So the PBOC is taking further steps to plug the leak. Not unexpected.
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.)
The situation is very similar in India. You can't just convert INR to USD freely. There's a limit of $250,000 per person per year. I don't know if anyone mines bitcoins in India (because of horrendously expensive power), but if they did, they'll be subject to similar scrutiny.
Hey bitcoin miner! Power is one cost but I've always wondered about other costs at scale like hardware and labor. Devices tend to wear out after a while, bitcion mining seems quite intensive, how does this kind of issue effect your buisness / profits?
Just pointing it out... you don't need to mine the coins in the country to assist Indians (or anyone) in converting their currency to USD beyond the normal limits. So the price of power to mine the coins doesn't really have much to do with it.
How do you mean. So how can I buy bitcoins that aren't mined in India using INR. I probably will have to convert INR to USD by buying USD in India and then buy BTC using USD. No ? Some Indian BTC exchanges might be wrapping these transactions under the hood. No ?
You can buy bitcion offline. You meet in person with someone and hand them cash and they give you an address. wouldn't do it for huge sums because of the risk, but it is a common thing in the US at least.
> Buying BTC using INR is as hard as buying USD using INR since you need to show the paper trail.
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?
Is the control on the yuan really that tight? How are Chinese citizens able to buy such a massive amount of premium Seattle/SF real estate with ease? Isn't ownership of foreign real estate a big leak?
Real estate purchases are one of the exceptions carved out where Chinese citizens are able to take more money out of the country. That's part of why it's so popular as an investment, because it's one of the few ways to move large amounts of money out of the country there's almost always another rich Chinese person or real estate speculator willing to pay the massively inflated prices which then gives the owner money outside of China.
I suspect (tinfoil hat on) that the whole spiel about "capital controls" and the bitcoin thing are a clever strategy to make people buy up lots of foreign real estate instead of virtual internet coins.
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.
It's refreshing that a country can act this quickly even if we don't agree with the action. In many countries this would require several meeting of understanding, a dozen committees forming sub-committees, accusations of corruptions and biased interest and several related court cases, and endless other shit. IMO it's actually a very smart move, to ensure a fair and complete dissolution, and if those execs dont have the bitcoin to distribute back to participants (i.e. they've been speculating or liquidating client BTC) then they're going to jail. China doesn't want the egg on face that Mt.gox / Mark Karpeles caused.
First off - no one has been dragged off, they are merely preventing the exchange operators (that are originally resident in China anyway) from leaving the country until they execute an orderly shutdown. i.e. No holidays for now, we don't want you doing a MarkK. Also, we are talking China here not NK, but don't let the facts get in the way of your point. Btw, you do have "temporary injunctions" in other parts of the world too.
That may all be true in this instance, but previously, executives have been executed for various things. The story I recall was some sort of fraud, but who knows what the real reason was. I don't have a reference handy unfortunately.
you're espousing the benefits of autocratic control. I am describing the trade-off.
Sure, maybe China isn't dragging people off to gulags today but the point is that autocratic control means they can if they want to.
Not almost, there are whooping 48 or 49 naturalized Chinese citizens who got citizenship through means other than marriage since the naturalization law was introduced 1998
Do you think there'll end up being due process with this approach? And fair trials? I wouldn't be so quick to endorse a dictatorship's approach to law and justice.
>It's refreshing that a country can act this quickly even if we don't agree with the action.
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.
Thank-you for illustrating the reason we have elected, republican governments in the west and in addition have a non-popular voting system for the president in the United States(I don't mean the party of the same name, I mean the style of government).
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...
How is it irrelevant? You can buy Bitcoin with yuan, transfer the bitcoin to a foreign exchange, and then buy another currency like the US dollar with the bitcoin, thereby circumventing capital controls.
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.
The difference I think is that bitcoin allows someone with no connections to bypass capital controls. I'm not saying bitcoin isn't a rounding error, I'm sure other priorities (like ICO scams) are at work, but that might be another point.
