Chinese government says Bitcoin cannot be used as currency | Hacker News Reader

Chinese government says Bitcoin cannot be used as currency

techinasia.com

37 pointsMKais30 comments

This was very much expected as China has strict financial liquidity controls and bitcoin was being used expressly to bypass the same and take money out of the system. The Chinese government isn't stupid.

Yeah, no sane person would have expected BTC to become legal tender in China soon. Very nice that they acknowledge BTC and say that trading it is fine. This is really good news and the article is just trying to make up a negative story.

Sure, they acknowledge it to be on par with WoW points. They can't stop people from bartering with it, just like they can't stop people from bartering with chickens or eggs. What the central bank has done is shut bitcoins out of the formal Chinese financial and banking system.

Which means it is an interesting digital phenomena but definitely not a currency.

"Liquidity controls" meaning what? Preventing Chinese from buying non-Chinese products+services with yuan? Or from moving USD out of China?

If yuan are hard to spend, due to legal constraints, I don't imagine a non-Chines is willing to sell BTC for yuan.

How would a Chinese use BTC in this way? Buy BTC from someone willing to accept yuan; spend the BTC on .... foreign goods mailed to China? Foreign assets, to "park" the value for a while ?

I think you need to read between the lines.

The fact that five Ministries and departments inserted themselves into this declaration suggests that the Bank of China is not strong enough to unilaterally ban bitcoin beyond what we have seen here: fairly sensible restrictions on BTC investment and holding by financial institutions.

What we are witnessing may even be a regulatory coup of sorts by MIIT, the Ministry with the most obvious interest in promoting bitcoin and the strongest claim to serve as regulator of it and other "virtual commodities".

Some people will sell, but in reality this is a great time to buy assuming the price slumps a little.

Is this current crash related to this news?

http://bitcoinwisdom.com/

It is impossible to definitively give a reason as to why something as uncontrollable as Bitcoin changes in price.

But yeah, probably.

Well, if ever it were possible to definitively give reasons, this would be the time.

When you have, on the same day:

a) Greenspan's announcement saying bitcoin is a bubble, and using the "no intrinsic value" argument

b) China effectively banning bitcoin (not that we have the specifics to say that "ban" is the best term yet)

...it's not going to do wonders for the price.

Both (a) and (b) have been stated forever. (b) was just common knowledge, clarified with an official announcement today.

Yeah, but Bitcoin's price is not based purely on logic. It is also based on emotion.

I am still waiting for bitcoin to crash.. it going to be fucking epic..so much fun

Schadenfreude?

No, they feeling of being verified for what is a very obvious belief, compared to people going for the gold rush like fools...

For ever fool who loses money in the gold rush, there is a genius who made money.

By betting against the fools.

>For ever fool who loses money in the gold rush, there is a genius who made money.

Emm, this is not how a "gold rush" works.

The whole idea is that there were far more fools who lost money than geniuses who made money. If it was a 50% chance (1 foul for every genius) it would be a pretty damn decent proposition).

Not to mention that those (far fewer) who made money, made them by betting against the fools, and selling them shovels and stuff.

> For ever fool who loses money in the gold rush, there is a genius who made money.

More accurately (but still drawn with a broad brush),for every 1,000 fools who lost $1000 in the gold rush, there is a genius who made $1,000,000 selling shovels and services to the fools (and a bunch of people who were gainfully employed by that genius who would have been gainfully employed doing something else without the gold rush and didn't really gain or lose financially.)

This seems to be a way of saying that, unlike USD which has a controlled exchange rate on the public/legal markets, you can't just pay your bills in BTC because the person you are paying has no way to determine what the BTC are worth, so you have to covert them to official currency.

What other decision is possible? To have an official govertment exchange rate posted for banks to use? That would be insane, with BTC's volatility.

Can Chinese use pesos for paying mortgages and investments? Is BTC different from any foreign currency in this regard? (Except perhaps USD, which are special)

Ummm...good luck with that China.

Good luck? It's a done deal.

What exactly does that mean? Is it illegal to, say, pay for a house in eggs (I give you 1 million eggs for this house)? Any kind of barter is illegal?

China has a pseudo-controlled economic system. Coupled with the reality that most Bitcoin transactions are traceable, this law effectively kills Bitcoin as a viable currency in China — for now.

You can't reason with the guys with the guns.

In addition of other comments about Chinese economic control.

There is plenty of regulation for bartering in most countries. Like for a house, you local IRS will have something to say if you exchange your house and dodge taxes like that.

Taxes is the key issue in our economies.

Sure dodging taxes is of course illegal. But you don't have to dodge taxes just because you barter.

>Any kind of barter is illegal?

Don't know the situation in China, but that already holds for some countries.

E.g in my country, any transaction over a certain amount of money (not very big), has to be done through a bank to be legal.

Well, effectively, it means that banks are disallowed from treating it like a currency. So, you could still trade a house for bitcoins, just as you could eggs, in theory, but what you can't do (again, same as eggs) is go to the bank to take out a loan in bitcoin to buy the house.

You also can't make payments on a loan with bitcoin, store bitcoin in the bank or expect to accumulate interest (by the bank, disregarding proof-of-stake-type currencies), etc.

Currency and barter transactions are very different things. Currency transactions are based on credit, barter transactions are based on trading commodities without any intermediary.

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