembly elections
The 1912 election was for the Nationalists upon overthrowing the imperial system. However China transitioned into a period of warlord rule immediately and the National Assembly never had any control over anything except in theory on paper until Taiwan transitioned to democracy in the 80’s and 90’s.
https://www.amazon.com/Chinese-Democracy-Guns-N-Roses/dp/B00...
Dong Xiaojun, Lin Renfu, Wang Peiwen, Tian Daomin, are among those identified who have been crushed by tanks.
Older list: http://www.hrichina.org/en/list-155-victims-beijing-massacre
More troubling is you don't seem to know what happened in Tiananmen square, are you in China?
https://www.theguardian.com/world/1999/jun/02/china.johngitt...
We are talking about the people who were crushed by tanks in the square.
Really, most were shot, which is how I'd deal with a trouble maker being filmed like tank man.
But there is evidence of tanks crushing people as per my link, which is WHY tank man is famous (plus he was photographed, other people did do it too).
Are you doubting tanks rolled over and killed people?
I think one thing causing the apparent increase in political discontent in the US is the increasing metaphorical distance between congress and the people. Now imagine if you increased our population by more than 400%, had Hawaii declaring independence, and various states trying to separate either to go completely independent or join Mexico or Canada. And now of imagine that a coalition of China, Russia, Iran and other unfriendly nations were constantly posturing towards an invasion of Mexico which would put them right at our doorstep while their motherland remains far out of reach.
I'm in no way defending China, but I think it's safe to say that the level of authoritarianism we would respond with if we hit even a fraction of the issues they're facing would be unlike anything the world has ever seen. Our current political systems and technologies, regardless of specific political ideology, do not scale well.
That said there is one macabre issue that benefits China. About 50 years ago Chinese were starving to death by the tens of millions. While perhaps controversial, I think contentedness paradoxically breeds discontent. Consider in the US that much of the political discontent is heavily centered at some of the most privileged areas in the nation. We can wax poetic about justice and the nuance of social interaction. People struggling to just get by have more immediate issues to deal with. China's successful industrialization of their nation is already producing an increasingly large contented class to whom the struggles China has had are as personally familiar to them as the lynchings or Cold War of US history are to us. That newfounded contented class is likely to spark discontent towards the very actions that provided their luxury - and China will have to manage that somehow.
Can you map these metaphors to their counterparts in China?
If you or anyone knows, which territories are trying to join a neighboring country?
A comparable situation for the US might be native Hawaiians campaigning for independence, while the majority population just doesn't care. There are probably such groups already, they just haven't resorted to violence enough/encountered a strong enough reaction by the state to become notorious.
Also, the comment you are responding to complained about all of three pro-bitcoin comments (Two top level) that were all posted less than 3 minutes before his.
This seems a little unfair to me as it's possible that this thread was likely buried (hence no replies for >1h) and just surfaced to the top of HN.
I speculate there's a lot more resentment on HN towards cryptocurrencies than you might expect.
I can "conceive" of many categories in which the US is less totalitarian: freedom of speech and of the press, judicial independence, not having to show ID to buy train tickets or prepaid SIM cards, freedom of assembly, severity of punishment for minor drug crimes, ...
The US isn't perfect, but let's not exaggerate.
There is an upcoming contentious hard fork in Bitcoin called Segwit2x. It activates in November and is supported by some miners and a number of Bitcoin companies. Those who oppose that hard fork believe cutting China out of the network will cause the proposal to fail.
Segwit2x was a compromise between Bitcoin providers and the very miners that China look like shutting down now - primarily Bitmain, who many believe are also behind, or in control of, the previous bcash bitcoin fork. The compromise was activating Segwit in exchange for miners getting their wish of a 2MB block size increase. Segwit has since been force-activated with a user-activated soft fork - so many feel the compromise is now not necessary and presents many risks.
[0] https://twitter.com/stefanobernardi/status/91023339225132646...
No serious government cannot allow it's monetary policy to get out of control. And no one will.
As long as bitcoin were an aberration it had been tolerated. Not anymore.
Would be interesting to see if that activity picks back up.
Not always the case, and sometimes the floor drops - but it was a good market for quite a while - especially for chinese investors that wanted to diversify their holdings.
Last time I exited this market (2008), lowest tier 3L.coms were selling for $3k
From what I remember, the 3Ls were somewhere around 10-17k? Depending on premium v non-premium & specifically domains that are attractive to Chinese.
As the article mentions, miners have expenses to pay which are likely funded by bitcoin conversion to local currency, if they can't operate in China (especially favorable because of inexpensive power) the controlling nodes will be moving or shifting to other mining firms.
It is good that China is taking steps to regulate the cryptocurrency world (starting with an outright ban, I guess) Especially the ICO's, which are mostly scams, and even those that aren't should probably be treated as securities.
Bitcoin (and other crypto-currency) exchanges also could use some regulatory oversight - if you watch the order books even on US-based ones like GDAX there's non-stop spoofing and other trading illegalities that would normally get you banned from any exchange and perhaps land you in jail in a jiffy.
It will be interesting to see what happens if we lose the China hashing capacity. If that happens (and it looks like it already is), we will have slow blocks until the next difficulty adjustment.
In general the more of this sort of thing happens, the better it validates the Bitcoin model. What doesn't kill it makes it stronger.
Really? It's a "communist" country. If anything, what's surprising is that it took China this long to start cracking down on Bitcoin.
Bitcoin algorithm automatically adjusts every 2016 blocks, to make the average block time 10 minutes. If the number of miners drops, the algorithm will adjust the difficulty of finding a 'good' hash. Meaning as an individual miner you have a better chance of finding the correct hash, but the overall network has the same rate.
If Bitcoin transaction rate would be significantly reduced for weeks or months, would that kill it in the sense that Litecoin or Ethereum would take over?
The transaction rate would only be affected for a max of two weeks as I understand it. As for how the 'market' would react if all Chinese miners dropped out, I have no idea :)
/s
-Mahatma Gandhi
First they ignore you, then they laugh at you, then they fight you, then you are never heard from again.
- First they ignore you. Nobody ever notices you.
- First they ignore you, then they laugh at you. Nobody takes you seriously.
- First they ignore you, then they laugh at you, then they fight you. You lose.
- First they ignore you, then they laugh at you, then they fight you, then you win. Congratulations! Now who are you ignoring?
ISTM you need to have a plan for crossing each of the three filters, rather than saying "they're fighting us, therefore we'll win".
EDIT: It's even funnier if you realise that the quote is symmetric and using it as an argument also proves its opposite. Activists often sub in government/"the system" as the "they", but activists could be the "they" from the system's perspective. They start by ignoring the system, then mocking it, then fighting it, then the system wins?
So to prevent: "Damn, they are ignoring me, I might as well give up".
This is more of just hiding it outright, I think?
Says whom? I imagine anyone who got rich legally in China would also try to get the capital out and diversify in more developed countries.
Capital controls: I have loads of money made legally but I want to move it offshore. The government won't allow large amounts of money to leave the country so I need to find a way around that restriction. For example by buying a bar of gold locally and shipping it out.