Feeds

back to article People's Bank of China bans Bitcoin over 'drugs and guns' trade fears

China has banned its banks from using Bitcoin after warning the cryptocurrency could be used to fund terrorism. Financial institutions in the Middle Kingdom will no longer be able to use Bitcoin, although citizens are free to spend the digital funny money. The People's Bank of China announced its decision in a statement …

COMMENTS

This topic is closed for new posts.

Page:

Bronze badge

Fearmongering from the Masters

Bitcoin is no different than cash in it's anonymity although Bitcoin can be transferred more easily. If China was truly concerned about terrrorism and money laundering, it should only look deeper at Hong Kong/Shanghei Banking Corporation and then in the mirror. Repeat, Rinse, Repeat...

Back and forth several million times might be enough for them to get the point.

3
0
Bronze badge

Re: Fearmongering from the Masters

Really? No different than cash?

Any currency is controlled by a national bank that has the monopoly on issuing coins and notes.

Who can guarantee that the market will not be flooded by counterfeit bitcoins?

Where do they originate from?

No different than cash he says? :-D

2
5
Anonymous Coward

Ouch

Won't be long before the whole thing is banned, or maybe hacked into the ether never to be seen again.

1
0
Silver badge

I will

I will destroy what I do not understand

I will destroy what I cannot control

4
2
Bronze badge
Boffin

Re: Fearmongering from the Masters

Who can guarantee that the market will not be flooded by counterfeit bitcoins?

Math

11
0

Re: Fearmongering from the Masters

As I understand it, each node in the network is used to check that the transactions and coins and whatever are legitimate, so for fake coins it would need to fool every node down the line into believing that the transaction is legitimate and the coins are not fake. It's why you can't spend 2 of the same coins, other users check how valid the transaction is and says "umm, no, you spent that" or something.

Obviously the capitalistic pig in me is wondering how much cash I'd need to spend on a dedicated mining machine to mine bitcoins to make a huge profit and take over the universe, but it's all bloody complicated!

1
0
Silver badge
Big Brother

Re: Fearmongering from the Masters

Any currency is controlled by a national bank that has the monopoly on issuing coins and notes.

And you know where that is coming from and why it is there.

Taxes. And getting away with inflating the money supply (i.e. getting valuable goods for nothing). Brought to you by the guy with the swordgun. That is what Seigniorage is about: "the difference between the value of money and the cost to produce and distribute it", aka. "stealing". Right up there with first f*ck rights.

0
0
Bronze badge

Re: No different than cash?

In it's anonymity.

0
0
Silver badge

Re: Fearmongering from the Masters

"That is what Seigniorage is about: "the difference between the value of money and the cost to produce and distribute it", aka. "stealing""

So that basically makes any currency which doesn't consist of solid hunks of metal (or any given thing) a form of theft - meaning that somehow you feel that it's different when the market determines some gold is worth depending on how much people are currently managing to dig up (at a profit, of course) vs. the market determining how much a euro or dollar is worth depending on... how many of them people are willing to trade for other currencies... hmm... which can be created (dug up) at will - at a profit.

Interestingly, your take on currency-as-currency rather than currency-as-proxy-for-arbitrary-rare-metal-chunks is about as accurate as "first f*ck rights", which, while much-talked about, were rarely seen in the real world.

1
1
Anonymous Coward

Re: I will

"I will destroy what I do not understand

I will destroy what I cannot control"

Excellent. You comprehend the concept and theory of controls on a fiat currency system, then.

1
0
Bronze badge

Re: Fearmongering from the Masters

Who can guarantee the UK won't be flooded with counterfeit currency? Or that the Bank of England won't decide to print 375 billion pounds and buy up 1/3 of the national debt with it (and they have done just that in the last 5 years).

Bitcoin prices are a bit absurd, but the system itself is sound and is far more secure against counterfeiting or the kind of unlimited devaluation by printing that most traditional currencies have been subject to in the last few years.

1
0
Silver badge
Holmes

Re: Fearmongering from the Masters

the market determining how much a euro or dollar is worth depending on... how many of them people are willing to trade for other currencies... hmm... which can be created (dug up) at will - at a profit

Yes.

