The principle is correct (indulge fear) but the extent is different.

Put aside moral choices, in the case of an abused wife, the advantage of breaking away for freedom outweights the risk of looking for another husband, and freedom is a rational choice. If the man, instead of beating the wife as he wish, decides to beat his wife only when she is disloyal to him, she got less incentive to fight for freedom, at least before she fall in love with another.

Chinese living in mainland China enjoys a considerable degree of freedom, in many aspects more than the west. In general you enjoy the seemingly free life, but you know if you touch the lord's 'red line' you are in trouble. The Chinese can't identify themselves with the people in  1984 or "The brave new world", thanks to the current freedom they enjoy, hence these books are not forbidden.

It seems to every individual that the effort to break free brings in China offer little advantage. One cannot be sure freedom is a necessity or just a hobby.

Before any of these happened, as long as I can remember (> 12 years), http://mp3.baidu.com has been offering amazing repertoire of music to download from Woody Guthrie to Bartok (you must come from an IP address of China to download these illegal copies, and I drunk this well like crazy), and every other rule of entertainment industry you mentioned has been broken in Chian from the start - so is software copyright, e.g. few pays Microsoft Tax here.

But I don't see this freedom bring any influnce on the free thinking to China. I also cannot ascribe the entertainment and software industry development to this freedom. Indeed observing from China, this 'freedom' is slowly reducing thanks to stronger and richer Chinese entertainment industry. So, observing from this end of the earth, it is difficult to convince a Chinese that the world trend is the one you describe, and there is still no proof freedom brining productivity if you look from here. we observed reverse trends, that merger and takeover are mainstream in china internet sector.

Personally I know the event and 'development' you described and observed, but my fellow countrymen doesn't, thus they joined Bitcoin game for a very different reason than yours. I wrote another article to address the reason Chinese joined Bitcoin since late 2013, still it is in the editing workflow.

You also said freedom bring indie developers with new technology. We have every new Internet technology the West have, with our state controled imitation, many have more users than the original. So lack of innovation does not make life harder. If you link freedom to innovation, you will find a funny fact, that we decided to outsource this freedom to the West and see what they produce, and copy it. So without adding more freedom here, we enjoy the fruit none the less. Mindboggingly: If freedome can be outsourced, there is no reason why we must produce it ourselves.

Okay, My wording is not good enough, allow me to step back and rephrase it:

Milton Friedman suggested "a society allowing free market will eventually evolve into a free society thanks to its influnce on people's willingness to choose; free market is incompatible with regime of centralism in the long term". What Chinese calls Socialism with chinese characteristics worked well enough and long enough to disapprove Milton.

In china people compare China to India and conclude democracy not a condition for high productivity.

Despite my aversion to the Lord and my aversion to myself for having been trained to speculate what Lord thinks as a survival exercise for the last decade, I actually find the following interesting and important: There is no sufficient proof that a free society is more productive than a society of strong political central power combined with almost-free market policies. Or: Milton Friedman suggested "a society allowing free market will eventually evolve into a free society thanks to its influnce on people's willingness to choose; free market is incompatible with regime of centralism in the long term". but What Chinese calls Socialism with chinese characteristics worked well enough and long enough to disapprove Milton. Personally, no matter how I love freedom, a down-to-the-ground rational thinker like me fail to find the necessity for this love, almost like an homo find it hard to rationalize his love -- , unless I consider freedom self-evident, that is, like a religion.

1) I think chips are produced in Taiwan - they are moving to ShenZhen but there is no harm. Get this correct first: Bitcoin is a second consideration of China's government, Chinese people are the top enemy of Chinese government. Producing chips is harmless to our government.

2) If China doesn't produce mining equpiment, the bitcoin produced will not be less.

Even consider 1 + 2, your question is actually valid, because China government can technically use it to atack the network. But attack network only serve to discredit Bitcoin, and that is necessary only in the plan B scenario, plus the detective work that Lord usually averse to do, double unlikely. Our goverment should focus on what they are good at: discredit people and organizations, not descredit a technology.

