Bitcoin Gets a Cautious Nod From China’s Central Bank

sinosphere.blogs.nytimes.com

10 points·mrb··2 comments

It's unclear that the Chinese government understands that bitcoin is more than just a security you can buy and sell, or a currency that you can wire in a bank.

If someone buys $1M in bitcoin, that money could easily leave the country forever, without the knowledge or control of the government.

Given that China has very strict rules on capital flow - wiring funds out of the country, currency conversion, etc - I'd be very surprised if they are not considering shutting down bitcoin exchanges in China and banning the use of bitcoin for purchases.

If China does not clamp down on bitcoin, that would be a major policy change I'm not sure China is prepared for. And I'm not sure why they would choose to change their policy in this way for bitcoin, rather than continuing to capital markets in a measured pace as they are now.

I think they are hedging their bets and are making a trade-off between allowing their citizens to put their savings into BitCoin and potentially letting them run free financially, and also possibly wresting control of the world financial system away from the Americans. They want the US Dollar to stop being the world reserve currency. If they promote BitCoin they have an opportunity to wrest control of the world's money supply away from the US. To them, a currency that no one controls is better than a currency that the US controls.

I think there's also the matter of the public ledger. An anonymized public ledger is still more information than they currently have with even the yuan about when currency is changing hands and where it is going. I think BitCoin libertarians are fooling themselves if they think the public ledger isn't a major asset to the government, who can now track money from point A to point B if it enters and leaves the BitCoin economy at an exchange endpoint.

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