But someone with no connections would presumably not have that much capital to move either, right? They'd not move much volume even if they bypassed capital controls.
It can be dangerous though. If suddenly several million citizens start transferring small amounts you can easily get outflows of several billion USD a month. Done by a few that would be an amount easily noticed.
How do you buy the bitcoins without the state tracking you?
FYI the US is doing that also, you cannot buy on coinbase without providing ID... they want to be able to track big buyers.
You could mine, even if it was unprofitable. Spending 10 million in mining costs to produce $5million in bitcoin is still a win for a lot of people trying to move money out of China.
Does that work - I think the mining reward is 25 BTC, about 75,000 USD. So for 7.5million thats being the winning miner 100 times.
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"?
The stats don't really matter, because the market is designed to equilibrate the price: it costs 7.5 million to mine 7.5 million's worth (in expectation, net present value and all that), and always will. If you're worried about reducing your variance you can join a pool rather than mining directly.
At a guess we'd be talking 6 months - 2 years - my vague memory/impression is that's roughly the timescale on which mining hardware goes from new to worthless. If you're more vertically integrated in terms of buying datacenters/chip fabs/what-have-you then I'd imagine longer.
You can mine in a pool that distributes the pool's winnings proportionally to hashpower to its members. You don't need to actually mine any blocks on your own.
China breakdown on exchanges has begun before the ICO rage. Top exchanges did hold crpyto withdrawals for all their users for a long period of time (several months).
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.
Well, we're going to find out very soon. As the Bitcoin exchanges in China shut down, they're going to have to pay back all their customers. "Platforms should also tell the government by Wednesday Sept. 20 how they will allow users to make withdrawals in a risk-free manner and handle funds to ensure that investors' interests are protected."[1]
The executives of the exchanges were told not to try to leave China. Somebody foresaw this problem.
ICOs are a perfectly valid way to raise money. In fact, as long as you don't raise more than the cap specified by Reg CF ($1,070,000), it's no different than crowdfunding.
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.
> A technical white paper that doesn't bs with buzzwords, or a business plan filled with marketing fluff?
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".
I hope this shows you that I am very serious about the "idea".
But is there even a mechanism here?
---------------------------------
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?
This comment only got down voted because the traditional VC crowd is upset that something has come along which can disrupt their tight funnel which gives them a monopoly on venture capital and the corporate acquisition pipeline.
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.
The corporate brainwashing angle seems a bit far-fetched. I'd rather compare it with the endorsement of savings accounts with a 1% rate of interest and useless things like that.
Why does corporate brainwashing seem far-fetched to you? It happens all the time. Advertisements are all about brainwashing common people to buy things they don't really need.
I think what your GP is arguing is that corporate advertisements are symptoms of a diseased economy, where much of critical infrastructure, luxury & healthcare is controlled by the few.
When you use words like "enslaved" and "brainwashing" incorrectly (and extremely hyperbolically) like this, it dilutes what might otherwise be a relevant point.
ftlio is right, but another reason is Taiwan. Someone can correct me if things have changed - a lot of Taiwanese businnesses have strong links to the mainland in the form of manufacturing facilities, and so on. China encourages these links with one big stipulation: these Taiwanese businesses cannot transfer their funds out of China. Why? China considers Taiwan to be a renegade province that it would like back just like Macau and HK. It will do almost anything to make that a reality i.e. influencing elections, tempting and pressuring the business sector, etc... It's such an emotional issue that I feel even a costly invasion would be on the table if there was enough provocation from pro-independence factions in Taiwan
My understanding was that between debt purchasing and exchange controls, China can keep the yuan cheap and demand for their exports high. I say 'was' because it's been a while since I tried to grok China's economy.
it's just that bitcoin was pretty anonymous, but there are more convenient ways to get money outside if you wanna avoid wire transfer through Chinese person
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 :))
In your US example I don't think you have to report anything. Buying a house in Switzerland wouldn't require paying any US taxes. If anything, you'd have taxes on the original source of the money (if it's income) but that has nothing to do with the house purchase.