Regarding plan B:

https://bitcointalk.org/index.php?topic=589894.msg6715566#msg6715566

I delivered 2 articles. The recent 2 months's event unfold faster than I thought, that I have to deliver prediction before the 3rd article:


What are the outcomes

A strong ban, a national 'illegal exchanges cleanse' action to rule the exchanges outlaw and ask them to settle and stop exchange business before a certain date. If non-PBOC ministries participated, they will consider to also take down a few non-bitcoin exchanges, e.g. underground stock broker, to weaken Bitcoin's publicity and to incriminate Bitcoin by putting it together with other guilty financial schemas.
Condition: 1. the PBOC consider a strong pose in financial sector against shadow baking benifitial or not harmful to other non-Bitcoin measurements they are about to take. After all PBOC's main task is monetary policy, need to weight the message they deliver to the market. 2. Bitcoin exchanges or Bitcoin itself is not weakened in their observation period.
Probability for this condition to be met: 50% likely


The second on the candidate list is a ban from non-PBOC entity (most likely Ministry of Industry and Information or Ministry of Commerce) for any commercial activities related to Bitcoin - this second possibility won't happen in May, because one weak ban after anther weak ban in short interval weakens Lord's image. After all you should fear the Lord, not to play hide-and-seek.
Condition: Bitcoin exchanges are about to die out or exiled completely, just need a push.
Probability for this condition to be met: 25% likely:

The third is our Lord's plan B. Use state media to question one exchange about insolvency (typically largest of all targets), force it to actually be insolvent (if it is managable), and use state media propoganda machine to paint Bitcoin evil and black, from birth, with news, documentaries, radio etc etc. This plan is really not needed: as "Art of War" said, letting your enemy quit without a fight is better than killing it in fight; also, thanks to the Internet, change attitude that radically would harm the regime.
Condition: it happens if die-hard bitcoin believers started some group-activities that calls a lot of atention due to Bitcoin price raise largely OR the state decide to take down another die-hard enemy similar in influnce of Bitcoin, and by killing Bitcoin in a confrontation, save the need to do it again for a harder enemy: for the time being, the harder enemy is either P2P lending business or Alibaba.
Probability for this condition to be met: 12% likely

PBOC will say nothing more.
Condition: if exchanges all choose to self-exile, or just do business with cash-at-door on tiny scale, or just die (FxBTC), not trying hosting P2P trading, not trying ATM or vendor machines or tried but not successful, and PBOC consider they are weak enough, and in the interim the world bitcoin price doesn't rally.
Probability for this condition to be met: 12% likely


Not weighted for now: Take down a leading exchange with the execuse of tax issue and others will quit by themselves. If this route is chosen, it should be down long ago when exchanges were not getting so much attention.
Conditoin: if the following is done successfully, the Lord will reconsider this approach.

will always happen together with other outcomes except PlanB: little media exposure (good-or-bad) for Bitcoin in state-own medias, less and less in other Chinese medias.

Will there be a raid?

Western readers are concerned with violence so I had to address it. For Chinese readers I won't mention it, because it is:

1% likely: There will unlikely be an arrest / raid, because that sort of thing should happen before the event escalate to central government, when the central government can always blame lower level for the blood. Now:
1. Since this issue is brought to central (The Lord) as early as Dec 2013, there is no space for bloody nor violence.
2. consideration of foreign capital involvement, explicit force action backfires PR trouble.
3. arrest by national government usually targets those outspoken member who holds different opinion than the government and also different than the people around him, in short, a prominent target. For example, if you say "all officials are corrupted and parasite of the country", they won't arrest you, because your opinion is just another average Joe; but, if you sing freedom and democracy, you are not only different from the government, but also different from the average Joe hence a prominent target (the people do not demand either of these, they demand opportunity-to-be-wealthy and no-corruption-ruling). None of the exchanges are prominent target by this definition. For example, Huobi CEO explicitly said "Bitcoin can't be a global currency", and emphasized its property as "collector's piece" hence he is not a prominent target.
4. The regime is rather kind and humane, you are often given a chance, a hint, before violence - usually by inviting you for a tea (and you are really served tea! I never experienced it but I heard it is free and in a nice café - I hope I can choose, because my favorite tea is usually too expensive for me).  He who do not repent gets trouble. Even Don Juan is given a chance to repent. None of the bitcoin players are stupid enough not to repent.

What is the effect on price

Sorry, I haven't do homework for this party yet. But it depends on which of the above happens. Things happened too fast for my brain to process.

What is the 3rd article about

An attempt to find out what drives the bubble in the first place.

P.S.

- A list of guest writing for Bitcoinblog.de by me can be find http://bitcoinblog.de/category/english/ where my name Weiwu is.

