Did China just legalize Bitcoin, clarify regulation, for its free market use?

[AnonyMint]

Is my interpretation correct?

(note the vote doesn't apply to my speculation about Baidu having manipulative intentions)

Note I am not saying they legalized it as a currency. I am saying "for its free market use". Please understand the distinction.

However, general public may trade bitcoin on the internet by taking their own risk.

How is that not uber-bullish?

Because if merchants aren't allowed to accept it as currency then that is a major blow for bitcoin adoption in China.  However it's not clear to me if that is the case.

Who said merchants were not allowed to accept it as currency?

From the 'human translation' on reddit: http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_translation_of_the_china_regulation/

"Bitcoin is a specified virtual commodity, it does not have equal legal status with money currency, and it cannot and should not be used as money currency on the market."

Note the important correction.

That could be interpreted to mean that any Chinese business should not treat bitcoin as money currency i.e. not accept it as payment like they would if it were a currency.

My father is a former West Coast division head attorney for Exxon. I appear to have inherited some of his high IQ ability to interpret the law.

I can't find anything in this document that specifically bans the bolded assumption.

This document is merely stating that Bitcoin will not be allowed to circulate widely as a currency to compete with RMB, because all volatility risk will remain outside the financial sector in the private parties and exchanges. It is very free market way of saying Bitcoin will not be backed by the government's system. There is nothing stopping businesses from accepting it, and converting it to RMB via a registered exchange.

The government will not likely clamp down on small scale acceptance, as it presents no credible threat to RMB. As we all see now, businesses are forced to convert to fiat immediately if they have significant expenses in fiat, i.e. Bitcoin presents no threat to fiat at the moment because of its volatility and the need for businesses to have fiat to pay their employees and operating expenses, etc..

Note small scale in China is big scale relative to current Bitcoin market size given the large population. Bitcoin is only in the tens of $billion range of market cap. Fiat finance is in the hundreds of $trillions. Bitcoin can grow immensely while still being small scale relative to fiat finance market size.

Whereas, (small) businesses could keep their profits in BTC, as easydns did (PenAndPaper username). Of course big businesses can't because the Bitcoin market cap is too small any way, besides big businesses are not into such risk.

The document is saying that non-financial entities must accept risk of holding BTC.

So this does not to stop the trajectory of Bitcoin in China. Exchanges can still operate and are not prevented from having a bank account to operate with. The document only bans financial institutions (and payment providers) from being market makers, underwriting, insurance, etc. In other words, all the risk and market making must be done by individuals and exchanges.

What they have done is simply kept Bitcoin in the free market-- the wild west.

This is an extremely bullish outcome. They have clarified that Bitcoin is legal for its small scale free market functions.

The Baidu thing is very suspicious. They accepted for a very small portion of their business which was misunderstood and caused a euphoria, then they dump when people misunderstand the ruling above, in order to create panic. Looks like some manipulators are getting rich on BTC pump & dump & rebuy on the dump.

[AnonyMint]

So apparently 80% realize and up to 20% are willing to panic.

So this is how the concentration of ownership in Bitcoin possibly increases, as the weak hands pass it to the strong hands.

[deltanine]

So apparently 80% realize and up to 20% are willing to panic.

So this is how the concentration of ownership in Bitcoin possibly increases, as the weak hands pass it to the strong hands.

Yes.  This is how pigs get slaughtered.

[Prolifik]

The Chinese should just say fuck you government we'll do what we want.
It's not like they can't trade in person or with an online escrow service.

[AnonyMint]

The Chinese should just say fuck you government we'll do what we want.
It's not like they can't trade in person or with an online escrow service.

Well there are a lot of cameras and police in China, but yeah the government probably realizes it better to regulate the exchanges (require identification) than force people to go to the underground economy.

There is a huge Shadow banking underground finance economy in China. China knows that in order to take its place as the new center of the financial world by 2033, it must liberalize its financial industry.

This ruling appears to be right in line with China achieving its goal.

http://armstrongeconomics.com/2013/11/15/chinas-reform-push-for-2020/

(click link above to see this image if it doesn't appear)

http://armstrongeconomics.com/2013/11/15/china-a-new-era/
http://armstrongeconomics.com/2013/11/23/china-the-dollar/
http://armstrongeconomics.com/wp-content/uploads/2011/02/armstrongeconomics-the-assent-of-china-the-new-face-of-china-1-25-2011.pdf

[Bitsurprise]

No they didn't , you just imagining things because you hold BTC and its dropping so fast get back to reality they said its not a currency no way and currently banned for financial institutions , it shows you China may ban it at any given time without any given notice , virtual commodity ? what the hell that mean ...

[AnonyMint]

No they didn't , you just imagining things because you hold BTC and its dropping so fast get back to reality they said its not a currency no way and currently banned for financial institutions , it shows you China may ban it at any given time without any given notice , virtual commodity ? what the hell that mean ...

