
Bitcoin dropping after BTC China said it is closing - koolba
https://www.cnbc.com/2017/09/14/bitcoin-is-dropping-right-now-after-a-big-chinese-exchange-said-it-is-closing.html
======
rothbardrand
Every time bitcoin slips a little, the anti-bitcoin crowd claims victory and
it's kinda hilarious. The summer of 2015 BTC was around $200, it's now over
$3,000- so up 15X in a bit over 2 years. This is failure? Why is down $500
failure but up 15X in less than 30 months not success?

There are about 11 million millionaires in America. There are only ever going
to be 21 million bitcoins total. That means, even just among American
millionaires, they will never be able to all own two bitcoins. How many will
try to put %5-%10 of their net worth into bitcoin when they become convinced
of its reliability?

Bitcoin has been under various forms of attack, by state level actors and by
hackers for the past 8 years and it has done quite well. I am unaware of any
software project that has captured this much value with this little
vulnerability.

The value of all the gold in the world is about $8T. Bitcoin as a store of
value has a lot of advantages over gold:

\- Its terminal supply is absolutely fixed, unlike gold, and its rate of
inflation is rapidly decreasing to below golds.

\- It's easy to store wealth in without being obvious to others.

\- It is easier to transport bitcoin than any significant amount of wealth

\- It is easier to protect bitcoin than gold. Gold has to be guarded, Bitcoin
can be split in to an n-of-m key and encrypted and replicated, securing it
from fire, theft, etc.

So given all that, what is the ultimate intrinsic value of bitcoin? Lets say
it is half that of gold. Then what's the intrinsic value of a single bitcoin?

That's something we can calculate: $4T / 21,000,000 = $190,476

 _Bitcoin is better than gold at gold 's primary purpose._ Yet its current
value is much less than that of gold. This makes sense given that bitcoin has
not yet crossed the chasm-- but gold is also something very rare for people to
hold. People have a negative net worth and not a lot of them hold gold.

Bitcoin is the very definition of a disruptive technology that will
revolutionize society for the better and hackers are embracing it. You should
too.

~~~
random023987
> The summer of 2015 BTC was around $200, it's now over $3,000- so up 15X in a
> bit over 2 years. This is failure?

As a modern eTulip bubble, it's a "success" for anyone who has made money
speculating.

As a replacement for fiat money, it's an absolute disaster as a currency.
Volatility and high transaction fees have killed any opportunity Bitcoin may
have had to gain traction as a way to pay for anything besides drugs,
ransomware, and evading currency controls.

~~~
rothbardrand
You can send several million dollars in under a day for about $0.50 right now.
IS that "high fees"? Hell if you do it right you can do it in under an hour
for under a dollar.

Any talk about it being a replacement for fiat money is evading my point. I
made the point that it was a plausible good store of value, not currency.

Oh, and by the way, there's nothing wrong with using bitcoin to pay for drugs,
and this argument is akin to saying that the US Dollar is evil because it is
so widely used in the drug trade that every $20 bill tests positive for
cocaine (so I've heard.)

As for evading currency controls, aka economic oppression- that's one of the
great uses of Bitcoin that will help improve people's lives world wide.

Finally regarding tulips, you can't have it both ways- you can't say price
going up is proof it's a mania and price going down is proof it's a mania.
Tulips were not a revolutionary new technology.

~~~
nosuchthing
If someone actually paid that small of a fee in BTC for several million USD,
they would risk far more of their transaction being lost due to volatility
during the multi-hour long transaction.

Anyone holding that much BTC, and facilitating that type of transaction will
likely be subject to some form of regulatory scrutiny, sooner or later.

~~~
olala69
The size of the transaction grants it higher priority.

------
koolba
> The cryptocurrency traded at $3,601.40 at 7:58 a.m. in New York, far below
> an all-time high of $5,013.91 set earlier this month.

That's a 28% drop from the high. For normal securities a price drop like that
in less than a month would be considered a crash.

Does it count for BTC as well or are the elevated levels at the start of the
month with too thin a volume to be considered legit?

~~~
paxpelus
In cryptocurrency world 10% daily change is considered normal. The markets
were extremely volatile in the past and as years pass by they become more
stable. We are not there yet but I believe in the future as the market cap
increases and more people get involved the price will stabilize more and such
changes will be considered a crash.

Also do not forget the people that had money in BTCC exchange. I suppose many
of them sold their BTC in order to withdraw there money hence the crash that
you see. This price drop in BTCC exchange created arbitrage opportunities and
so people (and probably auto-trade bots) started buying cheap BTC in BTCC
exchange and then sold to another exchange - resulting in the drop of price
that we see right now. Of course panic selling is happening right now too...

Don't forget that 20% changes are not something extreme. Check TSLA price
between 23th of June and 6th of July this year. The price went from $383 to
$313 which is around 20% change.