I feel you did not finish reading that article. But I assume many others don't neither, so here is a teaser of that article:

As a reporter, I enjoying the intellectual achievement of identifying hubris on both sides:) And I enjoy reporting it to both direction:) What you say about sillicon valley's indifference to Alibaba, world's biggest IPO? Not hubris? And put in consideration that Alibaba is a height of hubris themselves - that is, you (sillicon valley) don't shit he (alibaba) who doesn't shit anyone but Chinese government, and you don't shit Chinese government, ain't you (sillicon velley) a height of hubris? Quite so in Chinese eyes. If you talk ebay or amazone as mainstream (while in practise alibaba is bigger than these two competitor combined), they also would reply starting with "Are the Americans for real, or just making this crap up to entertain themselves?" Another example is Tencent. I won't keep listing.

Notice that Bitcoin Foundation did fail in the goal they vowed, the very line about "protect Bitcoin" - they did nothing useful in both Gox fiasco and China clash, but Bit Foundation did nothing useful to both case neither - in fact, Bit Foundation's effort on the Bitcoin 2014 Global Summit is counter-productive for Bitcoin in China, due to the political attention it attracted (they didn't see it coming). PBOC knows Bitcoin 2014 Global Summit is an event 'by the Chinese, for the Chinese, of the Chinese' and they know they are solving internal problems. No one wins the 'protect Bitcoin' competition.

The King of King of hubris is Chinese governmental newspaper "Global Times", but read the Chinese edition please for really good laughters, English edition caters English readership and English hubris and you just feel at home reading it, no entertainment. Too unfortunately Google Transalate doesn't handle Chinese acceptablly, and when human translated it all the funs are gone. I perhaps am one of the few to deliver Chinese in English without 'cater' for readership: I hope that provoking article opens the eyes of my English readers.

Bit Foundation this time. If the names are confusing, it was intended so.

By the way, it is a nationalism tradition in China to call their event and media and organizations 'global'. For example, China's biggest nationalist newspaper is named "Global Times". I explained in the above article, that this is because "China is the world" and "the world never grow out of the boundry of China" (if it does, we will ignore the overgrown part with Somebody Else's Problem field)


"exile" is the world I used in the article, killing Bitcoin businesses is a feasiable way to achieve that goal. Businesses are run by people. Control people = control business.

The second is finally here:
https://bitcointalk.org/index.php?topic=606390.0

The third is in the editing workflow.

My latest editorial on this speculative topic.

"Bitcoin is not a naughty child – it challenges China’s national control of its money. It shouldn’t have been born"
http://bitcoinblog.de/2014/05/12/bitcoin-is-not-a-naughty-child/
(German edition: http://bitcoinblog.de/2014/05/11/china-der-bitcoin-ist-kein-ungezogenes-kind-er-ist-falsch-geboren/)

(My editor likes this ironic tone in the title - I myself actually is a supporter of Bitcoin)

Following text no longer valid because voting is closed:

Or recruited to work for one of the bitcoin business to write for them. People who can talk Bitcoin without even basic concept mistakes are lacking in all major Chinese exchanges, if you can, you are invited - only that it is not a good moment in China to recuit people IMHO.

Well, there is no way to not to defy the PBOC at all. "How to train your dragon" has this in the cartoon:

"The problem is HERE!"
"You just pointed at all of me!"

Their existance is an offence.

There will unlikely be an arrest / raid, because that sort of thing should happen before the event escalate to central government, when the central government can always blame lower level for the blood. Since this issue is brought to central (The Lord) as early as Dec 2013, there is no space for bloody action. You won't hear someone buying execution bullet with 0.001฿, sorry. Put to consideration of foreign capital involvement, bloody action backfires PR trouble. I had speculated the possibility of blood and picturesque scene, but that was in October before PBOC announcement. After PBOC announcement, no blood. Your life is guaranteed.

What more likely is a strong ban, a national 'illegal exchanges cleanse' action to rule the exchanges outlaw and ask them to settle and stop exchange business before a certain date. They may also take down a few non-bitcoin exchanges, e.g. underground stock broker, to weaken Bitcoin's publicity and to incriminate Bitcoin by putting it together with other guilty financial schemes.

The second on the candidate list is a ban from non-PBOC entity (most likely Ministry of Industry and Information or Ministry of Commerce) for any commercial activities related to Bitcoin - this second possibility won't happen in May, because one weak ban after anther weak ban in short interval weakens Lord's image. After all you should fear the Lord, not to play hide-and-seek.