Not sure about the US but in many countries you'd still have to report it. For statistical reasons (so that economic indicators can be calculated properly) and to avoid money laundering or terrorism financing rules (the Swiss hotel could be owned by someone on a black list).
(In the US), once you've got a million dollars of clean money in the bank, it's already been taxed and reported by everyone who has an interest in it. I'm sure that someone somewhere would take notice if you suddenly send a million dollars to Switzerland, but there's no reporting requirement here for something like that.
I don't think the US has any obligations on the part of the client for those situations. Banks would have AML (Anti Money Laundering) rules that would require confirming or reporting certain transactions but as an individual you wouldn't have to file any papers yourself.
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).
What's interesting to me is that no amount of bad news appears to affect the price of BTC. I'm not a professional or amateur trader (I've got no position on BTC at all) but the price fluctuations really seem dominated by sentiment over any sort of fundamentals.
It does seem to have some effect. Bitcoin "crashed" last week quite a few pecentage points (see https://coinmarketcap.com/currencies/bitcoin/#charts click 1M or 3M and see September 15th). Like stocks though, it is always hard to pinpoint why, because it's a market with lots of different opinions.
Wouldn't sentiment based fluctuations smooth out over the maturity of the instrument. Bitcoin is an infant compared to stocks... so volatility will be 100% based on youth/ignorance/fear of what is happening with said insturment
Here's another way to look at it. If I have a stock which has bad news, I need an exchange to panic on. No exchange? Then no way to dump the stocks. So if Chinese are thinking of dumping bitcoin on account of the bad news they need liquidity to do so. Currently with all (most?) exchanges gone where do they, if they really want to, dump their bitcoins? On that note it did go from 5k to current price.
This point is so chronically under-appreciated. And it doesn't even have to be "no exchange" -- it can be "high friction at the exchange" or "overwhelming tax burden to covert to fiat."
Maybe the GP reads the word 'sentiment' as the root of 'sentimental' and interprets it as only referring to good sentiment, a synonym for rose-colored glasses?
Trends have been more or less identical for Bitcoin, Ethereum, and Litecoin over the past month or so. The following picture only spans a week, but it shows the exact same rise and fall in prices for all 3 -- https://i.imgur.com/GjsCMUZ.png.
Trying to fit models to that picture (or the other way around) seems like trouble, but it stuck out as interesting.
> 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.
It's a 24/7 market; the price responds a lot faster than other markets. So looking at day-over-day price isn't a good gauge. Additionally, by the time a story is known at large, it's usually been known for a bit among those who follow Bitcoin, so you'll see it already priced in.
I think their point is that while most investors in e.g. equities (stocks) regard out-of-ours trading as "not counting" because it's a much smaller volume than in-hours trading, the amount of money that moves into or out of stocks in out-of-hours trading is still much larger than the amount that moves into or out of bitcoin (at any time). So it doesn't really make any sense to say that stocks are a 9-5 market and bitcoin is a 24/7 market.
Foreign exchange, many government bonds, even some institutional bond markets—none of these have a single exchange and thus all trade 24/7. A minority of markets, e.g. the public stock markets, have “market hours”.
Time to generate blocks isn't the same as what happens to price. They are loosely correlated, but not the same thing. Price is as much psychological as technical.
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 exchanges don't typically create a blockchain transaction when you trade, so block mining times do not factor in here. It's just an open market with buy/sell orders that anyone can place at any time.
This doesn't happen in real time, but adjusts every 2016 blocks. So loss of hash rate will temporarily affect block generation time until the next adjustment.
I view it more like the war on drugs. Cracking down on cocaine at it's source basically just increases the value thus price. If the mining slows, it will just mean there is more money in mining.
But in the long run, this won't significantly affect the supply of bitcoin because the hash difficulty will just adjust, right? That's in contrast to cocaine, where the crackdown may very well lead to long-term supply shifts, causing the price to rise. But I guess maybe if a significant amount of coins get trapped in accounts held by Chinese citizens, it would make a difference.