~~~
nwah1
Tesla is considered an infamously overvalued stock, and even Elon Musk has
publicly questioned the price in the past. It has had the highest number of
shorts for any stock. Despite making 1/100th as many cars as the big
manufacturers, it has a market cap higher than Ford and GM.

That is not exactly a great comparison. A normal blue chip won't fluctuate
more than ten percent in a month, let alone in a day.

But currencies are supposed to be more stable than stocks. EUR to USD over the
past month has wildly swung from 1.17 EUR->USD to 1.19 EUR->USD.

~~~
SimbaOnSteroids
I believe Tesla's value has everything to do with what people believe Tesla
will be worth in the future, simply because confidence in Musk is so high. I
think there's this unspoken expectation that Tesla enters the Pantheon of
Large Auto Manufacturers.

~~~
nwah1
From a value investing standpoint, it is overvalued, but obviously tech stocks
play by different rules. However, even for a tech stock, TSLA is very high
priced.

I wish them the best, and I truly hope they succeed, but it doesn't change the
fact that the speculative value is super high compared to their asset value.

That explains why it can swing wildly in price while Ford generally won't.

------
raesene6
It would seem that _if_ China shuts down domestic Bitcoin exchanges that could
have quite a big impact on the network as it could make the position of miners
in china difficult.

Looking at articles like
([https://www.buybitcoinworldwide.com/mining/china/](https://www.buybitcoinworldwide.com/mining/china/))
~70% of all mining power is handled by China based groups, so it'd be a big
change for that to be removed...

~~~
baldfat
So does that mean AMD is about to lose their number one customers? China has
almost a monopoly on mining due to access to low to no cost electricity. The
miners preferred AMD Graphic cards and make AMD cards hundreds of dollars more
valuable on EBay.

[https://www.pcworld.com/article/3199257/components-
graphics/...](https://www.pcworld.com/article/3199257/components-graphics/why-
amds-radeon-graphics-cards-are-almost-impossible-to-buy-right-now.html)

~~~
nullnilvoid
GPU's are still used in mining. But the majority of large-scale miners use
ASIC chips to mine coins. ASIC chips are just more efficient and powerful.
They are designed only for mining.

------
fencepost
So it's lost half of its gains since early August.

Bitcoin almost defines volatility.

~~~
paxpelus
Market cap is the main reason in my opinion. The more people get involved the
less volatile it is going to be. You should see how volatile BTC was in
2011-2012, what is happening right now is nothing in comparison.

~~~
nwah1
The main reason for the volatility is that there is no actual use for them,
and no entrenched demand via a tax system.

The price of bitcoin can literally fall to zero. With fiat currency, achieving
that would require the government losing its power to enforce tax collection.

People losing interest in a fad seems to be a bigger risk than a governmental
collapse.

~~~
danharaj
> there is no actual use for them

There's a use for BTC, it's just illegal.

~~~
v64
Cash can be used for illegal purposes too. Private, unencumbered, tax-free
transactions have licit purposes as well.

~~~
root_axis
So what? Their point is that cash has other uses as well besides the illegal
ones. I would argue that bitcoin has some additional uses besides the illegal
ones, but they're extremely niche.

~~~
v64
Part of the reason why the US Dollar is so valuable is because of its
extensive use in illicit operations. Even if a cryptocurrency is used for
illegal purposes, that use increases its value for licit activities, as niche
as they may be.

------
kyranjamie
Announcement made via twitter
[https://twitter.com/YourBTCC/status/908285586368167936](https://twitter.com/YourBTCC/status/908285586368167936)

------
forestjc
There are 3 major exchanges in china: BTC China, Huobi and OkCoin. Only BTCC
allow ICO trading and it's the only one closing. Maybe it's related to the ICO
ban from last week and nothing to do with bitcoin

~~~
econner
Bloomberg is saying China plans to ban trading of bitcoin on all domestic
exchanges.

[https://www.bloomberg.com/news/articles/2017-09-14/bitcoin-t...](https://www.bloomberg.com/news/articles/2017-09-14/bitcoin-
tumbles-as-chinese-exchange-says-it-will-halt-trading)

~~~
thephyber
If that's how Chinese exchanges interpret it also, this will have a huge
impact on some of the largest miners and mining hardware companies (lie
BitMain).