The third is our Lord's backup plan. Question one exchange about insolvency (typically largest of all targets), force it to actually be insolvency, and use state media propoganda machine to paint Bitcoin evil and black, from birth, with news, documentaries, radio etc etc. This plan is really not needed: as "Art of War" said, letting it die peacefully is better than killing it in fight, and thanks to the Internet, change attitude that radically would harm the reign. It happens only if die-hard bitcoin believers started some activities that calls a lot of atention OR the state decide to take down a die-hard enemy similar in influnce of Bitcoin, and by killing Bitcoin in a confrontation, save the need to do it again for a harder enemy (for the time being, the harder enemy is either P2P lending business or Alibaba, but Alibaba is too smart to need a lesson to teach them, so only P2P lending is left). Both conditions for this level of confrontation are unlikely to happen.

The last outcome: if exchanges all choose to go out of the country, or just do business with cash-at-door on tiny scale, or just choose to close (FxBTC), not trying hosting P2P trading, not trying ATM or vendor machines, then PBOC will say nothing more. However this is also unlikely to happen.

Thanks for pointing out. Having watched Rigoletto a few years ago I started to consider the difference between China and the West is more like the difference between "Medieval and Enlightenment", than the difference between "Confucius and Socrates". That is, if Shakespeare comes to China now, he feels more homy (culture-speaking) than if he comes to current day England.

I wrote answer to your questions, but I realized it is off topic before posting, so will you be so kind to post it there on the bitcoinblog.de and I'll paste my answer there? Or you can post to the reddit page of this article and I'll follow up there. I can answer the last part here because the last one question challanged my logic.

"What does this mean?  And if means what I think it means, then tell me how the Chinese exchanges are not just bowing down to the PBOC and not shying away from a fierce fight?"

Answer: Isreal bow to their God and do not shy away from the fierce battles. You don't fight God, however you can fight your enemy in the competition of who can do more bows to to God per minute (or how many hours you bow to your God without resting). Smarter fighters guess God's intention and execute it without being ordered, thus win battles by gaining God's favor. (PBOC is not God himself, but the government is a united body, the communist party is the soul, which is God. nothing co-signed by 5-ministries are not party's will so you bow to it.)

In my article I consistantly use the world "Lord" for the central government. Here I use God for the party to make a stronger point. You will notice that in my Bitcoin speculation articles, I am consitantly speculating the Lord's intention, a skill I received training in China and most senior managers are well trained of. My latest article published today is also a speculation of Lord's intention, but only German version is published - English perhaps tomorrow:
http://bitcoinblog.de/2014/05/11/china-der-bitcoin-ist-kein-ungezogenes-kind-er-ist-falsch-geboren/

I said the situation more than 1 month ago, no one asked me to explain why. Seems I got more thinker-reader now.

The Chinese do not trust the exchanges that much, but they trust their own computer less, and they have no confidence nor skill to use western-produced 'wallets' neither. I was there when the community talk about it, one trader said he transferred money to his own wallet and thinks who he is to guard his wealth when exchanges can fortify the guard, so he transferred it back to the exchanges. Another said he uses wallet, and people say "oh it's just another way to fool yourself, after all its on your computer and can be hacked", in general people nod towards the guy who transferred back to exchanges, and the people say to the wallet user: "you must be a geek who can guard your computer, we are not, so we cannot follow your suggestion."

 And many do not know the difference between wallet and trading account.

And one exchange CEO said to me in person that his company keep failing convincing users to use their own wallet. "I said to my client in person, because he is a million-dollar investor, that he should use a wallet, so that each time he withdraw he use the same address, no delay, no human check and audit. He said 'NO I can't, because the other exchange I use generate a new address each time I choose deposite, and I had to avoid putting all money in one exchange.' - in the end I did not convince him to use a wallet."

Reguarding to why Chinese don't trust his own computer, that costs an article to explain the root, but if you live here you know it is true. The Chinese are confident that Baidu, 360 and all these Chinese companies have our computer's data, we tolerated this for years, because we (Chinese) weight less for personal space / privacy. In the west standard, it seem as if we don't fight for privacy at all, and in Chinese standard we perhaps already spent more than necessary to fight for privacy. Then, a critical use case appears, leaving traders no solution. There is no way a Chinese wallet software can gain the trust needed to be more popular than exchanges, even more unlikely for a western one (Amory / electrium) - because despite we hussle our own people more often, we tend to believe that the West are worse hustlers. FYI I personally use Electrim on Ubuntu. I hope the recent collapse of FxBTC change the situation a bit.