>no amount of bad news appears to affect the price of BTC.
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.
I think it's worth remembering that Bitcoin is not a real currency or commodity yet and has little real value. The only value number we can put on it is the number that the hardcore loyalist place on 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.
BTC noob here, please forgive me. My understanding is that you can send from any wallet to any other wallet, right? So what's to stop me from having wallets on both Huobi and LakeBTC, buying a BTC on Huobi for $3524 then transferring it to my LakeBTC wallet and selling it for $4282?
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.
It's still an option now, however it looks like they too will lose banking access in China soon.
>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.
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.
- 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
For anyone reading this and thinking "wtf, no barbecues?!?", this is ostensibly some kind of anti-pollution measure to combat the extreme smog in China (though in practice likely just to make people think they are taking the issue super-seriously while refusing to address the actual problem).
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?
My guess is food safety. Not quite real food safety, but also not made up. Some European cheeses are not available in here Australia because of regulations about how dairy products have to be processed (Pasteurisation I guess).
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!).
True, and in Australia that could be somewhat plausible case that it is protectionism. But in China probably has no cheese-protectionism lobby. Though I suppose it might just be someone angling for baksheesh.
No, cheese from raw milk is not banned in the US. There are various regulations on it however. The raw milk cheese has to be aged at least 60 days and labeled as unpasteurized.
In the west we eat a lot more chicken feet than people think. Nearly any decent chicken stock is going to be made in part with chicken feet as they provide a lovely gelatinous component to the stock.
Only if you are unfortunate enough to be in a bar which gets raided at the wrong time (ie bars which are believed to have had drug dealers or drug users in the past) OR if you were in contact with a dealer who got busted.
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
> 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)
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.
I'm by no means an expert on this, but the timing for several of these likely relates to the once every 5 years National Congress of the Communist Party of China occurring next month. There are competing factions, and it's probable that some of these decisions benefit one over another.
To me, calling them "crazy" is insulting to their culture and people. For the label to be justified, you'd have to argue the action contributes to ruin.
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.
No you don't have to argue that, what on earth are you talking about? Good god...
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.
Can you give any more details on "China's economy is crashing"? I must admit I haven't heard anything negative about their economy, thought it was on the up and up.
It's not all sovereign debt. The amount of debt owed by Chinese companies has also been exploding over the last few years. It's possible they're taking out all that debt to make productive investments, but the analyses I've seen suggest that there's way too much debt for that to be the case.
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.
That's not how government debt works. There is no ceiling on the amount of debt you can have except in extreme cases like 2-3x debt to GDP ratio which China is nowhere near. Government debt is really just a record keeping system for funding and not really debt like you and me have. Look up US debt and how it works to fund the economy.
Velocity is important. China went from no debt to 2X in less than a decade. If they are 3X a few years from now, how will that work. They have to deleverage somehow, or at least stop the growth.
From the PRC's perspective, the yuan is a just a tool to stimulate productive activity in their population towards the goals expressed in state budgets. If they can muster the political will, they can simply levy highly progressive taxes to reduce inflation and keep on spending. There is nothing stopping them, ideologically.
If growth is mostly currently debt fueled, that growth can easily stop and reverse when the debt is pulled back. Recession at best, depression at worst, definitely there will be a few crashes along the way.
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 purpose of the growth, from a governance perspective, is to keep the population satisfied through a rising standard of living, and to continue to develop the country through sane budget allocations. They can continue to do that using debt, because the only risk from doing so is inflation, which they can keep low with taxes on the present debt holders.
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.
It is difficult to see a case where housing crashes and the economy in general doesn't. They see a housing crash as desirable, for sure, but too much economic activity right now is tied up in real estate and infrastructure investment, they know how painful it will be. So they keep pumping up housing....
