"but essentially if bitcoin is not a currency in China and china as a state only recognizes one single currency which is the RMB. therefore all merchants, stores and services can only accept the RMB. since bitcoin is not a currency and not a recognized currency so it's actually a logical conclusion that china for now will not allow goods and services to be sold and paid for by bitcoin" Bobby Lee (CEO of BTC China)"

Audience: Goods/services can not be sold in bitcoin. Im wondering if most investors in china are they expecting that to change?
Bobby Lee: So that’s not going to change anytime soon. The government has made it clear that goods/services can not be priced in btc and can not be sold and paid for in btc. So that’s the current stance. All companies under the china law will follow that.

Audience: Can you clarify as whether all merchants are not allowed to accept btc or is it only for existing financial institutions?
Bobby Lee: it’s both. Financial institutions can’t touch it and goods/services are not allowed to be sold or priced in btc. Two different points and they both apply.

I guess Chinese sellers can still use payment gateways that instantly convert bitcoins into RMB and then settle it to merchant's account. Of course prices will be in national currency.

Given that Chinese individuals are free to buy bitcoins and hold them as investment, they are also free to buy any goods for BTC through described above payment platforms.

actually if you listen through the video (i didnt quote it), it removes many bitcoin business models from china.  the government is very clear that they do not want goods/services exchanged for bitcoin.  they are aware of teh bartering rules but i would assume they deliberately omitted mentioning that it's ok to barter.  in China, you don't do things that the government frowns upon, they will put you in prison or execute you.  look up shadow banking in china.

here's some commentary by a chinese citizen that i quoted for a reddit post.  

http://www.reddit.com/r/Bitcoin/comments/1sgjxw/post_by_a_chinese_citizen_on_how_the_china_rally/

All of the analysis thus far and including my prior post, is myopic and ignores the ecosystem networking effects.

The Chinese will own 10s or 100s of $billions perhaps even $trillions of value stored in BTC. Do you really think the market is not going to respond and try to market something to that huge capital base?

For example, the Chinese could go on vacation abroad and spend their BTC.

Or they could buy and sell abroad over the internet, e.g. such as for their homes abroad or running business virtually abroad. Especially they become wealthy investing in BTC.

Also the anonymous altcoin comes along, they leverage their BTC into that.

China is desperate to grow the consumer share of their economy because as http://pettis.com has pointed out, their economy will collapse if they don't. Do you really think they will allow all that consumer business to go abroad? No. The wall is coming down. China is transforming.

Etc.....

China can't put the free market use of Bitcoin back in the bag.

3. People's Bank of China banned all the third party payment company doing business related to bitcoin, including bitcoin exchange platforms.
For those who is currently doing, they are required to completely cut off bitcoin related business by the Chinese new year, which is at the end of Jan 2014.

After Dec 5, small merchants or online shop owner could still accept bitcoin as payment and comfortably convert them to rmb through exchange like btcchina. In the future , this is going to be much harder and completely illegal after the Chinese new year. Basically, bitcoin is dead in China for the most part. People can only use it as speculative investment and store of value, but it is going to very hard for them to realize their potential profit legally in the future.

My personal opinion is that China is in not going to have a robust bitcoin economy anywhere in the medium or long term future.

China currently has a $50k USD restrictions on the amount of money its citizens can take out of the country. Bitcoin with its anonymous nature can easily by pass these restrictions. yeah i know there's AML/ KYC rules set up for BTCchina now but i know that if btc becomes a widely circulated "commodity" in exchange for services and goods that it will be easier to launder and hide illicit gains in bitcoin than it would be to hide them yuan. http://www.china-briefing.com/news/2011/11/11/getting-cash-money-rmb-out-of-china.html
if citizens in China start using btc as a "commodity" in exchange for services and goods that would threaten the stability of the chinese yuan. it certainly would not raise the value of the yuan. i don't see how the chinese govt would encourage this to happen.

the Chinese banks are banned from offering services/goods in bitcoin. that was NOT a good sign. it certainly wont make it easier to start bitcoin related businesses in china. Baidu/China Telecom's immediate removal of btc as a payment option following the offical govt announcement was NOT a good sign. i don't know how anybody can spin those actions as a positive for bitcoin.
i also don't believe that bitcoin is booming in China because it's citizens believe in it as an alternative currency. I believe the price skyrocketed due to greed and pure speculation. take a look at the 2010 China Garlic Bubble where in a few months the price of garlic rose 40-50x due to pure speculation, price manipulation and hoarding. Sound familiar to bitcoin in China? http://www.npr.org/templates/story/story.php?storyId=121125739

Plenty of redditors have claimed that China would be supportive of btc because it would devalue the US dollar and raise it's own yuan in value for foreign trade. that's highly unlikely since the Yuan is already the #2 most used currency for foreign trade in the world. China is about to start direct trade with the UK in yuan/pounds. the daily global trade in Chinese Yuan is over $120 billion which is 10x the market cap of bitcoin.
http://www.bloomberg.com/news/2013-12-03/yuan-passes-euro-to-be-second-most-used-trade-finance-currency.html
China is a quasi-totalitarian regime that has no qualms about crushing any form of rebellion (labour camps for journalists, tiananmen square, human rights violations, highest # of executions in the world). Bitcoin by its very nature is designed to give the power back to its people, its users. China's entire recent history is about controlling it's people.

tldr: bitcoin gives freedom and power to the Chinese citizens, the chinese government is realizes this and will move to prevent China from ever having a robust btc economy where btc will be widely traded for services/goods. Chinese citizens have a history of participating in mass speculative bubbles without caring about the fundamental value.

We will build real anonymity and sidestep the government's power.

Bingo!

Good to see you all are starting to understand finally.


Yes and they will collect capital gains and/or VAT taxes on Bitcoin appreciation as an investment even if you are trying to use it as a currency (medium-of-exchange), thus it can not be a currency.

But developers of altcoins will rise to the opportunity and create truly anonymous coins. Anoncoin isn't it. Bitcoin isn't it. I will soon publish a whitepaper to explain why.

In short, you need to understand that Chaum mix-nets (e.g. Tor) are vulnerable to timing attacks, and even honeypotting given only 3 hops. They NSA and spy agencies in each country are likely still able to track your identity much of the time. And VPNs are likely all controlled/backdoored/hacked/rooted by the NSA. And exchanging through mixers and altcoins does not obscure your IP address no matter how many times you do it. Also even across these proxies, your identity is tracked in other ways such as browser plugins trojans, cookies, patterns of internet uses such as favored search terms, facbook et al tracking the way you type, etc..

Even if you are one of the lucky few who manages to keep your anonymity assured by careful mix of the above methods, the point is the majority will not. And thus it is very simple for the government to make your anonymous coins practically unspendable and useless. The government simply sends a tax bill and put criminal liability for all activity on a coin since mining until present, until those non-anonymous coins holders (or former holders) can provide the identity of whom they bought from and sold to.

Thus all users will become afraid and only accept coins and sell coins from those who provide their complete identity. Thus only a coin with widespread assured anonymity would be able to become a currency and remain immune to government control.

So clearly you can see that you never will have anonymity with Bitcoin nor any current altcoins. Thus Bitcoin and the current altcoins can never be currencies (unless the governments take them over somehow and make them legal tender), and the government will essentially control them.

Note one means anonymity I proposed thus far are a new way to do physical crypto-coins.