
China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst” - adamnemecek
http://www.trustnodes.com/2017/09/19/china-bans-bitcoin-executives-leaving-country-miners-preparing-worst?
======
Animats
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.)

~~~
JumpCrisscross
> _China has exchange controls_

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...](http://www.reuters.com/article/us-china-economy-capital-
controls/china-relaxes-some-cross-border-capital-curbs-as-yuan-steadies-
sources-idUSKBN17L0M2)

 _Disclaimer: I am not a lawyer. This is not legal nor financial advice. Do
not launder money._

~~~
Pyxl101
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.

~~~
JumpCrisscross
> _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.

~~~
dannyw
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.

~~~
jogjayr
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.

~~~
dx034
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.

------
acjohnson55
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.

~~~
bdcravens
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.

~~~
Twisell
Are you sure? Doesn't the need to mine block slow down transaction to a bare
maximum per block?

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.

~~~
thisisit
Bitcoin adjusts block generation to 10 minutes irrespective of the miners.
What does change is difficulty, hashrate and transaction fees.

The bitcoin hashrate has remained more or less the same in last 2 months:
[https://blockchain.info/charts/hash-
rate?timespan=60days](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](https://blockchain.info/charts/hash-
rate?timespan=180days)

Fees peaked around 25th August but still pretty high:
[https://bitinfocharts.com/comparison/bitcoin-
transactionfees...](https://bitinfocharts.com/comparison/bitcoin-
transactionfees.html)

~~~
Heliosmaster
Hashrate has not remained constant:

\- 7 day avg of last 3 mo: [https://blockchain.info/charts/hash-
rate?timespan=180days&da...](https://blockchain.info/charts/hash-
rate?timespan=180days&daysAverageString=7)

\- 7 day avg of last 2 mo: [https://blockchain.info/charts/hash-
rate?timespan=30days&day...](https://blockchain.info/charts/hash-
rate?timespan=30days&daysAverageString=7)

Going from 6 to 7.5 EH/s it's not more or less the same (it's a 25% increase)

------
pc86
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_.

~~~
Laforet
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.

Source: [https://www.lakebtc.com/p/9352](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.

------
adamnemecek
Is it just me or has China been doing some crazy regulatory stuff recently.
Idk if there's an overall mosaic I'm missing or if these are unrelated.

~~~
EZ-E
Yes there has recently been :

\- 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

~~~
samstave
Why would they ban blue cheese?

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?

~~~
adrianratnapala
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!).

~~~
warcher
Food safety is a great way to backdoor agricultural import restrictions.
Europe has been doing it for _decades_ on GMO's.

~~~
baby
Wasn't the American GMO's studies bullshit for decades as well? If anything,
Europe has led the way in strict and unbiased testing.

------
mincon4747
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.

~~~
indubitable
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.

~~~
canoebuilder
>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?

~~~
Synaesthesia
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.

~~~
yorwba
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.

~~~
fapjacks
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.

------
gggdvnkhmbgjvbn
All comments so far have been pro-bitcoin... does nobody think this could
actually be a sensible decision?

~~~
strathmeyer
For a totalitarian country, yes.

~~~
bjshepard
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.

~~~
umanwizard
"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, ...

The US isn't perfect, but let's not exaggerate.

------
joelrunyon
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.

~~~
puranjay
What's the going prize on 3L.com's right now? Say, a bad combination (Q, X, Y,
V, etc.)?

Last time I exited this market (2008), lowest tier 3L.coms were selling for
$3k

~~~
jameskegel
I have a 4 letter domain that sounds like a common word. What should I sell
for?

~~~
joelrunyon
You're gonna have to share way more info than that...

------
banku_brougham
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.

------
gtrubetskoy
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.

~~~
dx034
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.

------
yellowapple
"China’s decision to shut down exchanges took many by surprise"

Really? It's a "communist" country. If anything, what's surprising is that it
took China this long to start cracking down on Bitcoin.

------
chatmasta
If miners shut down, mining rate slows, supply goes down, so price should go
up. Right?

~~~
moufestaphio
No.

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.

~~~
qznc
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?

~~~
moufestaphio
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 :)

------
xaldir
So... Are we going to see a surge of cheap second hand GPUs?

~~~
jameskegel
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.

------
korzun
This is good news for Bitcoin. They are holding the executives so they can
apologize and issue them licenses.

/s

------
siculars
First they ignore you, then they laugh at you, then they fight you, then you
win.

-Mahatma Gandhi

~~~
endgame
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?

~~~
koonsolo
You have a very valid point here. But to me this quote is more of a "Hey, it's
normal that you have setbacks, but keep going, it's part of winning".

So to prevent: "Damn, they are ignoring me, I might as well give up".

------
eberkund
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.

~~~
josu
Money laundering is currently not an issue, it has more to do with capital
controls.

~~~
samstave
Serious question: how are capital controls vs money laundering different from
the perspective of the one with the money?

~~~
mkwldbttr
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.

~~~
mirimir
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.

~~~
tehwebguy
Yeah but that's what laundering is. Making money that would be designated
dirty by the state look clean.

This is more of just hiding it outright, I think?

~~~
mirimir
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.

~~~
aianus
> Well, domestic capital leaving China is largely illegal

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.

~~~
mirimir
I meant that there aren't many legal ways to get it out.

