false signal resulted rally in China, and it won't stop.

[zhangweiwu]

If you search the topic in baidu of the last week's price rise, and you search in Chinese, most posts and reports ascribe it to the recent adoption of bitcoin payment method by a web service of Baidu (jiasule.baidu.com).

For example this report of sina.com (one of the biggest Chinese online news outlet):
http://tech.sina.com.cn/i/2013-10-17/10248825635.shtml

These reports suggests that the adoption by Baidu is a signal that the big vendors are accepting bitccoin - consider the close tie between baidu and central government, that the government may be interested too. It is like saying Microsoft or Facebook started to accept bitcoin. That tapped on the emotion and BTC rose.

I think the big vendors are no way closer to accepting bitcoin in the last week than any weeks before. It is indeed a small change, and signals nothing from big vendors nor the central government at all.

Chinese information technology vendors, including the big ones, in general prefer the studio model. A big company is devided into multiple studios, some companys have 100 studios. They each compete against each other. They compete on revenue and profit, within the embralla of a same company. Each studio find their own ways of making profit, and enjoy freedom of decision as long as they are making money. The mother company acts like a referee, dismissing unprofitable studios and buying out (admitting) small competitors to form new studios; the mother company also act as a protector, backing the studios with tremendous PR and governmental relationship power in case their competitor choose to fight on a different level (which also happens). This fast-proliferating fast-evoluting style isn't very co-ordinated, but it is effective because in general in China our culture emphasize competition, and we like to compete and win and we work the best if competition is physically next door. If instead big vendors are organized like Microsoft to co-operate and create huge products (Windows 7) in 5-year span, the youngsters wouldn't stay on their edge - they need quick confirmation whether they are wining or not - they work very hard but doesn't have much patience. Skipping between studios is frequent, the fast-growing studios get more resource and people.

The recent acceptance of bitcoin is likely a decision of a single stuidio in the embralla of baidu, perhaps trying to beat other studios of the same company. Baidu HQs speaksman said nothing about bitcoin in the whole year. How Baidu HQs treats the move is unkown, and they probably don't have an attitude, for it (bitcoin) is trivial compare to the huge online information market they are already on. News interview suggests this is a decision of an individual studio: "We always try to satisfy the webmasters, so when they want to pay with bitcoin, we accept them". Notice the interviewee said 'webmasters', that's the customers of this studio, not Baidu in whole, and he speaks for his own studio.

Also take notice the customer of this studio (jiasule.baidu.com), the webmasters, happen to be the major group of bitcoin miners in China.

So why such a small piece of news that indicates nothing for sure, stirs up such a rally? More important than the news itself it says Chinese investors are desperately looking for a reason to rally. They perhaps expected bitcoin to be above 1000¥ for a long time, now they only need a slight upward vibrate to rally. And they have a good reason to hope for a rally, for they bought huge amount of mining equipments in anticipation of raise of bitcoin value.

My reading of the event is, that Chinese investors are anticipating a rally for a long time, thus it won't cool down in just a few days. However they are speculating, not having much faith in sustanibility of bitcoin and may be frighten away by small bad news within China. They are less sensitive to western news like silkroad.

In China we have highly centralized political power. The chance Chinese government allows bitcoin on the markets (when it calls their attention) is like the chance U.S. government raise debt in BTC. The big vendors foresee it and shouldn't be interested. Besides we have a monoplay business atomosphere in China (every player are greedy, wants to win and take all), and you don't monoplay bitcoin. I see no reason Baidu being interested to include bitcoin into their development strategy. Small vendors are much more likely to be interested in btc.

(OP is a Chinese citizen in Beijing)

[spike420211]

they work very hard but doesn't have much patience

Their shipment of fail will arrive faster than ours does in USA.
Nice concept.

[Zangelbert Bingledack]

It does look sort of like China was looking for an excuse to rally, but that's how these things go: bubbles attract attention, which attracts many strong hands and many more weak hands...some of whom become strong hands as their position prompts educational interest. In the end the price level is much higher, even after the "burst" (see 2011 and early 2013).

In other words, it looks like sentiment drove Baidu Jiasule to accept bitcoins, rather than their acceptance driving sentiment. The Baidu story isn't what caused China to catch the Bitcoin bug; it's proof that China has caught the Bitcoin bug.