If you understand the population distribution in the PRC, have spent time in a Tier 2 or Tier 3 city, and think deeply about economic growth, the idea that the Chinese economy could "crash" is laughable: there is a vast pool of emerging customers that will continue to fuel growth over the foreseeable future. The question is whether global trends, especially related to climate change driven instability, will interfere in the emergence of the socialist/communist market economy. If you find a contradiction in the conception of a socialist/communist market economy, check Dominic Losurdo's
"Has China Turned to Capitalism?—Reflections on the
Transition from Capitalism to Socialism" published in the March 2017 issue of International Critical Thought.
Although a Socialist (using this in the sense of lower-stage Communist, rather than as Marx used it as synonymous with Communism) market economy can be practicable, China does not have it - most notably because there is wage labour and private property is protected by the State. The State is also not in democratic control of the workers. These rule out China from being either a Socialist country or having a Socialist (market or not) economy.
China's fast descent into totalitarianism is fascinating and scary. One can easily replace 'bitcoin executives' with 'foreign executives' or 'foreign assets' and see where this is going. I wonder if those companies that choose to outsource all the jobs in their country to China realized what they've done.
I think people tend to gloss over the fact that China has a population of more than 1.4 billion people in a land area that's slightly smaller than the US, multiple territories in outright revolt, ongoing territorial conflict, some cities that are approaching inhospitability due to environmental damage, and our increasingly aggressive nation is something less than friendly with them.
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.
>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
Can you map these metaphors to their counterparts in China?
I believe it’s the western states which are in rebellion, which have significant Muslim populations. North Korea is being threatened with invasion and China is encircled by US allies and military bases.
I wouldn't call the situation in Xinjiang or Tibet a rebellion. There are independence movements of some importance, but AFAIK the majority population in both regions are Han Chinese by now, who have much less reason for separatism.
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.
You are really overestimating the substance of the native Hawaiian independence movement. The vast vast majority of people living in Hawaii are not even native Hawaiian to begin with. And even most local Hawaiians don't want independence from the United States. It is really a tiny minority offshoot with some specific political grievances. Independence isn't even seriously floated by the majority of these independence folks. The whole idea is just a political and marketing tool except to a very small group of people.
I'm telling you right now... Let there be no illusion that Hawaii would or could ever declare independence from the mainland. Hawaiians wanting independence are a tiny minority, and even they realize that the residents of Hawaii have basically a three-way choice: The United States, Russia, or China. Hawaii is far too liberal and American and really everyone underestimates how much American military force is there on those islands. It ain't going anywhere without a fight that almost no one else can win.
There was some democracy in the late 1800s to early 1900s. But it didn't gel with the Confucian ethos. Stephenson's Diamond Age is actually pretty informative.
The first was a last ditch effort by the Qing dynasty to retain power with the election of powerless feel-good provincial assemblies. Even if they had real authority, which they did not, only half a percent of the populace had franchise. Not a democracy by any means.
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.
I think by outsourcing to China or entering the Chinese market, those companies are making a conscious decision to accept the risk, which is that what is perfectly legal and fine today can suddenly be illegal and hated tomorrow. Also, you can't expect any fair fight in China. Quanxi and lobbying the established politicians and tycoons is just part of any business.
If you mix up monarchy, empire, dictatorship, etc. all in the same bucket and call everything 'totalitarian', our ability to think about politics gets rather reduced.
I mean, I guess they could have crushed him later. But you can watch the video - he wasn't crushed after standing in front of the tank in the iconic photo.
That assumption doesn't seem to be very well supported by the comment you are responding to - what makes you think they don't know what happened in Tiananmen?
It's a lot less charitable than "OP was probably referring to the fact that video evidence shows tank guy being pulled away out of sight before the tanks continued past the point where he had been standing, rather than showing the tanks just rolling over him as that comment kind of implied". If you're going to be very careful to correct people who assert that the guy wasn't crushed, you need to jump on people who say he was crushed too, or you look like you're using the argument as an excuse to attack someone rather than being deeply invested in correctness.
If you follow Bitcoin politics you'd know that there is a large population of Bitcoin users who like this decision[0][3][4].
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.
Here you go: Have you ever heard of capital flight from Russia? Oligarchs sell oil then then purchase houses in London or Manhattan. The country is gradually hollowed out. China, OTOH, is trying to keep the money at home.