[John Cleese pause].

Unfortunately I have yet to see people digging up euros. They are generally carted out of the European Central Bank, amazingly.

Look up "currency manipulation" and the whole mercantilist bull of "fixing the interest rate" and "keeping the EUR/USD/YEN/RMB" low relative to other currencies to "help exports" and other retardations by economists possibly holding the "nobel prize in economics" (a title worth about as much as "MSFT most cherished microserf" but it apparently opens doors to writing inane if not frankly evil articles in the NYT)

Then ask yourself how this is were even possible if the fiat money had any objective value above 0.

1
0
Bronze badge

Re: I will

so. black holes then..

0
0
Silver badge

Re: Fearmongering from the Masters

"Who can guarantee that the market will not be flooded by counterfeit bitcoins?"

For that matter, who can guarantee that the market will not be flooded by (national currency) notes*? Ah, I forgot, actually it's guaranteed that the central bank controlling any fiat currency WILL flood the market with currency if it's convenient for the government to do so.

*They don't have to be fake, even real ones drive up inflation and dilute the value of the existing currency.

3
0
Silver badge

Re: Fearmongering from the Masters

"So that basically makes any currency which doesn't consist of solid hunks of metal (or any given thing) a form of theft"

That is essentially true when the printing presses go out of control. If everyone in a country of population 1000 has $1000, and then the government prints $1million willy-nilly (doubling the monetary base without growing the economy), the value of everyone's money goes down by half. So effectively the government has stolen $500 from each of the 1000 people and now has $500k in 'old' value.

Of course in reality it's a bit more complex than that and the margins are tiny (ideally non-existant in a healthy economy if money supply only grows as fast as the economy), but it's still a form of theft when it does happen.

0
0
Anonymous Coward

Re: Fearmongering from the Masters

Except the system isn't sound. It has already be shown to have vulnerabilities that can rollback transactions and mistakes that make it not really anonymous. Plus the mining difficulty is very rapidly exceeding the technology/speed increase. A common misconception is that mining produces bitcoins, it actually enables transactions to occur.

0
0
WTF?

Re: No different than cash?

>>In it's anonymity.

Why do so many people think Bitcoin is anonymous. Peeps fer fuck sake RTFM:

http://bitcoin.org/en/faq#is-bitcoin-anonymous

http://slashdot.org/story/13/12/02/0035206/rms-calls-for-truly-anonymous-payment-alternative-to-bitcoin

0
0
Silver badge

Re: Fearmongering from the Masters

"the whole mercantilist bull of "fixing the interest rate" and "keeping the EUR/USD/YEN/RMB" low relative to other currencies to "help exports""

You say this like it's a bad thing. Controlling interest rates and the strength of currencies is essential; without the option to devalue, you end up with horrid circumstances in countries with different economic situations. Greece comes to mind - being part of the Euro, they couldn't devalue, and in the event that would have been a softer way to handle the situation.

Yeah, there can be issues with countries artificially propping up / pushing down their currencies, but that tends to get dealt with by the international community in a mostly effective way.

Further, the paranoia about devaluation and inflation is pretty much just that - paranoia. Hyperinflation hasn't been a problem for decades, and the fantastic doomsday scenarios of governments going off their rockers and printing bazillions of dollars just aren't going to happen in the developed world - not without a triggering situation that's going to be terrible whether or not there's subsequent devaluation.

At the moment, the bigger problem economically is *lack* of inflation, actually - generally, monetary control has been too tight, not too loose.

0
1
WTF?

Re: Fearmongering from the Masters

"Then ask yourself how this is were even possible if the fiat money had any objective value above 0."

Objective value? OBJECTIVE VALUE? For a currency? What in God’s name are you talking about? You should really do some basic reading on how the monetary system works – that is, basic reading that doesn’t start from the overheated premise that fiat money is obviously a scam/Ponzi scheme/other cliché because gold/hyperinflation/Zimbabwe/seignorage=theft/whatever. Because this stuff is just the usual Ron Paul-lite goldbug leg-humping confidently posted all over the interwebs by excitable people without the faintest awareness of the history of economic thought.