Your retort is irrational, as I am sure all the No votes are. I have studied the ruling and analyzed what it legally says. Your paranoia does not agree with the reality of what the ruling says.

Pass your Bitcoins to strong hands who have sound logic and know how to read what the ruling actually says. And who understand that China is slowly liberalizing, while the west is slowing turning into a spy agency and capital controls prison. Note I have been a China critic over at http://mpettis.com, just find the posts with the avatar of Homer Simpson's small brain x-ray.

P.S. Actually I was holding no BTC (and never owned any) until today when someone sent me several to distribute to typhoon victims.

[stamen123]

Relax, this is the cool thing about Bitcoin - no one can ban it as long as he/she cannot ban the internet

This dump is something very positive for bitcoin - it will just punish people who bought it for mere speculation. Who told you that the fair price is $1000? It was just a good dream come true.

For the non-speculators, this dump will make it possible to develop bitcoin-based businesses. Such businesses are currently being developed and soon will start attracting customers with services not available in for fiat money. An example: free sports-betting where no limitation is feasible.

Even if China did outlaw bitcoin and all Chinese said "No" to it, China is not the world. It would only mean 20-30% lower equilibrium price. So what?

And last, bitcoin's revolution is not as a medium of exchange but as a way of keeping records. The new technologies building upon it, like Colored coins, Mastercoin, will do the revolution.

[Bitsurprise]

No they didn't , you just imagining things because you hold BTC and its dropping so fast get back to reality they said its not a currency no way and currently banned for financial institutions , it shows you China may ban it at any given time without any given notice , virtual commodity ? what the hell that mean ...

Your retort is irrational, as I am sure all the No votes are. I have studied the ruling and analyzed what it legally says. Your paranoia does not agree with the reality of what the ruling says.

Pass your Bitcoins to strong hands who have sound logic and know how to read what the ruling actually says. And who understand that China is slowly liberalizing, while the west is slowing turning into a spy agency and capital controls prison. Note I have been a China critic over at http://mpettis.com, just find the posts with the avatar of Homer Simpson's small brain x-ray.

P.S. Actually I was holding no BTC (and never owned any) until today when someone sent me several to distribute to typhoon victims.

Mate no need to try hard its banned there period , no business will be willing to accept it as long as this is the Chinese gov tune , its banned mate , its not important if people can exchange it , who cares i can exchange socks with you does that give it value , whats the value if it cant be used as a currency ? it was $13 at the beginning of the year and nothing have changed we're going back there but it takes time , its definitely not worth the hype , just another WOW Gold or a store credit ...

[lophie]

No they didn't , you just imagining things because you hold BTC and its dropping so fast get back to reality they said its not a currency no way and currently banned for financial institutions , it shows you China may ban it at any given time without any given notice , virtual commodity ? what the hell that mean ...

Your retort is irrational, as I am sure all the No votes are. I have studied the ruling and analyzed what it legally says. Your paranoia does not agree with the reality of what the ruling says.

Pass your Bitcoins to strong hands who have sound logic and know how to read what the ruling actually says. And who understand that China is slowly liberalizing, while the west is slowing turning into a spy agency and capital controls prison. Note I have been a China critic over at http://mpettis.com, just find the posts with the avatar of Homer Simpson's small brain x-ray.

P.S. Actually I was holding no BTC (and never owned any) until today when someone sent me several to distribute to typhoon victims.

Mate no need to try hard its banned there period , no business will be willing to accept it as long as this is the Chinese gov tune , its banned mate , its not important if people can exchange it , who cares i can exchange socks with you does that give it value , whats the value if it cant be used as a currency ? it was $13 at the beginning of the year and nothing have changed we're going back there but it takes time , its definitely not worth the hype , just another WOW Gold or a store credit ...

The hype wasn't about BTC in stores and more like a different store of wealth and income generator via accepting unregulated type of currency that you can exchange on a local market, look here and understand the potential http://tealet.com/grower/list. Now the fall is because of baido, being shacky over 1k usd per coin and the fact that we are 4 times highest than the highest price bitcoin ever was! That is a psychological factor.

It will recover after this weekend to a stable $800. Maybe more.

[JakeGold]

The Chinese government sees bitcoin (and gold) as means to undercut the US world reserve currency. "The enemy of my enemy is my friend" as it were.

Rest assured, if the CNY was on top, they'd go for bitcoins throat in a heartbeat.

[AnonyMint]

No they didn't , you just imagining things because you hold BTC and its dropping so fast get back to reality they said its not a currency no way and currently banned for financial institutions , it shows you China may ban it at any given time without any given notice , virtual commodity ? what the hell that mean ...

Your retort is irrational, as I am sure all the No votes are. I have studied the ruling and analyzed what it legally says. Your paranoia does not agree with the reality of what the ruling says.