China might have an easier time discouraging capital flight if it weren't the sort of place where entrepreneurs have to worry about their entire industries becoming illegal and possibly finding themselves in jail overnight.
Well, for a country that doesn't want capital flight, anyway. I mean, you want those capitalist rats to know that they'll go down with the ship, after all.
This isn't driven by Communist ideology; if it were, we'd see a return back to Mao's vaguely Marxist policy, not a continuation of Deng; the Chinese are fine with capitalists.
In almost any category conceivable (police presence on the streets, incarceration weights, bureaucratic oversight), the PRC is significantly more libertarian than the US. It is true that the CIA has invested a tremendous amount of energy and money into political issues designed to delegitimize the CCP -- Tibet, Falun Gong, and Taiwan. Liberalizing speech around these topics would likely be more efficient counterstrategy than the current approach, which is a remnant of an older model of socialist statecraft.
"Any category conceivable" here means "a bunch of categories I cherry-picked."
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, ...
Libertarianism depends on the rule of law. A central party system where the government always has total authority and is exempt from even the rules it sets is kinda the opposite of libertarian.
Why would it? The govt let's you go to casino, I should be allowed to do what I want with my money. Totalitarian and Aldo totalitarian govts are scared of bitcoin.
HN has a fair amount of "Bitcoin is overvalued" people as well. Note that the type of thread to reach the top of HN tends to be something groundbreaking, which will skew the discussion to the extremes.
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.
Not sure about the readership,though. But I think you're right with regards to the discussion - you only hear one side a lot which makes it appear that there is only one side which is the majority. But it's really not the case, however: opposing views are being bashed or brigaded to the point where expressing such views has become unsafe or too much effort. So instead of real discussion, people who are not left-leaning/pro-state/pro-fiat increasingly just use only karma buttons.
Curious if this will have an impact on "liquid' domain names (3 letter .com domains). They spiked a few years back as a way to get money out of China, but slowed recently due to bitcoin being a better option.
Would be interesting to see if that activity picks back up.
There's a limited quantity of some types of domains (2 & 3 letter domains). They typically have a "trading floor" where they can switch hands between investors for a minimum amount - so they're referred to as "Liquid."
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.
I'm most interesting in how the unfolding events affect the miners. Over 50% of mining compute is happening in China, would the state step in and try to control this aspect as well? My understanding is this would give them to power to make arbitrary changes to the blockchain.
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.
One would be naive to think that a government like PBOC would just let it be. But this is long-term positive news for Bitcoin.
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.
To be fair, in the past exchanges weren't the one advancing rules against spoofing. Only when regulators forced them to act they actually started stepping in. Exchanges have an incentive to maximise trading volume, high volatility is good for them.
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 all the chinese miners drop out suddenly, how long does it take to mine those 2016 blocks? More precisely, how much longer than 20160 minutes (2 weeks)?
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?
It should happen right away I believe. As soon as the next block after the 2016th is accepted, the difficulty updates.
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 :)
They mine with ASIC chips they themselves manufacture in China. If anything this hurts our ability to buy mining hardware from china, the main supplier.
People always quote this for all sorts of causes, but the fact that you're at one stage doesn't mean you're going to move to the next:
- 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?
China is a closed economy, it makes sense that they would put a ban on a technology which outside of speculative investment is largely used to facilitate money laundering.
Money laundering: I have loads of money from selling drugs. I can't use that money to buy a house because I can't explain to the government how I got it. So I have to launder the money through legitimate businesses.
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.
Depends if you obtained your funds legally or illegally? With former you are betting against Chinese economy with latter you are looking to leave less traces of activities that got you those funds.
That's not such a strong distinction, I think. I mean, "legally" and "illegally" are defined by the State. And there's plenty opportunity for selective/surprise enforcement.
Well, domestic capital leaving China is largely illegal. So circumventing laws through Bitcoin is arguably money laundering. And indeed, US laws against money laundering apply regardless of the source.
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.)