
Bitcoin Value Sinks After Chinese Exchange Move - mjfern
http://www.nytimes.com/2013/12/19/business/international/china-bitcoin-exchange-ends-renminbi-deposits.html
======
jackgavigan
Predictable outcome is predictable:
[https://news.ycombinator.com/item?id=6818821](https://news.ycombinator.com/item?id=6818821)

Anyone who thought the Chinese government were going to ignore a mechanism
that allowed people to bypass capital controls with impunity was pretty naive.

Bitcoin fanboys have classic tunnel vision - they're so enamoured of the
libertarian ideal of an anonymous crypto-currency that's not controlled by any
government, that they ignored all the practical, economic and legal challenges
it would need to overcome before it could become a real currency.

It's a bit like the people who watched the moon landings on TV and believed
that we'd have moonbases by the end of the 20th century. Technology needs time
to develop and mature, and there typically needs to be a compelling commercial
case for its adoption.

The technological principles that underpin Bitcoin _will_ see more widespread
adoption within the next few years but they'll be deployed within the pre-
existing financial context, perhaps as a mechanism for OTC trading or to
support real-time gross settlement in the wholesale markets. In the retail
market, I envisage an M-Pesa-style digital payments/money-transfer solution
that complements the the traditional banking and payments systems. We might
see alternative currencies built on Bitcoin-style infrastructures but based on
something that people value in a different way from dollars and cents (e.g.
the rainforest).

But Bitcoin itself is too flawed from an economic perspective, too inefficient
and too big a step to be able to function effectively as a currency within the
current AML/sanctions-focused regulatory environment.

~~~
vectorpush
_Bitcoin fanboys have classic tunnel vision - they 're so enamoured of the
libertarian ideal of an anonymous crypto-currency that's not controlled by any
government, that they ignored all the practical, economic and legal challenges
it would need to overcome before it could become a real currency._

I am always amazed by the condescending tone of know it all speculators who
think they've got it all figured it out. Labeling bitcoin enthusiasts as
fanboys is a trite rhetorical tactic to marginalize their opinions, but what's
really hilarious is that your tense (they _ignored_ all challenges, an obvious
falsehood btw) seems to imply that you've somehow definitively demonstrated
that bitcoin is destined for failure. Guess what? Bitcoin was chugging along
just fine before the Chinese hit the scene, in fact, black market merchants
had no problem accepting bitcoin as their primary source of payment long
before the financial world had even heard of bitcoin. I applaud your risky
predictions though (bitcoin will fail, the price will drop if a government
clamps down on bitcoin, bitcoin technology will be used in future financial
systems), truly marked insight, you should recommend a reading list.

Anyway, I expect you to headline the inevitable "Bitcoin Once Again Breaks 1k"
thread with a post linking to your comment here, explaining why you were full
of shit... Though, I won't hold my breath since intelligent individuals like
yourself will always find a reason to consider bitcoin a failure until its
adopted as legal tender (something that the "fanboys" realize is completely
unnecessary for the success of bitcoin).

~~~
kordless
Blaming statements are pretty easy to spot if you know the signposts for them.
Indicating a current outcome is 'predictable' because you said it was going to
happen is a form of confirmation bias. Making a self referential comment to
bolster his opinion sets the tone for the rest of the blaming argument that
follows. Also, there the fact he didn't actually publicly call it first:
[https://news.ycombinator.com/item?id=6818680](https://news.ycombinator.com/item?id=6818680).

As you point out, the terms 'fanboy', 'tunnel vision' and 'libertarian' can be
tactics to market a particular opinion. Ad hominem arguments are always a good
indication someone is making blaming statements. I'm personally enamored with
the fact that cryptocurrencies instantiate trust at their core because trust
is important to me. That's not necessarily a libertarian viewpoint, so
clumping me in with a group of libertarians effectively blames me for
something that I'm not guilty of. FWIW, I don't have a beef with Libertarians,
and may be one for all I know.

BTW, making a coy remark about his 'intelligence' and speaking for his future
actions are blaming statements in themselves. It isn't helping the
conversation much by doing that.

~~~
vectorpush
_BTW, making a coy remark about his 'intelligence' and speaking for his future
actions are blaming statements in themselves. It isn't helping the
conversation much by doing that._

I admit, that part of my response was intentionally provocative, though, just
to clarify, I wasn't being sarcastic when I regarded him as intelligent, my
intent was to highlight the fact that intelligent individuals like the GP who
are convinced they can conclude the definitive future of bitcoin will continue
to do so because their intelligence drives a hubris that less confident (i.e.
intellectually honest) individuals lack. The people who are used to telling
everyone how finance really works can't help but bash all the fanboys over the
head with their intelligent conventional wisdom.

~~~
kordless
Right on. I made a blaming statement myself, and for that I apologize. Happens
all the time! :) Also, I used the word coy incorrectly. Meh.