Pass your Bitcoins to strong hands who have sound logic and know how to read what the ruling actually says. And who understand that China is slowly liberalizing, while the west is slowing turning into a spy agency and capital controls prison. Note I have been a China critic over at http://mpettis.com, just find the posts with the avatar of Homer Simpson's small brain x-ray.

P.S. Actually I was holding no BTC (and never owned any) until today when someone sent me several to distribute to typhoon victims.

Mate no need to try hard its banned there period , no business will be willing to accept it as long as this is the Chinese gov tune , its banned mate , its not important if people can exchange it , who cares i can exchange socks with you does that give it value , whats the value if it cant be used as a currency ? it was $13 at the beginning of the year and nothing have changed we're going back there but it takes time , its definitely not worth the hype , just another WOW Gold or a store credit ...

Bitcoin isn't close to being a currency, for the reasons I explained in the OP and also because the majority of the demand is for speculation and because it is so volatile that merchants which operate on normal margins, e.g. 5 - 30%, must convert BTC received to a more stable fiat immediately.

So China isn't disallowing anything that Bitcoin currently is.

Small shops can accept Bitcoin just as they can every where else in the world. And they will immediate convert it to fiat for the portion they need to pay their costs with.

There are no way to make loans in Bitcoin because the volatility is several times higher than any interest rate anyone would pay. Thus Bitcoin is no where near being a financial instrument.

Bitcoin is a speculation, which also has the ability to transfer value electronically. And China's ruling has not changed that in China.

You are thinking that Bitcoin has to be ruled to be legal tender in order to be used. Sorry to remind you, that isn't the case in any country.

As I said, you are not being rational. Just all emotion not logical.

[AnonyMint]

My OP is merely recognizing that Bitcoin is no threat to the fiat world (yet). They know as long as they can force us through exchanges and force us to convert to fiat, because our costs are in fiat, then they control Bitcoin.

Relax, this is the cool thing about Bitcoin - no one can ban it as long as he/she cannot ban the internet

Disagree as explained below. What is interesting is how the west is turning into a police state, and China is slightly relaxing their police state slowly. Unfortunately I am not confident that China will unravel theirs all the way, and I am confident the western police state will significantly worsen, so I am thinking we end up with a much less freer world.

What I see is all the countries are heading towards a controlled outcome for Bitcoin, as explained in the quoted post below.

However, the crypto-currency story (Bitcoin isn't the only one) isn't complete yet... we can still fight back with other technologies coming...

P.S. your votes on the poll don't have to agree with this comment. The poll is orthogonal and based only on the OP.

You missed my point. The person whose identity they do know any where down the chain, is in deep shit until they can provide the upstream and downstream name who they bought from and sold to. Then when they help the IRS to identify those, then ditto for those people and so on, until it reaches back to you.

No, I didn't because I kept that in mind. To work it that way, first of all, you would have to physically catch and corner everyone who is down the chain.

No the NSA only needs to catch one IP address of one person on the chain.

It seems that now you are trying to confuse and obfuscate matters. At first you said the person down the chain would be in deep trouble because they would knock the crap out of him until he provided the names of whom he had bought from and sold to, and then you are saying that they only need to catch one IP address of one person on the chain. If the poor wretch just doesn't know the names how can he be of any help to the investigators?

And this still doesn't prove that they wouldn't have to catch everyone (which is what you assumed)...

If the IRS and criminal law enforcement (via the NSA) knows that you sent a spend transaction on a coin because they correlated your IP address using one of the many reasons I stated above that a user can fail to hide their IP address even with Tor and/or a VPN, they can come to you and say, "please provide records of whom you purchased from and who you sold to, so we can verify which transactions on this coin are yours. If you failed to keep proper records as required by law, we can only assume you may have been sending transactions to yourself ever since this coin was mined until the present time, so you've owned this coin since its creation until now".

Thus now you are responsible for all gains and all criminal activity on the coin, until you can prove you did not send transactions to yourself by showing whom you bought from and sold to.

You don't seem to understand that "I don't know" is not a valid defense. That defense means you own all history until the present on the coin.

They won't "knock the crap out him". They will send him a tax bill for the entire coin's history and put him in jail for any criminal activity on the coin. You can bet it won't take many examples like this for people to demand complete identification of the seller before buying and of the buyer before selling a Bitcoin.

I am continually amazed that people haven't realized this. The Bitcoin developers know this. Go to the CoinJoin thread which was started by Bitcoin developer gmaxell.

[raspcoin]

The Chinese government sees bitcoin (and gold) as means to undercut the US world reserve currency. "The enemy of my enemy is my friend" as it were.

Rest assured, if the CNY was on top, they'd go for bitcoins throat in a heartbeat.

What is China then supposed to do with all their dollars? It is not that simple, but more currency competition is probably good for them.