1
2
Silver badge

Re: Fearmongering from the Masters

" Plus the mining difficulty is very rapidly exceeding the technology/speed increase"

That's deliberate. You don't want tit to become easier to mine bitcoins, else you reduce their value.

ANY currency is only any good when theres confidence in it. The Roman Empire fell apart in less than 18 months when people started refusing to accept their coins.

The UK gov knows full well that tyhe same hting would happen rapidly if people started refusing to handle pound coins (counterfeiting issues) - I don't think it's coincidental that the fuss over fakes has conspicuously gone away at about the same time as the level of obvious fakes I encounter is increasing (It's been mentioned that a 5-6% fake level would be ebough to blow consumer confidence apart) and I'm at the point of refusing pound coins at all.

0
0

Re: Fearmongering from the Masters

Math? The math does not limit the number of BCs, nor does It limit the rate of growth. It only guarantees that as more and more BCs are mined it becomes increasingly harder to mine new ones. It is predictable only if computing resources remain constant, or at least within a projected growth curve. That is far from a guarantee. What if everyone starts mining? What if the Chinese and other governments decide they can't stop it and throw the weight of their many supercomputers into mining? What if a quantum computer is finally made that renders Bitcoin's math trivial? Sorry, but I do not believe the math precludes a flood of new BCs.

Besides, it isn't a true currency anyway. The overwhelmingly vast majority of BCs are pushed around by speculators with only a tiny fraction used to actually purchase goods and services. It looks suspiciously like a clever pyramid scam to me. Those who started it got the majority of the easily mined BCs early on and are allowing speculators to drive up the price of their easily acquired hordes. The late-comers can hardly mine enough to pay for their equipment, but they serve to drive up the price.

Also, it is extremely volatile, which brings in the speculators in the first place. This Chinese announcement drove the price down 20%. If other nations follow suite, it will drive it to zero worth. It's a scam. A very clever one, but still a scam.

0
1
Bronze badge
Angel

The voice of reason

is coming from the east.

I couldn't believe the US government decided to accept bitcoin as a legitimate currency. Nobody with any clue would.

2
4
Silver badge
Trollface

Re: The voice of reason

Seems your IP address is the Federal Reserve Main Bunker. How bizarre.

3
0

Re: The voice of reason

thats the real fear talking. fear of extinction.

banking cartels are really on the edge. they can't control cryptocurrencies, and their time is over. world is moving towards always online and fully digital era.

people will prefer to use a system which has fast (orders of magnitude), 24/7 and comfortable to use transactions.

with no middlemen banksters to extort exorbitant fees, with no government to control, abuse and exploit currency monopoly.

6
0
Anonymous Coward

Re: The voice of reason

That's the POINT of the Chinese proclamation: there is no such thing as a "cryptocurrency". It's a trading equivalent of a good - one object, material, having a perceived value in exchange for another object, in this case immaterial, having a value. But the immaterial object is a mathematical construct (a digital 'coupon') that, being back by NOTHING other than the USER'S belief, therefore has no value.

Fiat currency is not the same - it is backed by the faith in the government, the GDP behind that government and the government's ability to pay back loans made using that fiat currency. If Bitcoins were used by governments then it, as well, would truly be a "currency". But since Bitcoin is not a reserve exchange, not tied to a single market, property or exchangeable equity except by the user's hopes, it is worth, essentially, NOTHING. It is not legal tender - it is not valued as true exchange for anything of value, legally.

Therefore Bitcoin must, by financial theory, be an exchangeable good - you 'made' it and it only has a trade value to those who agree to some level of "value" in the first place.

Get a grip on yourself. Just because you "mine" (create out of thin air) a mathematical, encrypted 'coupon' does not make it a "currency".

1
0
Bronze badge

Re: The voice of reason

>>> Fiat currency is not the same - it is backed by the faith in the government <<<

Well that should inspire confidence.

But you're defining currency on your terms. Dictionary says:

1. Money in any form when in actual use as a medium of exchange, especially circulating paper money.

2. Transmission from person to person as a medium of exchange; circulation: coins now in currency.

It has nothing to do with whether it is issued or used by a government. Only that it is a medium of exchange, which it certainly is. Like cash, it has no utility other than as a representation of value.