------
master_shake
In April, I watched the price of bitcoin every day. When it approached $200 I
said "f*ck it," took out a student loan and bought in at $225. The VERY NEXT
DAY the price collapsed. I watched bitcoin slide to $50 in a state of complete
and utter devastation. I felt so stupid. I decided not to sell, and just
considered the loan to be a write-off.

Point being, you should assess the quality of your investment in years, not
hours. And in regards to the Chinese government, allow me to quote Mahatma
Gandhi:

> first they ignore you, then they laugh at you, then they fight you, then you
> win.

~~~
ivanplenty
There's a few things weird about this story. Are you really proud you have a
leveraged position in bitcoin? Isn't that among the riskiest positions you can
take on a very volatile, illiquid, and possibly illegal asset? That's totally
a personal choice, but it's certainly not one I would or a typical retail
investor should ever take. Your decision to buy-and-hold during a sell off in
the Spring is at best an anecdote and certainly should not be used as any
evidence on what behavior to do now.

Government intervention is just one of a few significant black swans:
blocksize changes, verification (i.e. mining) fragmentation (effectively
doubles the money supply for each split), and SHA collision attacks becoming
practical. None of this should ever happen, right?

However, this line should be clarified in every context:

> _took out a student loan and bought in at $225._

In the US, this is generally _not OK_. To everyone else in the US, do not read
this as a positive example. Do not use student loans for bitcoin or any other
investment.

 _What can I use my federal student loan money for? You may use the money you
receive only to pay for education expenses at the school that awarded your
loan. Education expenses include such school charges as tuition, room and
board, fees, books, supplies, equipment, dependent child care expenses,
transportation, and rental or purchase of a personal computer. Talk to someone
at the financial aid office at your school if you need more details. [1]_

[1] [https://studentaid.ed.gov/sites/default/files/your-
federal-s...](https://studentaid.ed.gov/sites/default/files/your-federal-
student-loans_1.pdf)

(Of course you may have been one of the small percentage who took out an
unregulated private loan, but the principles behind those are generally the
same).

~~~
celticninja
i love how you are telling him it was a dumb idea, when you have no idea if he
sold enough at $1100 to cover his student loan, or that right now he is still
in a position where he has doubled his money in a matter of months regardless
of this crash.

Too many people offering investment advice in hindsight round here.

~~~
achughes
Just because it worked out well in the end doesn't mean it was a good idea to
begin with

~~~
celticninja
It means it was a worthwhile risk that paid off.

------
Fuxy
China is afraid. Bit-coin is an unregulated way of moving money out of China
and they are known for keeping the movement of money in and out of china under
very strict control.

The only way of regaining this control is by forcing all major companies to
ban bit-coin.

You think the companies are happy about this they were making a very nice
profit from the transactions.

~~~
seanmcdirmid
Right. China still has currency controls on the RMB. Makes it a pain for me to
move it out of China en masse, not that I've tried yet.

------
erdoserdoserdos
Unregulated capital flight is really not a feature of Bitcoin.

Bitcoin is money with the ledger built into it. It's not for hiding wealth,
but for tracking it. This is a market correction that had to take place.

People get confused right now because the ledger is more or less blank. It
won't be. (As a slightly dystopian side note, BTC with very little history may
become very very valuable.)

In the future, it is going to be preferable to pay for anything large with
cryptocurrency. It's overkill to buy a coffee with Bitcoin. But a house, a
car, maybe even rent? What better way to prove you own or have paid for
something? The currency knows when and how it was used.

We currently live in a world where banks try to foreclose on homes that aren't
even mortgaged. Bitcoin and the like will end that. But even more importantly,
Bitcoin is about wealth protection. The average Joe will have very little of
the deflationary income. But large banking institutions will.

~~~
lukifer
Altcoins with faster transaction times and built-in inflation formulas could
change the game. I'm bullish on crypto-currency in general, but I don't think
it's a given that BitCoin is guaranteed to be the winner, long-long-term.

> BTC with very little history may become very very valuable.

Unpack this? I had thought that if you sent coins to a fresh wallet ID, it
becomes effectively anonymous. (I've heard of some who generate a new public
key for every transaction.)

~~~
Anderkent
> Unpack this? I had thought that if you sent coins to a fresh wallet ID, it
> becomes effectively anonymous.

Not really, you can see where the money came from, and assume the same owner
(or a relationship between the owners).

To anonymize bitcoins you have to 'mix' them - take X bitcoins from N people,
send them to a single address, then send X to new addresses for each of the N
people. Because any persons bitcoins might end up going to someone else, you
cannot assume it's the same person or a transaction any more.

------
MattyRad
_> "It is not issued by a central monetary authority, it does not have the
properties of legal currency and it is not a currency in the real meaning of
the word."_

Certainly an amusing quote, given the extensive actions to stop the spread of
such a non-threatening non-currency.

By "ban", I assume they mean "made illegal." The former of course being a
euphemism for the latter. A couple questions come to my mind as such.... How
will China enforce such a ban? Can China physically or technologically bar
access to Bitcoin deposits?

Regardless of the Chinese government's ability to effectively enforce such a
ban, the price of Bitcoin has taken a noticeable dive.