------
davidbeep
China not loving bitcoin and not being onboard isn't news. A communist
government not agreeing with a decentralized currency shouldn't come as a
surprise. Speculators who invest should understand that clearly, and not go
into panic when China makes decisions that are very China-like. The good news
is that it's a perfect time to buy more bitcoin and ether at a discounted
price.

~~~
outwebyou
First of all, China is an authoritarian government, not a communist
government. Second of all, China is doing this because they are suffering from
[hidden] massive outflow, and need to clamp down on that. The Chinese economy
is slowly collapsing from all the malinvestments, and the rich folks are
trying to get their money out. Look at the richest man in China, Wang Jianlin,
unable to leave China

[https://www.bloomberg.com/news/articles/2017-08-28/wanda-
bon...](https://www.bloomberg.com/news/articles/2017-08-28/wanda-bonds-fall-
on-reports-of-chairman-wang-stopped-at-airport)

~~~
fspeech
"Wang Jianlin meets Hong Kong’s ex-chief executive Tung, quashing talk he’s
barred from travelling"

[http://www.scmp.com/business/china-
business/article/2110610/...](http://www.scmp.com/business/china-
business/article/2110610/wang-jianlin-meets-hong-kongs-ex-chief-executive-
tung)

------
Synaesthesia
If other governments in the world follow suit, what would happen to bitcoin? I
think it could be rather easily marginalised.

~~~
1ba9115454
The price would drop for sure. But the network would still survice.

~~~
Udik
The network would survive with a vastly reduced number of miners. But at that
point it would become feasible for a state actor to wage a 50% attack against
it and kill it for good? It didn't happen before because bitcoin was just a
geeky curiosity; now that it's been proved to move real money, it has become a
possibility.

~~~
Klathmon
Well in a bit of an ironic twist, because ASICs that are used for Bitcoin are
kind of worthless without it, Bitcoin _should_ continue to have enough value
to run those miners at cost in some low electricity areas (assuming it doesn't
entirely go under).

With a GPU mineable currency, if it crashes and becomes "unprofitable" to
mine, people with GPUs can just use them for something else and the currency
can die entirely.

So 50% attacks are still difficult because unless bitcoin becomes almost
entirely worthless (at which point a 50% attack is kind of pointless), there
is still just as much hashing power sitting around waiting to be turned on
when it becomes profitable. Power that can't really be repurposed, so it's not
really going anywhere.

------
luxpir
Take note, high-risk investors: now is a good time to buy.

~~~
thisisit
I remember the last time something China related happened in 2013 or
something. I forgot the exact news but it sent BTC tumbling back to $200-300
in next couple of years before it came back up. If you believe in China's
influence that much, then better wait it out. There should be much better
price to be had.

~~~
thephyber
> I remember the last time something China related happened in 2013 or
> something.

Are you conveniently forgetting the first few weeks of this year? They changed
their policies towards cryptocurrencies in a way that wasn't quite clear
(rumors were that "China is banning cryptocurrencies!" and "Chinese exchanges
are closing!"). The reality of the regulatory change was tiny in comparison to
the rumors, and many people profited from the short term rumor noise.

------
gourou
I find it odd that China banned all cryptocurrencies but Bitcoin 2 weeks ago
and that now a Chinese Bitcoin exchange is closing. China's position is still
unclear at the moment and it seems to be what's making or breaking the BTC
market.

~~~
artofcode
They didn't ban 'all cryptocurrencies'. They banned ICO's instead, and (afaik)
it's a temporary ban until proper regulations are in place.

~~~
gourou
You're right. However, I doubt they'll add proper regulations for hundreds of
cryptocurrencies. What makes you think they will?

~~~
artofcode
If they ban it completely and the demand remains, it'll disappear underground,
while if the government embraces it and puts AML/KYC (and most likely cash-
limits) in place, they can control (and tax) it.

Local bitcoins is already out there and if those get blocked by the great
firewall of China, alternatives will pop up soon enough.

Also the ICO environment is littered with complete utter garbage and I can see
lots of people getting burned when jumping in uninformed, which seems to be
happening on an accelerated pace these days.

------
drez
What I don't understand is that bitcoin is always referenced in value to USD,
but there isn't enough fluid USD in the exchanges to match what the bitcoin
network is theoretically worth. How do they decide what Bitcoin is worth, if
the money that it's worth isn't actually around?