[windjc]

If you search the topic in baidu of the last week's price rise, and you search in Chinese, most posts and reports seem to attribute it to the recent adoption of bitcoin payment method by a web service of Baidu (jiasule.baidu.com).

For example this report of sina.com (one of the biggest Chinese online news outlet):
http://tech.sina.com.cn/i/2013-10-17/10248825635.shtml

These reports suggests that the adoption by Baidu is a signal that the big vendors are accepting bitccoin. It is like saying Microsoft or Facebook started to accept bitcoin. That tapped on the emiontion and BTC rose.

I think the big vendors are no way closer to accepting bitcoin in the last week than any weeks before. It is indeed a small change, and signals nothing from big vendors at all.

Chinese vendors, even the big onces, in general prefer the studio model. A big company is devided into multiple studios, some companys have 100 studios. They each compete against each other. They compete on revenue and profit, within the embralla of a same company. Each studio find their own ways of making profit, and enjoy freedom of decision as long as they are making money. The company acts like a market, turns off unprofitable studios and open new ones. This isn't very co-ordinated, but it is effective because in general in China our culture emphasize competition, and we like to compete and win. If instead big vendors are organized like Microsoft to co-operate and create huge products (Windows 7) in 5-year span, the youngsters wouldn't stay on their edge - they need quick confirmation whether they are wining or not - they work very hard but doesn't have much patience.

The recent acceptance of bitcoin is likely a decision of a single stuidio in the embralla of baidu. How Baidu HQs treats the move is unkown, and they probably don't have an attitude, for it (bitcoin) is trivial compare to the huge online information market they are already on. News interview suggests this is a decision of an individual studio: "We always try to satisfy the webmasters, so when they want to pay with bitcoin, we accept them". Notice the interviewee said 'webmasters', that's the customers of this studio, not Baidu in whole, and he speaks for his own studio.

Also take notice the customer of this studio (jiasule.baidu.com), the webmasters, happen to be the major group of bitcoin miners in China.

So why such a small piece of news that indicates nothing for sure, calls up such a rally? More important than the news itself it says Chinese investors are desperately looking for a reason to rally. They perhaps expected bitcoin to be above 1000¥ for a long time, now they only need a slight upward vibrate to rally. And they have a good reason to hope for a rally, for they bought huge amount of mining equipments in anticipation of raise of bitcoin value.

My reading of the event is, that Chinese investors are anticipating a rally for a long time, thus it won't cool down in just a few days. However they are speculating, not having much faith in sustanibility of bitcoin and may be frighten away by small bad news within China. They are less sensitive to western news like silkroad.

In China we have highly centralized political power. The chance Chinese government allows bitcoin on the markets (when it calls their attention) is like the chance U.S. government raise debt in BTC. The big vendors foresee it and shouldn't be interested. Besides we have a monoplay business atomosphere in China (every player are greedy, wants to win and take all), and you don't monoplay bitcoin. I see no reason Baidu being interested to include bitcoin into their development strategy. Small vendors are much more likely to be interested in btc.

(OP is a Chinese citizen in Beijing)

Interesting. Thanks for the insight. One question: when you say there is no way the Chinese gov would allow bitcoin on the markets, what exactly are referring to?

[zhangweiwu]

One question: when you say there is no way the Chinese gov would allow bitcoin on the markets, what exactly are referring to?

If Chinese government pays attention to bitcoin, it would act the same way they do towards shadow banking: fine those involved in bitcoin yet backed by government, and prosecute the entities without gvernment backing (even execute a few, like the unlucky millionaire Wu Ying last year and Zeng Chengjie this year). The charge will be as usual: illegal fund-raising.

Right now there are two points that needs to be considered on understaind Chinese behaviour:

1. Chinese traders speculate. Few believed in a non-governmental currency taking root, as few believed anything significant yet non-governmental can take root. This translate to a huge bear market when Chinese government acts.

2. The atomsphere in China is like the roaring twenties which I read from books. Everyone feels like they are ready to make a big fortune. This can translates to potential huge bulls.

My two cents.

