How will the Chinese buy Bitcoin now?

[rebel24]

I'm trying to think it through.

The chinese still definitely want to buy bitcoin (all their other asset classes are largely inflated or dangerous(like their real estate market).

But if 3rd party payment processors are banned, how do the Chinese, buy bitcoin, with yuan, other than buying what already exists?

Ideas?

[jasonjm]

go on vacation and use localbitcoin?

wire money to an international bank and then have that bank wire it to bitcoin exchange?

however, more likely the chinese will just go back to buying precious metals now, much less effort and risk.

[rebel24]

The point is Chinese can't wire more than $500 to another international bank without it being a pain in the butt- and they definitely can't do more than $50,000 a year.

This may work to an extent, especially if they offered citizens money to help facilitate this, but I thought of another solution which is-- if people in other countries, like say the US, are content in holding yuan or gold/silver in china, and by doing so, they buy the bitcoins here in the US, make a call over to their business partner in china, who deposits gold in their warehouse in china, and in exchange gets bitcoin, at which point they sell it locally like localbitcoin.com


Finally, China could make bitcoins illegal in China, thats basically their last major step, but I don't think that either would stop the chinese. Everyone wants a good investment, and people are willing to take risks for it if the return is high enough -- if anything it could fuel people to buy it because they'd see it "if it's illegal it must be good" type of mentality.

The Chinese have a lot of money to spend, and they want good returns, virtually nothing else in china is giving a good return or isn't already in a bubble.


This stuff is crazy, but dang, I think it's just begun.

I would be surprised if the Chinese invested less than $50B in bitcoin in 2014 (as of today, the market cap of bitcoin and all alt currencies is less than $10B)


**I should add- in case any readers aren't aware- China does NOT want their yuan leaving the country, thats the whole point of the $50k a year limitation and their making it a pain in the butt to do wire transfers over $500. Also, if money DOES leave China, like it was through bitcoin, it is a major threat to their housing bubble (their housing market is like ours was in 2007- at PEAK high's and VERY expensive and a BUBBLE). Further, because money would ultimately flow from feeding the real estate market to bitcoin, this could cause their housing bubble to pop, and their whole economy with it... (like we saw in 2008, a year after our housing bubble popped).

[bitcool]

I can think of several:  

1. Indirect or disguised trades, something like selling a USB drive with BTCs on it.

2. Underground. Wherever there's profit, they are people willing to take the risk. With BTC, it's very easy to conduct trades among friends, relatives, acquaintances and other types of semi-closed circles.  

3. Overseas. Many Chinese know someone who live overseas, each citizen has a quote of $50K  sending overseas, many have been and will be using this quote to its full extend. Within families, close friends Chinese always trust and help each other. Unless the government want China to be completely cut off from outside world, this channel of money outflow is unlikely in danger.

4. Hongkong. It's easy for many Chinese to make a trip to Hongkong, traditionally they buy a lot of gold there because of the low price, now BTC may be the next hot thing.  

In short, in a country where there's no black and white, everything is gray, it's going to be a hell of work for PBOC if they choose to fight Bitcoins  

[jasonjm]

i dunno man, think about it for a second..... how likely would you be to invest in something that is very near impossible to get money in or out of unless you find a cash partner?

and its pretty clear that if people still don't listen and do the cash route in large numbers, china will simply outright ban bitcoin. Right now they figure they are making it so hard that it will make bitcoin a minor annoyance, with only fringe players in china committed enough to go through the hoops. But if people still do not get the message the banhammer is coming.

I don't think you are placing this in the correct context.

[gentlemand]

The Chinese will buy Bitcoin by doing a bank transfer to an exchange via their, er, bank. There's been zero mention of this being stopped.

Whether they'll want to with as much fervour as they have in the past is another matter.

[seriouscoin]

Do you know they can just buy mining gear right?
What chinese government is clueless about is..... ahem... you cant stop it if ppl use btc to transfer capital.