1
0

Re: The voice of reason

maybe this will make it easier to understand:

it is not made out of thin air - think of it as a conversion of electric energy, scientific knowledge and hardware into a digital value unit. decentralized and secured by distributed computing. each additional person mining adding more security and resilience to the system. as reward for spending enegy they get "coins".

no douchers to tell people what its value is, how/what/etc to trade it.

future is digital, digital is virtual, virtual is anarchy, and anarchy is freedom.

0
0
Silver badge
Headmaster

Re: The voice of reason

Fiat currency is not the same - it is backed by the faith in the government, the GDP behind that government and the government's ability to pay back loans made using that fiat currency.

Well, if you look at the frankly exponential curves of government debt of the last few years, and you realize that "pay back" means taxing today's and future generations, thus shutting down economic avenues, then it will suddenly OCCUR TO YOU IN A FLASH that there is no way a western government will pay back its debt, ever. No way. It may pay it back NOMINALLY by issuing fiat money, but that won't help you at all.

People buying government bonds are basically taxing their children (and handing a fat haircut to the bureaucracy) It's a good investment I guess.

0
0
Bronze badge

Re: The voice of reason

future is digital, digital is virtual, virtual is anarchy, and anarchy is freedom.

Normal bitcoins supportes excluded, There's nothing like a bitcoin article to bring out the hippies and commies

Has the guardian linked to us today or something?

0
2
Silver badge

Re: The voice of reason

"Fiat currency is not the same - it is backed by the faith in the government, the GDP behind that government and the government's ability to pay back loans made using that fiat currency."

See my comment about the roman empire. All the government backing in the world has little value if noone will accept it. There are persistent rumours that the real reason for the second Iraq invasion was that Saddam was trading oil in Euros rather than dollars - which if true would make sense, as that kind of step change would severaly undermine confidence in the USD as a trading currency.

0
0

Governments will never like the currency because they don't control it, bartering with livestock you owned used be a valid 'currency' which worked fine without any government intervention. At the end of the day you should be free to use whatever means you want to pay for a good, as long both the buyer and seller value it, then the deal can be done. All other missing attributes are just the attributes the government likes to use as control, those are the things missing. The problem is, as an increasing amount of trade is done online, there isnt much they can do to stop people largely carrying it all out using Bitcoin.

2
0
Bronze badge

Did you read the article?

From the top: "China has banned its banks from using Bitcoin after warning the cryptocurrency could be used to fund terrorism. Financial institutions in the Middle Kingdom will no longer be able to use Bitcoin, although citizens are free to spend the digital funny money."

Any government has the right ànd the duty to set rules for their banks. It's because most failed to do their job, that we're in this mess to start with.

And that bartering with livestock was all very fine, but at the end of the year, "da man" came and took 10% of your livestock. So your "without any government intervention" line, doesn't fly either.

1
0
Silver badge

So I can trade these six strapping African lads for 45,000 board feet of lumber? How about this young Thai lady, she's barely been used. There have to be limits on the acceptable vehicles of trade or Humanity is guaranteed to do really fucked up things.

So if we accept some reasonable limits you can trade whatever you like if you can find someone willing to recognize the value of what you're offering. You can trade oddly shaped pebbles if you want and ascribe any value you see fit. If there are a bunch of pebble traders you all might come to an agreement on a standardized value of the pebbles. You and your buddies are free to trade pebbles all you want.

But I don't want your pebbles, I don't care what their equivalent cash value is. I want cash, so it's on you to convert them to cash, not me. You want my thing, I want your cash, not your pebbles, your pebbles have no value to me.

By using a unit of trade that's not recognized by the person you're trading with you've effectively reversed one of the few near universal constants: You've put the seller in control of the transaction. Normally the buyer is actually in control of a transaction as your unit of trade can be applied to other things the buyer wants so the buyer actually has the need, you as a customer fulfill that need. But if your unit of trade isn't widely accepted then it's equivalent value is greatly reduced.

It is perfectly acceptable for me to ascribe a much lower value to your trade unit as it isn't fully functional. So an item that cost $500 in cash would cost you 10 Bitcoins. Since there is no widely recognized value of your trade unit I can value it however I like and you can either deal with it, convert it to cash, or try to find somebody who recognizes the value of your trade unit and is willing to deal with the hassle.