I love it this way, when I beg for critical talk there are critical talkers in the party:) Let me turn your conclusion into a new question that provoke more thinking:


The mining cost relationship to Bitcoin has been discussed multiple times. For example, April 2014 mining cost is at $528 coins, close to the price and may influnced it - could be behind the 15th April rally, to return to the right price. It seems the most popular theory is that mining cost grows after bitcoin price, and holds a bottom before the next wave of Bitcoin price rally. So bitcoin demand drives mining cost on the way up, and mining cost decide Bitcoin price on the way down. I lean towards this popular idea.


'efficient' is perhaps better replaced with 'externalized'. Now: Suppose the Chinese miners, inefficient as they may be, got free energy (Guanxi again) and produce more coins, since they compete with the world for production, the more they produce, the less the rest of the world can do. Now suppose they hold the coins, only selling a part of it to cover the cost, let's not consider the pressure they cause by selling the coins, but look at the competitor in Antarctica. The Antarctica guy find it is harder to generate a coin, and each coin they generate costs higher. So the Chinese does not have to sell all his coins to influnce price, because the downward price's bottom is decided by the Antarctica guy who has to sell most of his coins to cover the cost. Therefore, instead of worrying Chinese fire-sales driving down the bitcoin price, the opposite happens: that Chinese cheap coins drivers up the difficulty and thus the cost of average coins worldwide.

Now let's go on this direction further, consider competition between the Chinese ourselves: eventually it will drive up the cost of coinage that makes Antarctica miner stop producing coins. Suppose eventually only Chinese and those who externalize the cost (let someone else pay) produce coins. So the cost of coins, the 'list price' to the world will be higher than the cost of coins actually produced at all. The question is: will the bottom price be held by the list price, the supposed cost of minting a coin, or it will be held by the actual cost, the money Chinese has to spent to mint each coin? A more interesting question is, whether or not this follow the cold rule of math or mentality of miner business owners?

This is what I mean by saying 'the mining cost is not directly based on electricity cost in China':

The mining cost and the cost forming mech has no influnce on pricing because Bitcoin is limited to 3600/day? Market traders/speculators, the demand side decides the price, and producing side's cost have no influnce, you really think so, right?

"Made in China" is different than "Made in Antarctica", because the cost structure is different - China externalize the mining cost to the people and over-investment in northern power facilities (through the bribed cheap/free energy), while Antarctica the specialty is lack of cooling cost - for which Finland is good enough.

Follow up reasoning after every random guy's cursory conclusion is inefficient. I'll not take another bait.

You may consider it irony, but chance is high that although China's influnce of Bitcoin pricing through China's trader is going to cease, mining will remain and grow. High chance that will see lots of bitcoins "made in China" soon. So the direction is CHINA-> CRYPTO (here the greater-than symbol means produce and export, not control). When that happens, China still have 'influnce' on the price if you believe in the pricing model that Bitcoin market price homes mining cost. I put a quotation mark on 'influnce' because it is superfacial: even if China produces most new coins, the mining cost is not directly based on electricity cost in China - it's a long topic on its own.

Only the last is truly often reported (especially China's "Global Times" newspaper): "Without China, xxx will collapse" (replace 'xxx' with anything). The Chinese do not report the first and second like you describe, because most Chinese consider 'freedom' and 'human rights' trivial, there is nothing to be proud of if you are the freest or have the best human record. It's like reporting a kid beat pacman level 99 - who would read it?

If you wish to see the Chinese value, the ocrresponding Chinese value of Freedom/Human Rights are:

position and obligation:
There is much to be proud of it if you have most orderly society and everyone knows their position, not to drift away from it, no matter if its obligation brings  benefit or suffering. So don't assume Chinese value the same value like the West - freedom etc etc

wealth and the chance to be wealthy:
There is much to be proud if you are wealthy, or if the country is wealthy.

true. i have written a article to review the china saga - it influnce is ending, so it is time for eulogy. bu it is low urgency and hence delays in publishing queue. guest writing can't be prompt like forum post...

if you like a few minutes fun: china govt is strong, media hold dim view:
a lot chineses news outlets are reporting bitcoin bans of other countries. one title is: 'following the lead of china, the world countries queue to desert bitcoin'. some reports in china are saying: the bitcoin's decoupling from the rest of the world is a troubling event, but we must move on.