I feel it is still years away until Chinese government taking action on bitcoin. A centralized power does only a handful of things at a time, and their hands are full in Xi's first 2 year's reign. (Xi is a surname, not roman number 11)

[Zangelbert Bingledack]

"Roaring 20's...huge rallies...regulation years away"

That's what I like to hear.

[windjc]

One question: when you say there is no way the Chinese gov would allow bitcoin on the markets, what exactly are referring to?

If Chinese government pays attention to bitcoin, it would act the same way they do towards shadow banking: fine those involved in bitcoin yet backed by government, and prosecute the entities without gvernment backing (even execute a few, like Wu Ying last year and Zeng Chengjie this year). The charge will be as usual: illegal fund-raising.

Right now there are two 'concepts'.

1. Chinese traders speculate. Few believed in a non-governmental currency taking root, as few believed anything significant yet non-governmental can take root. This translate to a huge bear market when Chinese government acts.

2. The atomsphere in China is like the roaring twenties which I read from books. Everyone feels like they are ready to make a big fortune. This can translates to potential huge bull markets.

My two cents.

I feel it is still years away until Chinese government taking action on bitcoin. A centralized power does only a handful of things at a time, and their hands are full in Xi's first 2 year's reign.

Makes sense. But from my view here in the West, China is very eager to appear mainstream especially when it comes to finance and capitalism. Therefore, if Bitcoin were to get mainstream acceptance in Europe and the US, I could see a world where China didn't try to ban bitcoin. Bitcoin isn't going to threaten a communist Chinese government at anytime in the future anyway.

[zhangweiwu]

Makes sense. But from my view here in the West, China is very eager to appear mainstream especially when it comes to finance and capitalism. Therefore, if Bitcoin were to get mainstream acceptance in Europe and the US, I could see a world where China didn't try to ban bitcoin. Bitcoin isn't going to threaten a communist Chinese government at anytime in the future anyway.

More or less agreed. However if bitcoin present challange to authority (not to actual fiscal power, but to the image of authority, like that "Chinese government can maintain the stability of our own currency"), they treat it differently.

[Elwar]

It seems like Chinese citizens are desperate to get their money into some sort of investment. When the government allowed people to invest in a second home it became such a huge craze of investment that they now have empty cities of "second homes" built purely for investment.

Whether it is Baidu or anything that gets the word to Chinese people with money to invest, if Bitcoin becomes even a sliver of the craze of other investments it will skyrocket the price.


But yes, it will be a bubble. They are in a housing bubble right now and if the US defaults on its loans, China will be hit. So a huge Chinese investment in Bitcoin will not be a solid foundation.

[Severian]

However if bitcoin present challange to authority (not to actual fiscal power, but to the image of authority, like that "Chinese government can maintain the stability of our own currency"), they treat it differently.

Just speaking as an American observer, one thing that pre-disposes some Chinese citizens to Bitcoin is that millions were already involved in Q Coin, so the idea of digital cash isn't as foreign to them as it is to many Americans. P2P networks in all forms are also familiar territory to a lot of net users in China so the idea of P2P money probably has a little wider acceptance than it would here in the US. In comparison to the rest of the world, most Americans are stodgy and conservative in matters relating to currency. Overall, Bitcoin will probably do better in China than it has here in the US.

A practical matter would also be that if the Chinese government sees Bitcoin as a threat to Western banking (Western banks have admitted as much), then Bitcoin could be seen as a tool to increase their influence if it can undermine the European Central Bank's and the Federal Reserve's influence. But I do agree with you that if your government (or mine) felt more threatened by Bitcoin, they probably would come down on it hard.

[Johnny Bitcoinseed]

IMHO, at this relatively early stage anything that gets the word out is good.  The more people hear about this bitcoin thing, the more people will actually give it a try and tell their friends and family.  The network effect is very powerful, more powerful than any one business and any one country.

[Walsoraj]

The more people hear about this bitcoin thing, the more people will actually give it a try and tell their friends and family quickly realize that Bitcoin doesn't really solve any of the problems created by fiat. 

[zhangweiwu]

Just speaking as an American observer, one thing that pre-disposes some Chinese citizens to Bitcoin is that millions were already involved in Q Coin, so the idea of digital cash isn't as foreign to them as it is to many Americans. P2P networks in all forms are also familiar territory to a lot of net users in China so the idea of P2P money probably has a little wider acceptance than it would here in the US. In comparison to the rest of the world, most Americans are stodgy and conservative in matters relating to currency. Overall, Bitcoin will probably do better in China than it has here in the US.