[AnonyMint]

The Chinese government sees bitcoin (and gold) as means to undercut the US world reserve currency. "The enemy of my enemy is my friend" as it were.

Rest assured, if the CNY was on top, they'd go for bitcoins throat in a heartbeat.

What is China then supposed to do with all their dollars?

Both of those commentators don't understand what is really going on.

China has a highly unbalanced economy with 2/3 on fixed investment and only 1/3 on consumer. Such imbalance is not sustainable. The leaders recognize this and have begun a plan to spend their dollars on imports and rebalance their economy with meaningful results by 2020.

None of the countries of the world are planning to use Bitcoin to defeat the reserve currency. The countries of world are run by the banksters who are part of club and they plan on bringing the world to an SDR reserve currency which is a basket. And then all the national currencies will float relative to the SDR reserve.

Bitcoin is no threat because as I explained in my previous post they can easily force everyone to demand everyone's identity. Divide-and-conquer baby, the elite know that.

No country will give up its absolute power over the issuance of money. That would mean politicians, banksters, and taipans would have to give up their power. Never will be, not unless we decapitate them with technology. And Bitcoin can't be it, it doesn't have anonymity.

[EskimoBob]

Did China just legalize Bitcoin, clarify regulation, for its free market use?

Yes, you can say that.

Lets try to make it simpler to understand:

1) BTC will not be treated as a regular currency. (This is actually a good news)
2) People can use it as they please... (This is also a good news)
3) ... but must bare all the risks involved. (you wanted freedom? You got it)

2. and 3. mean - do wtf you want with it. (also good news)

4) If you use BTC, do no not come back to your bank or gov. agency, crying foul, because you lost your coins or you got ripped off.
5) Do not cry, if BTC loses 30-99% in another panic sell-off (caused by severe illiteracy among BTC "investors")
6) You have no gov. guarantees and your BTC (account) are not protected (read: not insured) as your fiat is in a bank account.

[LiteCoinGuy]

The Chinese should just say fuck you government we'll do what we want.
It's not like they can't trade in person or with an online escrow service.

Well there are a lot of cameras and police in China, but yeah the government probably realizes it better to regulate the exchanges (require identification) than force people to go to the underground economy.

There is a huge Shadow banking underground finance economy in China. China knows that in order to take its place as the new center of the financial world by 2033, it must liberalize its financial industry.

This ruling appears to be right in line with China achieving its goal.

http://armstrongeconomics.com/2013/11/15/chinas-reform-push-for-2020/

(click link above to see this image if it doesn't appear)

http://armstrongeconomics.com/2013/11/15/china-a-new-era/
http://armstrongeconomics.com/2013/11/23/china-the-dollar/
http://armstrongeconomics.com/wp-content/uploads/2011/02/armstrongeconomics-the-assent-of-china-the-new-face-of-china-1-25-2011.pdf

interesting picture.

[porc]

No country will give up its absolute power over the issuance of money. That would mean politicians, banksters, and taipans would have to give up their power. Never will be, not unless we decapitate them with technology. And Bitcoin can't be it, it doesn't have anonymity.

Bitcoin cant become currency for your stated reason. The majority of bitcoiners believe it will.

I agree with the bolded statement (in part). However no cryptocurrency will ever be anonymous and thus become currency. If somebody has a hugely successful business and no transactions are shown in yuan (at his local bank account) (or any other government currency) it will be obvious that he is using cryptocurrencies instead of yuan.

EDIT: I believe bitcoins price will collapse as I dont see Bitcoin being used as a store of value (or as a currency as explained above).

[superduh]

china not only legalized bitcoins 100% they put it outside their tight currency controls!!! which is actually a REALLY REALLY good thing for today. there are many people who don't understand china and many people who can't quite grasp how good this news is for now! china treating it as a commodity for the time being is really great! now it will go on to surpass gold in terms of value. see you at the moon

[porc]

china not only legalized bitcoins 100% they put it outside their tight currency controls!!! which is actually a REALLY REALLY good thing for today. there are many people who don't understand china and many people who can't quite grasp how good this news is for now! china treating it as a commodity for the time being is really great! now it will go on to surpass gold in terms of value. see you at the moon

I have to disagree. Its not great as treating it as a commodity (with capital gains taxes for example) will mean that it wont become a dominant medium of exchange.

So whats left is the store of value aspect. However bitcoin being a technology that can be outcompeted by altcoins, possibly hacked (how should the average joe know if not more bitcoins can be created), and not wanted for itself (like gold that people love to look at and hold in their hand or silver) will have enormous difficulty become a dominant store of value. Btw: people speculating in it (thinking it will go to the moon like you do) does not proof bitcoins viability as a store of value over long periods of time!

Now for transfers it is not cheap if you take into account the spread! So where exactly is the value??? I dont see it.