2013-12-05 TechCrunch - Bitcoin Back Over $1K After Chinese Ban ...

[Cunningham]

Bitcoin Back Over $1K After Chinese Ban, BofA Comments, And Greenspan Mockery
http://techcrunch.com/2013/12/05/bitcoin-back-over-1k-after-chinese-ban-bofa-comments-and-greenspan-mockery/

It’s been a rough day for Bitcoin. China slapped a ban on it, Bank of America said it is “at risk of running ahead of its fundamentals” claiming it has little short-term upside, and Alan Greenspan laughed at it. In response, investors in the cryptocurrency sent it under the $900 mark.

Bitcoin, buoyed by the endless optimism of its acolytes, bounced back over the $1,000 mark on the Mt.Gox exchange in short order. The market turbulence also hit rival coins, including Litecoin, which saw its trading range ease by up to 25 percent.

I think the cooling down in China was necessary. I mean, what did the Chinese think? That Bitcoin will be the new Yuan? It was clear from the beginning that the government of China will not let this happen. But actually they finally made their official statement in a very mild and reluctant manner, by allowing Bitcoin for the private sector. So what's next? There are still a lot of countries for Bitcoin to conquer, like India and Russia, for instance... By the way, trading in China is still looking fine, according to fiatleak.com .

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[Cryddit]

It is still a problem however. 

Chinese Banks, and indeed all other Chinese Financial-sector businesses, are banned from buying, selling, or providing services for Bitcoin.  That means that if a Chinese merchant accepts them he cannot bank them with the rest of his earnings, nor easily exchange them at some exchange or financial service for Yuan that he can bank.  Being Chinese will mean that he cannot easily establish a financial-services account in some other country, and if he did, getting the money back into China would feed a lot of rent-takers compared to his usual business of taking Yuan.  He'd be left with less money than if he'd sold something for Yuan in the first place.

In order for accepting Bitcoin to be viable for a Chinese merchant, there must be someone accepting Bitcoin for the things (mostly wholesale fresh inventory) that the business needs to continue.  At least enough such other merchants that he can spend nearly as much Bitcoin as he takes in.  Or someone, not a financial service, who wants to buy his Bitcoin for Yuan. 

Obviously he can keep his profits in Bitcoin, but retail margins are razor-thin -- he *HAS TO* spend 95% of the money he takes in to make a 5% profit on his merchandise.

Keeping banks out of the game made it much more difficult for Chinese non-banks to deal with Bitcoin.

[Cunningham]

In order for accepting Bitcoin to be viable for a Chinese merchant, there must be someone accepting Bitcoin for the things (mostly wholesale fresh inventory) that the business needs to continue.  At least enough such other merchants that he can spend nearly as much Bitcoin as he takes in.  Or someone, not a financial service, who wants to buy his Bitcoin for Yuan.  

You are quite right. This should hasten the process of getting paid in Bitcoin and stay in Bitcoin. Soon enough, there should be no need to go back to Yuan for clever merchants.  

[kjlimo]

I love how everyone is reporting this as a ban... thanks for the cheap bitcoins!

[beetcoin]

sounds like another case of media sensationalism. refer to something grey as black.

[Cunningham]

Judging from hundreds of media sites reporting this "China bans Bitcoin" bullshit, Bitcoin itself showed unbelievable inner strength after the flash-crash. The day after, there is still lots of negative publicity in the media, but Bitcoin is almost back to 90% of the all time high. Now that a lot of coins changed from weak to strong hands, I predict new all time highs in the next couple of days, even with low volume.

[beetcoin]

i see a lot of arguments from both sides... and at this point i am where i normally am: i don't f'ing know.. so as far as i can tell, the chances of it exponentially multiplying are 50/50, and that's a good bet to me.

[LiteCoinGuy]

i found a nice statement here:

http://bitcoinmagazine.com/8744/china-releases-first-regulatory-report-on-bitcoin-businesses/

[TraderTimm]

I personally think there's a loophole here.

In the third plenum meeting, there was a provision for private investors to open their own banks. So, if Bitcoin has been declared a "good" for private citizens, how much you want to bet you can set up a local private bank, funded by private investor funds - and do business that way?

Sounds to me that the Chinese government wants to limit large players from getting too involved in something they perceive has risks. It seems like a prudent approach to me.

[Carlton Banks]

if a Chinese merchant accepts them he cannot bank them with the rest of his earnings, nor easily exchange them at some exchange or financial service for Yuan that he can bank. 

How are China Mobile and Baidu, both state backed companies, "banking" their Bitcoin takings then?

See if you can understand what the announcement means, it was stated pretty plainly. And it doesn't mean what you're suggesting.

[aigeezer]

if a Chinese merchant accepts them he cannot bank them with the rest of his earnings, nor easily exchange them at some exchange or financial service for Yuan that he can bank. 

How are China Mobile and Baidu, both state backed companies, "banking" their Bitcoin takings then?

See if you can understand what the announcement means, it was stated pretty plainly. And it doesn't mean what you're suggesting.

Bad news from Baidu just in, according to this thread: https://bitcointalk.org/index.php?topic=360180.0

Gox prices are flailing, possibly in response, but who knows what levers are being pulled in all this.

A miner's life for me 'til the noise dies down a bit.

[LiteCoinGuy]

the exchanges in china are still allowed to do business and also merchants can accept bitcoin. finally china got his KYC and AML rules in place like most of all countries already have.

[Carlton Banks]

Bad news from Baidu just in, according to this thread: https://bitcointalk.org/index.php?topic=360180.0

Only the mp3 sales division though, not the Jiasule DDOS protection service as was originally announced. That's the larger surprise to me, I had no idea the Baidu mp3 platform was using Bitcoin (also didn't know of the platform either  )

Gox prices are flailing, possibly in response, but who knows what levers are being pulled in all this.

A miner's life for me 'til the noise dies down a bit.

Profitable mining has always has been the best mitigation against the big swings. I was looking at the price graph in logarithmic mode just now, the April crash was much more dramatic than this one. Although the absolute numbers are more significant, of course.

[onedeveloper]

I've been watching fiatleak.com for a while now. More than 500 BTC got bought in China in less than 5 minutes! Also, a record 100 BTC in USD in one minute, after some strong buys in Yuan. Bitcoin markets are strong while I write this, and it's 1000 BTC in Yuan in less than 10 minutes. The buyout rythm is strong.

So .. who cares?