Also mind that Q-coin has a different position than Bitcoin. As said, in China (people think that) nothing significant can take root without being part of the government. This holds true with Q-coin. The company behind Q-coin doesn't hesitate to follow governmental scutiny - other big players baidu, sina all show obiendiance to the central governmental the same way, and are allowed to live. The game that is called reguation in the west is equivilent to the game of obiendiance here. So it is not the question whether bitcoin can be regulated, but whether bitcoin can obey. Bitcoin trading can be regulated but bitcoin itself bends to no one - which begets the question whether or not it will be allowed to live.

On the other hand, if Bitcoin becomes so significant that the government has to make a decision, and they decided to let it live, the acceptance of bitcoin will have no consumer psychological barrier, because, as you said, we are pretty familiar with virtual currencies.

On a side note of P2P: a centralized government can only do a handful of things at a time. The fight to copyright protection is dismissed as tirival. it is non trivial in the U.S. because corporates takes root in the government, where here is the opposite, the government take root in companies. In the U.S. big companies plant their people in the government, here the government plant people in the company's board (e.g. through Party Committee which exists within most named vendors). Besides, P2P video exchange, popular in china perhaps more than any other country, happens without much user's awareness. It is not that people are more willing to share, but that the commercialized P2P software does P2P in the background and the companies operating this ain't worried of being sued.

[windjc]

The more people hear about this bitcoin thing, the more people will actually give it a try and tell their friends and family quickly realize that Bitcoin doesn't really solve any of the problems created by fiat. 

I really can't for the life of me understand why anyone who didn't believe in the viability of bitcoin would spend any great amount of time reading and posting on this forum.

[bobdude17]

This is all really interesting. Thanks for posting.

[Shallow]

Meh, if it helped boost the btc price I'm happy.

[OleOle]

So why such a small piece of news that indicates nothing for sure, calls up such a rally? More important than the news itself it says Chinese investors are desperately looking for a reason to rally. They perhaps expected bitcoin to be above 1000¥ for a long time, now they only need a slight upward vibrate to rally. And they have a good reason to hope for a rally, for they bought huge amount of mining equipments in anticipation of raise of bitcoin value.

My reading of the event is, that Chinese investors are anticipating a rally for a long time, thus it won't cool down in just a few days. However they are speculating, not having much faith in sustanibility of bitcoin and may be frighten away by small bad news within China. They are less sensitive to western news like silkroad.

Thanks, it's good to hear your take on it, it's often pretty hard to get a read on what influences perception and behaviour in China.

[elux]

If you search the topic in baidu of the last week's price rise, and you search in Chinese, most posts and reports ascribe it to the recent adoption of bitcoin payment method by a web service of Baidu (jiasule.baidu.com).

These reports suggests that the adoption by Baidu is a signal that the big vendors are accepting bitccoin - consider the close tie between baidu and central government, that the government may be interested too. It is like saying Microsoft or Facebook started to accept bitcoin. That tapped on the emotion and BTC rose.

I think the big vendors are no way closer to accepting bitcoin in the last week than any weeks before. It is indeed a small change, and signals nothing from big vendors nor the central government at all.

Reminds me of American media reporting on Chinese media reporting on The Onion (Satirical Newspaper) declaring Kim Jong Un the sexiest man in the world.

Or the "Bitcoin ATM Coming to Cyprus in Two Weeks ®™" story.

Something was clearly lost in translation, somewhere on the way from http://jiasule.baidu.com/news/525cd5aabf9efd699f800e7e to http://finance.yahoo.com/q?s=BIDU

Thanks for speaking up!

[nobbynobbynoob]

This is all really interesting. Thanks for posting.

Yes, it's wonderful to hear a knowledgable Chinese person discussing Chinese political issues. Many foreigners (rightly?) regard China as a brutal totalitarian state, so the things he has posted will come as little or no surprise to many of us.

[afbitcoins]

Thanks for the Chinese perspective.

Paraphrasing but there was one part I found interesting.. American companies place people in government whereas in china the government places people in companies.

Merger of state and private sector in both cases, or in other words Fascism.