No legal recognition means your trade unit has the value I set, not you. If you bring cash that value is set by a third party so there's no room for gouging, it's an even playing field. So why not just deal in cash? Why set yourself up to pay extra for something?

0
1
Silver badge

If you bring cash that value is set by a third party

No.

This based on the wrong idea that "cash" has some universally defined value. It doesn't. "Cash" is just a moniker for some good that you trade for another good. The valuation is done at the moment of exchange only and valid only for the persons taking part in that exchange,

Hopefully that good is actual money, i.e. some hard metal.

Today, "cash" is cheap paper and symbols in computer memories.

If you are the government, the value of that kind of "cash" is basically zero (the cost of a print run) and you can buy anything at all. If you are the seller-to-government, you will make sure you increase the price before you are being handed that paper and then you will spend it pretty fast (transforming it into money) if you know what is good for you.

"Legal recognition" is bullshit front, back and center as the Weimar hyperinflation nicely showed.

2
0
Silver badge
FAIL

@Johan Bastiaansen..

Any government has the right ànd the duty to set rules for their banks. It's because most failed to do their job, that we're in this mess to start with.

Maybe you should first learn how money production and bubbles work before pulling random stuff out of your nether regions.

If random IT guy would come up and tell you that his program doesn't work because there is not enough Microsoft licensing in this company, he would rightly have an accident with the tape safe.

0
0
Silver badge

Of course legal recognition is bullshit. It is however what allows me to trade my cash for whatever I like with pretty much anybody. Not so with Bitcoin, you've got to convert it to something of recognized value first.

Dealing with the recognized value of a trade unit is what's been screwing thieves out of big profit for millennia. You may have a whole basket of diamonds but they are worth precisely zero if that's the value I ascribe to them. You can take your diamonds to the bank and store them safely but their value is still exactly zero until you convert them into cash or find someone to trade with but you will still be basing the value of the trade on a dollar (or pound or whatever).

Same with Bitcoin, it has zero value outside its little club and even then it's value is dictated by the purchasing power of the trade unit you convert it to. What's the point? It all comes back to a base trade unit anyway. Why not just deal with that base unit?

0
0
Silver badge

If I could transfer that base unit anywhere in the world without long delays or fees or reliance of 3rd parties, sure. If that base unit could be used to buy/sell online without having to pay fees to and rely on 3rd parties, great.

Currently the pace of moving money exchange into the 21st century has been "Well um, maybe we should get rid of cheques at some point. But we don't have a clue of something good to replace them with" (or look at the US, where modernising cheques means you can scan a cheque with your phone...). Bitcoin may not be a Government backed currency, but it has solved some useful problems.

0
0
Silver badge

"But I don't want your pebbles, I don't care what their equivalent cash value is. I want cash, so it's on you to convert them to cash, not me. You want my thing, I want your cash, not your pebbles, your pebbles have no value to me."

Some women seem to have a hell of an attraction to faceted and polished ones....

0
0
Silver badge

CASH and MONEY are two different hings.

Supposedly the amount circulating in the UK cash economy is abnout 2-5% of the total money circulating in the UK.

Bitcoin is a CASH device. You can't make more out of thin air as banks and moneylenders do.

0
0
Silver badge

Re: @Johan Bastiaansen..

"If random IT guy would come up and tell you that his program doesn't work because there is not enough Microsoft licensing in this company, he would rightly have an accident with the tape safe."

My tape safe is more than large enough to hide the evidence (Several Phoenix 4622s) and I have been highly tempted at times.

0
0

I think you will find this entirely depends on how far you go back, "da man" as you put it only realised this was a good idea in fairly recent human history.

0
0
Bronze badge
Megaphone

Dear Peoples Bank of China....

...if memory serves, you will find that the Dollar, the Euro, the Pound, the Ruble and the Yuan (renminbi) have been, and are at present being used to finance Drugs, Terrorism and all other kinds of shenanigans.

How would Confucius have put it.....oh yes..."You're full of shit".

7
0

Money is just a lubricant to trade, if virtual currancy was outlawed globally the only difference would be a shift towards the return of old school bartering and escrow services.