Also what happens when a big holder of BTC decides to cash out? Wouldn't it
become similar to a typical bank run, collapsing the exchanges (and thus the
market)?

~~~
Slartie
There is no actual "worth" of all Bitcoins as a whole, whether in regard to
USD nor in regard to anything else. The only thing that exists is the last
price at which a non-zero amount of Bitcoins - usually only a tiny, tiny
fraction of all coins, today usually not even a whole coin - has changed
hands. This price, taken for every exchange, is then usually averaged to get a
"market value" of one Bitcoin.

The "market cap" is then just a number calculated by taking this average and
multiplying it with all Bitcoins in existence. Of course, the value would
collapse instantly, if just a fraction of these is put up for sale for current
market price. Actually you can witness this happening right now (try
www.cryptowat.ch and just pick a Bitcoin exchange and watch how the price
moves...mostly downward right now...because there's so much selling going on).

In case of Bitcoin it is even more severe, as it is rather well-known that
only a fraction of the 16.5 million coins in existence is even accessible and
an even smaller fraction of that is actually circulating. There are multiple
millions of coins buried on wallets to which the private keys have been long
forgotten. Or at least "most likely", because there's no way to prove whether
a particular wallet is just inactive, but someone still has the key, or
whether the knowledge about the key has been lost forever, and with it any
access to the coins on it. I heard about estimates of only 8 million coins
being actually accessible and in some kind of regular or irregular
circulation...

------
xHopen
People buy everyday coins in iOS games and no one seems to care. but why do
they care about bitcoin ? because it has real value, because people use it and
furthermore , you have ATM machines with BTC. They will try to drop the price
, not once but a million times, the same that they do with stocks. If you
trade you care about it if you HODL and don't read news, you care 0.0%

------
Nursie
Well... it was said earlier in the month that the ICO ban could be taken to be
referring to any and all exchange between crypto-currency and 'real' currency,
or between two crypto-currencies.

Perhaps the party in China has decided enough is enough, and that they must
regain control over capital flows which can potentially leave the country -
just like they have with foreign property investments.

------
jacknews
Wow, check out all the related stories, etc. CNBC really don't like bitcoin do
they?

~~~
thisisit
I never understood this. How does one conclude that media doesn't like
something? If you put yourself in media's shoes, their whole agenda is - news
and advertisements.

It's no secret that BTC fans tend to take offense at even small insignificant
stories criticizing BTC. They will flock to CNBC, register accounts to show
who is the boss. So what do networks do? Fan the flame and write even more
stories de-riding BTC. Because any publicity is good publicity. The BTC fan
reaction at that point is a forgone conclusion.

~~~
wu-ikkyu
>How does one conclude that media doesn't like something?

If an outlet shows a consistent pattern disparaging something.

>If you put yourself in media's shoes, their whole agenda is - news and
advertisements.

Most big media outlets are part of larger corporate conglomerates. So it is in
their interest to push a narrative that is helpful to the larger investment
portfolio.

------
throwabit
Buy BTC on BitStamp >= 3150 today, stop loss 3087 Expires in 8 hours, after 8
hours move stop to breakeven Target >= 3600

------
imdsm
This is but a battle in the oncoming monetary revolution.

------
korzun
I talked about this before, and most people instantly wrote this off.

The typical response was 'If X bans the cryptocurrency, we will just trade in
another country. That's the whole point!'.

Can somebody explain what will happen if U.S starts to feel the pressure from
Bitcoin and kills it at the point of exchange? Sure, you will still have your
Bitcoins, but they will drop in value and become useless.

Furthermore, what will happen to the market if 1%'s attempt to convert a
couple of billions to USD at the same time? Who will honor that transaction?
The banks will not touch it.

This will end up just like the banking crisis sans a bailout. People can't get
the 'money' out because the exchange rate is not going to be honored, and the
value of their money will drop over night.

~~~
Synaesthesia
Yep, I’m fact I’m surprised the US government hasn’t acted yet, but I suppose
they don’t yet view it as sognifixant enough to merit a response yet.

~~~
pc2g4d
But the IRS has already declared Bitcoin a taxable as either income or as a
capital asset. See [https://turbotax.intuit.com/tax-tools/tax-
tips/Taxes-101/Tax...](https://turbotax.intuit.com/tax-tools/tax-
tips/Taxes-101/Tax-Tips-for-Bitcoin-and-Virtual-Currency/INF29402.html)

This legitimizes Bitcoin and allows the US government to benefit from its
ongoing use, just as with other assets.

------
cm2187
Hold on, I thought crypto-currencies were using encryption to ensure that no
one can create more currencies like a fiat currency.

But we can just clone the currency, let's create bitcoin cash! Or let's agree
to change the algorithm!

Hold on, I thought crypto-currencies were meant to be immune from government
interference.

Wait, China cracking down on bitcoin makes its value plunge!

There is only one way to learn discipline when investing, the hard way,
loosing one's own money. Hopefully people haven't bet too much on this.

~~~
rothbardrand
Who is losing money? A year ago BTC was under $600. Today it's over $3,000.
Surely a painful lesson for anyone holding for 12 months.

Yes, you can fork open source software, but as you see the value doesn't come
from the code intrinsically. BCH is at $500, even after pumping and a year
long campaign of misinformation. Other alts have to provide compelling value
to get a good market price.

Nobody ever said cryptocurrencies were immune from government interference.
They are immune from government corruption. You haven't shown anything to the
contrary.

IT's funny how, whenever BTC slips a little you guys declare victory, but
you're kinda ignoring we're up 10X in 18 months.... where are your
declarations of defeat? (if that's your standard- price movement.)

How many years of knocking down the same straw men is it going to take?

~~~
Nursie
> BCH is at $500

Yup, a sure sign that something is screwy - let's fork the currency and award
ourselves 10-20% extra money overnight!

