
Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal - qu4ntumturk
https://www.bloomberg.com/news/articles/2017-09-04/china-central-bank-says-initial-coin-offerings-are-illegal
======
Lerc
Aren't ICOs more of an altcoin phenomenon? How does this impact upon Bitcoin?

To me It looked like Bitcoin just bounced off a psychological ceiling at
5000USD. It has done this with various round number levels in the past. It
makes a bit of sense if you consider people are inclined to think something
like "I'll sell when it reaches $5000"

There also seems to be a tendancy to use evocative language
(collapse,tumble,collapse etc.) to describe what has often been a loss of only
a few weeks worth of gains. I guess when people have an agenda to push on the
other side they call the same thing a correction.

I don't claim to have any special knowledge of how all this works. It just
seems to me that many of the authoritative sounding voices are actually as
clueless as the rest of us.

~~~
sgtnasty
What is an ICO?

~~~
Iv
A new way to fund companies. Instead of selling parts, issue tokens that work
like a cryptocurrency and promise they will entitle to some profits. Sell
these for bitcoins. Recently some companies raised a billion USD that way
(yes, billion)

The concern, that I share, is that this system is very vulnerable to Ponzi
scheme. And unlike Bitcoin, the crash of the pyramid is not a feature in this
system.

I think people are right to warn and forbid this thing. Pyramid scheme can
have large-scale effect in an economy.

I think etherum provides way to do things more responsibly but I understand
that authorities moved quickly when they saw anonymous companies with no
products receiving a billion USD.

Even that will cause ripples when it collapses. You don't want it to grow
more.

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thisjepisje
Bitcoin price goes from 1000 to 5000 in 6 months, but now it's tumbling just
because it went back to 4200?

~~~
okket
I love buying cheap bitcoin. Can it fall a bit more, please?

~~~
ringaroundthetx
people are going to make a serious killing selling puts on this when the
regulators and industry get it together

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ezoe
ICO is like stock without the regulation.

You offered it without any promise and they buy it. You sell it all so the
price goes down and those buyers lost the value.

Stock has a lot of regulation based from the many fraud cases. ICO backed by
digital currency doesn't have regulation so it's like 15th century when the
concept of stock appears without any regulation all over again.

Resulting a lot of abuse and fraud.

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zeta0134
Warning: Site has autoplaying video.

What's HN's criteria on the [video] tag, is it appropriate for links which
include a large auto-playing video, but also contain article text? Or is it
reserved for content which is exclusively in video format?

~~~
CamelCaseName
I don't know what HN's criteria are, but Safari recently blocked autoplay
videos and I suspect other browsers will add this functionality soon enough
that this problem will disappear.

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gruez
why does it feel like every time bitcoin goes up, the chinese government has
some sort of announcement to bring it back down? see: last time when they
prohibited banks from buying/selling cryptocurrencies. does someone there hope
to earn some quick $$$ from shorting bitcoin (profit motive), or are they
doing it to cool down a bubble (protect chinese investors motive)?

~~~
chinathrow8
Because Bitcoin and ICO are the main mechanism to get money out of China, with
overseas cash withdraw very limited for Chinese citizens, with 50% of
millionnaires in China wanting to leave
([http://bit.ly/2uzYLyu](http://bit.ly/2uzYLyu)) (and the other 50% already
having left probably), and with Chinese government cracking down on real
estate/insurance tactics to move money out.

But it's really doubtful they can prevent bitcoin from transfering money out
of China altogether (unless they ban bitcoin)

~~~
chinathrow8
btw if you want to make _real_ money, figure out how to help Chinese
millionnaires move money out of China

~~~
gnaritas
That's crypto's primary use case already.

~~~
chinathrow8
...until China bans bitcoin, which might happen soon, after the october
national congress

~~~
narrator
I think China likes Bitcoin because money flowing into it does not strengthen
the dollar thus putting pressure on their foreign reserves. If people are
sneaking their money out of the country, they'd rather be trading it for
Bitcoin than dollars.

~~~
seanmcdirmid
Unless there is also lots of demand from bitcoin to RMB, if not then foreign
reserves have to be tapped at some point.

~~~
narrator
The government doesn't care what the bitcoin/rmb exchange rate is because they
don't buy oil or imports in bitcoin nor do they hold any bitcoin reserves.

~~~
seanmcdirmid
I'm not disagreeing with that: Bitcoin isn't a sneaky way of doing forex
unless the RMB used to buy bitcoin is being converted into dollars (or another
convertible currency), which most definitely is cared about.

~~~
maxerickson
Mining operations can convert Chinese electricity into bitcoin.

So use RMB to purchase electricity for mining bitcoin, convert mined bitcoin
to currency outside of China (or sell for RMB to someone that wants to do that
and use RMB to buy electricity to mine more bitcoin).

~~~
bduerst
Aren't the bitcoin miners in China siphoning electricity off the grid for
free?

------
grubles
Strange title considering Ethereum tumbled from nearly $400 to $275 because of
the ban.

~~~
yebyen
At-large people are more interested in Bitcoin in the news. I personally agree
with you at Ethereum being more interesting, and much more central to the ICOs
issue, but it's also less stable (bigger swings in price), and higher risk
(risk/reward) while being newer, and more unknown in the market.