[bitcool]

i dunno man, think about it for a second..... how likely would you be to invest in something that is very near impossible to get money in or out of unless you find a cash partner?

and its pretty clear that if people still don't listen and do the cash route in large numbers, china will simply outright ban bitcoin. Right now they figure they are making it so hard that it will make bitcoin a minor annoyance, with only fringe players in china committed enough to go through the hoops. But if people still do not get the message the banhammer is coming.

I don't think you are placing this in the correct context.

Yes, if you are a speculator, you definitely don't want to do this.  If you are a true believer, or investing for the long term, you'll find a way to get your coins. It won't be much more difficult than buying gold.  Sky high RE bubble, rigged stock markets, there's little investment opportunity in that part of the world.

Of course Chinese government can ban it outright. Outside North Korea and Cuba,  China is actually among the top candidates to do this because of its totalitarian nature. If this happens, China will become a testbed for bitcoin's robustness. We'll know if it's really a honey badger or not.  http://www.reddit.com/r/Bitcoin/comments/1gagle/lol_new_bitcoin_billboard_in_san_jose_honey_badger/

To western bitcoin users, a Chinese government ban can actually be a good thing -- it's politically incorrect to stand on the same side as a communist regime, you know, on the wrong side of the history.

[GameKyuubi]

Bitcoin is super easy to smuggle (lol you can even send a paper wallet).  Getting it into the country will not be a problem, and once it's in, if people trade BTC for goods directly instead of selling it for fiat it should spread fast.

[dancupid]

It's only 3rd party money transfer mechanisms that have been blocked - you can still do bank transfers in and out of btcchina.

[bitcool]

It's only 3rd party money transfer mechanisms that have been blocked - you can still do bank transfers in and out of btcchina.

Not sure how long these banks will be allowed to do business with the exchanges though ... PBOC can pull the plug anytime it wants. In theory, they should do this to the bank first, then the 3rd party payment services.

Head-scratching things happen there routinely,  they make, bend and change the rules, no wonder people don't take laws seriously.

[ringsting]

The main reasons for buying bitcoin were getting money out of the country and speculation.

Some may speculate but as far as getting money out of the country the market is effectively dead.  Sure you could buy bitcoins on the black market but how is that any different from giving the merchant RMB and him giving you USD outside, especially when you consider the volatility risk?

[bitcool]

The main reasons for buying bitcoin were getting money out of the country and speculation.

Speculation -- dead. which is a good thing.

Getting money out of the country? I suppose you meant getting FIAT money out of the country, i.e.
  1) RMB -> BTC  
  2) BTC -> USD/EUR/etc.  

I wonder how many corrupted cadres have been using this way to get their money out of the country, not many, I think.

Even there are many, all they need to do is switching their source of BTC from open exchange to a private sources, which I am sure will flourish because it's profitable.

but how is that any different from giving the merchant RMB and him giving you USD outside, especially when you consider the volatility risk?

No difference if that merchant has a sufficiently deep pocket, he's essentially a MSB, you know, like an exchange.

Once you get your btc, the volatility risk is the same, it always take 6 confirmations to transfer and sell your booty.

[pand70]

The chinese still definitely want to buy bitcoin

If that was the case then the price would've gone up not down like it did after the rumor...

[ringsting]

I wonder how many corrupted cadres have been using this way to get their money out of the country, not many, I think.

Even there are many, all they need to do is switching their source of BTC from open exchange to a private sources, which I am sure will flourish because it's profitable.

This was one of the main drivers for getting money out of the country.  You would not believe how much black cash there is in China.

No difference if that merchant has a sufficiently deep pocket, he's essentially a MSB, you know, like an exchange.

Once you get your btc, the volatility risk is the same, it always take 6 confirmations to transfer and sell your booty.

Bitcoin exchanges made this much easier, it is going to be much harder now, and there is not really much point in having bitcoin in the middle.

[bitcon]

i'd like to see what happens when/if the Chinese start accepting BTC under the table for goods or services.