What they have done is to shut it out completely from the formal Chinese banking and financial system. So much for the debate about bitcoin being a currency!
All joking aside [0], you seem a little over eager to discount Bitcoin in this regard.
Here's my take on BTC's relevance as a currency:
- Its 'success' as a currency in the developed world (in the way we use greenbacks & fiat / Chinese use Yuan in daily life) ...
... on this point, I've never been too hopeful. [1]
This definition of "success" is biased by most of our developed-world perspective. . tldr; - It will likely become 'relevant' without becoming a 'success' in the Western/1st-world sense.
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Observations on why Bitcoin will struggle to become a ubiquitous currency:
1.) This statement from the PBOC - more or less negates its chances in China as being a "first-class citizen" (status) currency.
This comes as no major surprise to me. But, what is surprising is the portion which reaffirmed the legality of the participation in Bitcoin in China ("... Bitcoin transaction as a commodity trading behavior on the Internet, ordinary people have the freedom to participate in the premise of own risk."), as you alluded to in your comment. This more than "leaves the door open." That said, the factors which contributed to this approach are unbelievably complex and probably nefarious (w/regards to BTC's future).
2.) In the USA, I don't see a pressing need for it to be used in the way we know dollars to be used. The reason here is that we have a historically stable system in place.
3.) The volatility of Bitcoin is not, and likely will never be, as stable as most of the fiat units in circulation. This would discourage me from paying my employees in Bitcoin.
4.) Since day one, we have all been apprehensive about the deflationary nature of the currency -- expressing the Keynesian-concern that spending in an economy is vital to the prosperity of said economy.
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With that being said, here is where-and-why I'm long ...
I.) ... because of the international nature of the protocol, one must think about those living in Iran, Zimbabwe, Argentina, Russia, etc.. In those places, I think it has legs as a currency, regardless of state-endorsement. Some of these states in crisis may even endorse Bitcoin.
I believe that perfection isn't sought after in the 3rd world, as confidence has been lost in the fiat systems in place. (This is the reason why greenbacks are so ubiquitous abroad.)
There's also a palpable anti-American sentiment in the third world that could discourage greenbacks' usage by the layman if there were a viable and universally accepted alternative.
But paper greenbacks don't play well with the internet. Bitcoins do. One can argue that you could still use greenbacks digitally abroad, but this is not without large transaction fees, and -- in the case of unstable countries -- there may uncertainty in the bank which is facilitating the financial services.
II.) ... it's nature has melded the idea of a cash dollar and a digital dollar into a decentralized, ephemeral-yet-"trustworthy" protocol. I can honestly say: I'd be a fool if I claimed to have the slightest idea how Bitcoin will innovate and make itself useful as a currency.
So, I actually believe that Bitcoin has relevance as a currency, just not in a way that would make sense to the developed world.
The above is part-and-parcel from Bitcoins as a store of value and other financial novelties, which I don't really have the time to enumerate.
[0] - "So much for the debate about bitcoin being a currency!"
[1] - [and it saddens me greatly, because I'm a Bitcoin fanboy, and I've believed since the early days that Bitcoin is special in many other ways. And no, I'm not a Bitcoin millionaire.]
If you enjoyed this comment - I am releasing a Bitcoin-related service in ten days, and, in the idealistic spirit of Hacker News, I kindly encourage you to add me to Google+ or Twitter, so that you can offer early feedback. @spencenow or https://plus.google.com/+SpencerDailey Thanks! :)
> But paper greenbacks don't play well with the internet. Bitcoins do.
This is simply false. The evidence is all around you.
Bitcoin is composed of two parts: the token and the protocol. The protocol is interesting and useful. It will be most probably integrated into existing currency systems. We are already seeing this type of experimentation with the Canadian MintChip.
The token system on the other hand will be remembered as an interesting digital phenomena the same way we now look back at beanie babies and tulipmania.
It is already functioning as one -- just not a very effective or useful one. So, please be more articulate if you actually want to have a debate.
But thanks for diverting the the discussion by maligning my character.
Looking through your comment history, it's pretty clear that you have a strong aversion to Bitcoin. As someone so blindly opposed to it -- you probably have an ulterior motive too. At least I was forthcoming about mine -> I'm a Bitcoin fanboy and am building a business around it -- which is more than most speculators can claim.
So, what's yours? Because otherwise, you're kind of in need of digging yourself out of troll status. :)
How did I malign your character? I simply stated that since you are building a business based on bitcoin you may not be as objective as someone who has no vested interest one way or the other.
I don't own bitcoins or have any vested interest. It is simply an intellectual curiosity for me. I have no interest in making this personal and I was and am polite to you.
My distinction between this and a more general "form of barter"/medium-of-exchange was written as '"first-class citizen" status' currency.
[1](http://econ.worldbank.org/external/default/main?pagePK=64165...)
So what proponents of this idea are saying is that bitcoin will somehow, magically?, provide these people with not only the know-how of how to use a cryptocurrency but also provide them with these three indispensable resources:
electricity (dependable and stable)
internet (dependable and stable)
computer (mobile or not)
...all before they can then turn around and use bitcoin.
And that the central bank and government of said country will stand aside and relegate its monetary system and control to an outside force.
EDIT: to address your last point, I don't believe that it is within the power of any but the most sophisticated central governments to prevent adoption of a decentralized financial network. Look at the history of file sharing and bitcoin drug markets, for example. Every regulatory action creates evolutionary pressure on the network, and the succeeding services become more difficult to suppress.
When everyone already has the ability to use a cellular phone, the additional marginal resources required for using cryptocurrency are almost trivial. The way most banks operate, they would need electricity, Internet, and computers in all of their branch locations anyway.
If you have neither traditional banking nor cryptocurrency, aiming for the latter offers a bigger return on your infrastructure investment.
Bitcoin isn't going to solve the problem for everyone, but there are definitely people who could get access to bitcoin but not to conventional banking.
Think about all the things you could do with a Twilio account! Better get working on a product for a free and bright future. :)
Examples:
http://www.coindesk.com/bitcoin-and-m-pesa-why-money-in-keny...
I don't have total confidence in bitcoin itself, but I am very, very bullish on cryptocurrency.
This is a ridiculous statement. China's current stance on BitCoin doesn't close the debate about it being a currency.