My dad has started sending me Bitcoin news. I'm so proud. I was proud at first
when he was able to find Bitcoin news in his regular news sources. I'm even
more proud now that he's sending me news with relevant, quality information
that I hadn't already heard!

It is not that strange though, when you consider the market cap of Bitcoin
today is $71B and the cap of Ethereum is $28B (and is measured in bitcoin, at
least on the first Google result that I was able to find.) Is a 30% drop in
ETH prices really bigger news than a 20% drop in Bitcoin prices?

Bitcoin was the first mover, basically made the market, and has all of the
mindshare. It's basically the USD of cryptocurrencies.

------
hnaparst
In 2013, China's government declared Bitcoin to be illegal, and Bitcoin
crashed from $1,200 to $425. I figured that it would be impossible for Bitcoin
to succeed if China outlawed it, so I sold my Bitcoins at $425. I think I was
the low trade. Now Bitcoin is at more than ten times that level. Let that
story inform your decision making now.

~~~
Taek
Low trade was $220, and I think that price was late 2015. There was plenty of
time to get back in.

~~~
CamelCaseName
There might have been plenty of time, but no apparent reason at the time. You
can be perfectly rational and wrong.

------
sna1l
Long term, having some governmental oversight is key to the mainstream success
of cryptocurrency.

While this may make the ride bumpier, I'm happy that China has decided to
setup some regulation around ICOs, mostly impacting scammers and fraudsters.
My only concern is this regulation takes a while to figure out and this kills
some momentum.

~~~
sbenitoj
Governmental control of the monetary system (AKA "oversight") is one of the
biggest reasons Bitcoin was invented in the first place. The last thing this
world needs is more oversight and control by disconnected bureaucrats with no
skin in the game.

Long-term, however, such attempts at regulating cryptocurrency simply make it
even MORE decentralized / antifragile as people stop using traditional
exchanges (which can be easily regulated) and start using decentralized
options such as LocalBitcoins.com (which is all but impossible to regulate).

EDIT: website link

------
kirillzubovsky
Everything is going to be alright. Major coins crashed for a few hours but are
now coming back up. There's a strong long-term potential in crypto that would
be worth a lot, in privacy/operability if not value. Between now and then,
there are going to be a lot of scammers and ups and downs. Hopefully the coin
can mature and survive through all of it.

------
subru
BTC has never-before seen volatility, biggest bubble of all time. If
bagholders are all aboard, prepare for a dip below 2k for a swing. The market
is very orderly (which is why I was able to predict both the price and time of
peak, see my other account) using tech analysis only. Therefore there is
sufficient evidence of a balanced disparity between insiders (brought to you
by GS and company) and the uninformed.

For there to be a move above 5500 you'll need a new wave of buying pressure.
This puppy is now owned by your rent seeking masters. It's up to the big
players to govern how price is to move and that's largely a function of how
much buying interest really remains.

It doesn't take much to realize BTC itself has dubious value; better tech will
emerge in our generation. This was merely a first step. That has nothing to do
with the short term price or where it finally tops if it hasn't already,
though.

Goldman came out on public radio to state the price will be a buy below 2k.
Wise to heed their advice here. Trick is to know which of their info they
release is reliable, which requires a system in and of itself.

~~~
mrb
" _BTC has never-before seen volatility, biggest bubble of all time._ "

You are very wrong. First, volatility used to be much worse:
[https://mobile.twitter.com/lsukernik/status/8649208737189519...](https://mobile.twitter.com/lsukernik/status/864920873718951937)
Secondly, the importance of a bubble is measured relatively not absolutely:
BTC may be near the all-time high but it has seen only a ~2x increase in the
last 30 days, while the Nov 2013, Feb 2013, and Jun 2012 bubbles all saw
10x...

~~~
subru
Sorry meant nothing has risen from a fraction of a penny to five grand in
human history, iow referring to the percentage moves that we may never see
again in our lifetimes. I stand corrected. Meant relative to any other
investment in history.

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arikr
Can Chinese investors still invest in foreign ICOs, or is that now illegal
too?

------
gesman
China had plethora announcements that western press overhyped as a death to
Bitcoin and look where we are.

Considering sorry a __state of major financial systems on a brink -

It's a buying opportunity.

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subru
Could be worth a gamble here to short BTC up to 4500 with a tight stop, good
r:r. Be wrong quickly if wrong.

The current environment looks good for trading.

~~~
subru
Stay long at your own risk, imo. Selling rallies has been the regime for
almost a week now.

~~~
subru
Why be long here? Are you holding out for a break above 5k that may never
come? HN, please listen to me, it's at 4500 and all you have to do is sell.

------
mjevans
This could also be related to China's recent crackdown on VPNs.

Eliminating ways to export value without controls by the government, in
retrospect, seems like one of the more obvious reasons to control the flow of
information. There's suppression of nationally embarrassing facts, but only
recently have things actually gotten more serious than providing a high (but
climbable) wall.

~~~
jankotek
It works opposite way. Bitcoin mining is centralized in China, so firewall
would cutoff rest of the world. (it ads latency and makes it harder to
announce newly mined blocks)