OFFERED: two million assorted website logins

WANTED : will trade for credit on a WPA cracking service or large sack of rice (Beijing area).

1
0
Anonymous Coward

translation

quite simple

s/sex/intercourse/g

intercourse: communication or exchange between individuals; mutual dealings

(also see trade,traffic and relations)

3
0
Silver badge
Holmes

Someone totally missed what "money" is

One can argue whether Bitcoins are "money", but....

“Although there are people calling it a ‘currency’, it is not issued by the monetary authority, it does not possess the attributes of a currency such as legal repayment and enforcement abilities”

In the real world: Money: any commodity that can be used for exchange of goods.. Gold, nicely ciseled stones, fishes and bales of hay may be "money". (The Theory Of Money)

"Legal repayment and enforcement abilities" are not attributes of money. They seem to be random interjections thrown out by the guy with the brass knuckles.

Today of course, people are toilet-trained and think that colored pieces of paper (the value of which exponentially going to 0) are money. For those, you may indeed need "enforcement abilities" by the state. Otherwise, who would accept that crap for honest work.

1
0
Silver badge

Re: Someone totally missed what "money" is

In the machine shop safe there is a little over 18oz of 24k gold which will be used in a project. If I take that gold to the store I would be lucky to trade it for a 12 pack and a sandwich. It has absolutely zero trade value in general society. Zero.

Now, if I take $20,000 into the store I can trade it for whatever I like at a predefined exchange rate. The number isn't negotiable. The thing I want is valued at (x) dollars, I trade you (x) dollars you give me thing.

If you take the gold in there the value is determined by the seller of the thing you want and accepting your gold actually costs him cash because the predefined cash value of the thing being traded for must be met in cash. He might be willing to take value the gold at $17 for beer and a sandwich but you've just lost all your gold. If you had a useful unit of trade you could have kept the majority of your gold, but you didn't have a useful unit of trade and now you have no gold either.

0
1
Anonymous Coward

Re: Someone totally missed what "money" is

Actually, being a numerist for a few years, I've managed to pay the following bills with "hard" currency, usually being ex or current precious metal currency of the relevant country, or with gold coins from the common investment ones (maple leaves, pandas etc). Some took a little convincing, but most just wanted to check the current spot price and be able to get the weights.

I paid my bills at a:

- Notary

- Lawyer

- Accountant

- Dentist

- Builders

- Plumber

I've also bought a property and vehicles, although that I understand is illegal in the US, unless you settle for $1 and give the person the gold.

You can also walk up and exchange your gold or silver for cash in about as many places as you can exchange alternate currencies. Maybe a few more, but about the same for reasonable rates. I certainly can get my bank to buy anything investment grade for closer to spot than most dealers.

As for buying a beer and a sammich with gold, that'd be fiddly. But a full sterling shilling or two watered down ones would be about right.

The main issue is tax reporting, and if you move a large enough amount, money laundering.

0
1
Silver badge

Re: Someone totally missed what "money" is

Do you mean numismatist?

Numismatics is a fun game to play, if you like losing money. Even your mint, which has a board specifically to deal with the practice, advises against it. It's fun to have a little bit of gold and silver around but I also don't have to recognize anything but the face value of the coin.

Its value in metal is completely meaningless unless you find somebody who wants to play too. Again, why bother if not for the novelty? It actually has less value than regular money...

0
0
Silver badge

Re: Someone totally missed what "money" is

Also, it's possible that something is getting lost in the translation, but the way I read it makes it sound like any foreign currency is also not a currency - it isn't issued by the monetary authority, you can't use foreign currency to pay debts, and presumably they wouldn't want it circulating as a currency in China either.

Presumably banks in China are allowed to offer services of foreign currency exchange though...

0
0
Bronze badge
Linux

entrenched industry...

I am not sure I know much about bitcoin, but it simply looks like control freakery. Let us not forget the piece of plastic and long numbers we pay a tithe to massive corporate oligopolies for.... %1, %2 ...?

In a real sense, it is a shame the whole economy is not run on mathematics, but then that would make politics obsolete...

P.

2
0

Page:

This topic is closed for new posts.