~~~
ekianjo
> the price of Bitcoin has taken a noticeable dive.

Don't judge on one day. Wait for a week, 10 days before making conclusions on
the price of Bitcoin. Bitcoin has shown to be pretty resilient to news that
were considered bad by the media. We'll see.

~~~
taspeotis
> Wait for a week, 10 days before making conclusions on the price of Bitcoin

My conclusion is that it's pretty fucked up [1].

Nov 15 $US430

Nov 22 US$843

Nov 29 US$1137

Dec 6 US$552

Dec 13 US$869

Dec 18 US$584

Pick one of those dates before today and imagine saying "wait for a week ...
before making conclusions on the price of Bitcoin".

[1] [https://coinbase.com/charts](https://coinbase.com/charts)

~~~
ekianjo
Interesting, you already have the dec 18 value while the day is far from over.
You have a strange way to pick up numbers.

~~~
taspeotis
It's down to ~480 so it's lost $100 in 30 minutes. Let's just say that my
strange way of picking numbers can be described as "flattering" ... at worst.

~~~
ekianjo
No, you should pick numbers on a daily average with an indication of the daily
variation on the value if you want to be fair, not at a precise instant,
because Bitcoin can have as much as 30% variation in a given day, so I too can
make up numbers out of thin air by picking up a very biased time during the
day.

~~~
taspeotis
It ended the day at $582 [1].

> because Bitcoin can have as much as 30% variation in a given day

Hence, "pretty fucked up".

[1] [https://coinbase.com/charts](https://coinbase.com/charts)

~~~
ekianjo
30% is either "f+++ed up" or a massive opportunity for daily trading,
depending on your point of view. I see it rather as the second.

------
jasonlingx
Wow, this has really got the attention of the Chinese authorities. This only
alludes to how incredibly disruptive bitcoin is going to be. Time to go all-in
if you haven't already...

~~~
jaibot
> Time to go all-in if you haven't already...

If every possible outcome confirms your hypothesis, you are not considering
the evidence properly. If China hadn't moved against Bitcoin, would you think
that would make Bitcoin a less attractive speculation?

~~~
celticninja
going all in is probably not adviseable in any technology investment, but I
get his point, the Chinese Government see bitcoin as a way that its citizens
can circumvent currency controls and it also affects the exchange rate of the
RMB, which is very closely controlled byt he Chinese Government. This doesnt
mean that bitcoin is "going to the moon" this means that as a disruptive
technology it is making itself known and coming up against predictable
barriers.

The comment you responded to was a bit "buy buy buy" but the sentiment is just
another way of saying "first they ignore you, then they laugh at you, then
they fight you, then you win"

~~~
jaibot
That sentiment is also often a way to cover for the incoherent belief "P(A|B)
> P(A|-B) > P(A|B)".

~~~
exit
can you expand that for us? what are A and B?

~~~
jaibot
Any proposition, where A is the thing you want to believe and B/not-B are
observations - it's a slightly tongue-in-cheek attempt to mathematically
represent the idea that no matter what you see it confirms that you're right.

------
fsckin
After the peak of $1100 and being pretty happy last week, and the subsequent
decline, I sold my stash at $800 last week, no regrets.... yet.

Probably a great time to buy.

~~~
SamReidHughes
> Probably a great time to buy.

Why?

~~~
ivanplenty
> _Probably a great time to buy._

He or others like him may not have sold off all of their coins and need dumb
money to keep the price afloat just a little longer...

If it were a great time to buy, he would have. Follow the actions and not the
words in markets like this.

~~~
writtles
I've been investing long enough to know that:

1) if a disruptive tech has plenty of personal intrigue and 2) plenty of
brilliant people herald it

then buy the crash.

------
scotty79
Awesome. I have a little regret that I wasn't brave enough to sell at $1000.
But then I'd have to decide when to buy and I'd probably chicken out and
already buy for something like 800$. And I'd be risking the scenario I'm most
afraid of that I get stuck without bitcoins and I can buy much less of them
because the prize never goes below for what I sold them.

------
killerpopiller
I came here for some opinions on where the dive ends.

Will we see the BT under 200$?

~~~
forgotmycreds
If you look long enough you can see the end of all things.

Bitcoins, I as an outsider have to say that many people will be tempted to buy
because of the low price. This low price is being advertised by lots of people
as a reason to buy, probably trying to mask the news of China not allowing the
business. What big economy has accepted bitcoin as a currency? Edit: What
reason is there to be optimistic about the bitcoins.

