back to article China turns screws on Bitcoin with third party payments ban

The emperor’s-new-clothes world of Bitcoin trading suffered another major blow this week after reports emerged that China has banned all third party payment providers from offering clearing services for digital currency exchanges. The Middle Kingdom’s central bank, the People’s Bank of China (PBOC), met with over ten payment …

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Silver badge

It's an error. Fix it.

What this means is that the BitCoin system has a bug or design error that makes it vulnerable to this type of attack. If it is to be a proper part of the Internet, it needs to be able to route around such attacks.

This is an argument in favor of Crypto Currency, not against it. The fact that they have control over other forms of exchange and don't over this is a bad thing for them but a good thing for us. Intervening like this is an admission that they can't control Crypto Currency.

I have some technical misgivings about BitCoin in particular and I think it should be replaced rather than upgraded. However, I think we truly need a strong assault-proof Crypto-Currency.

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Banned

Until China finds a way to take it under State Control.

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Re: It's an error. Fix it.

The problem then becomes, how do you spend BitCoins you own? No one in China (from an official standpoint) will offer an exchange from Btc > Yuan, no vendors will offer "Coffee 0.000001 Btc!". You could invest the coins in an external exchange, but then what, what do you do when you want the cash?

Here, you could go Exchange > Convert > Send to bank.

China? Exchange > Convert > Have the money sent to you by post?

Currencies value (to a consumer) is in what that currency can purchase, if you're in China and you can't purchase anything with Btc, nor convert it to cash in your own country, where is the value in anything other than an investment, where, if the price starts to go on a slide you can't really back out, or, if it goes on a huge upswing you can't really convert it to your local currency.

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relevant?

I'm wondering just how relevant it will be soon to be able to change your bitcoins into any other currency... its like being able to convert the 'pretend' money in my bank account into paper and metal version.. I get paid in digital pounds, and I spend most of my digital pounds digitally, never coming into a physical form.. apart from when I go to the pub or buy bus tickets... and some pubs now take bitcoin...

I'd like to think one of the goals of bitcoin is to make national currencies irrelevant and make them go the way of the franc, the mark and the drachma.

The major hurdle will be being able to receive your salary in bitcoin... although I don't think this is very practical just now with the large currency fluctuations going on.. maybe later when it is settled and someone finds a way around restrictive regimes trying to mandate their national currency...

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Silver badge

Re: relevant?

There are huge economic advantages of a state being able to manage its currency. BitCoin, if it manages to establish itself, will provide an excellent parallel system to state currencies. But as a sole replacement, it would have terrible implications. Look at what happened to Greece recently when it was tied into a single currency with the economic powerhouse that is Germany. Yes, corruption in Greece was institutionalized, and fraud was endemic - these were the biggest factors - but being unable to adjust the economy to suit its own needs rather than joined in a three-legged race to Germany, was also a large issue.

Bitcoin is essentially a non-fiat currency (which is hilarious as technically it's about as fiat as you can get), and making it the sole currency of a country would cause very major problems. It does, however, have amazing potential as an international and moderating currency.

Thing is, as you can see here - the normal slow-on-the-uptake state of governments when it comes to technology implications are reversed where currencies are concerned. There are few greater threats to a government than a currency it does not control. China's response was as inevitable as it was predictable. There are no "guns" backing BitCoin. It can either be stomped out or co-opted. Co-opted I am fine with - I think it has great potential. But I wonder how the starry-eyed zealots will deal with it when governments start properly taxing and interfering with it.

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Bronze badge

Remuneration in BTC

> being able to receive your salary in bitcoin

I had it in mind that it was illegal to pay workers within the UK in any currency other than sterling, and that this measure was introduced to prevent employers from coining their own "money" with which to pay workers and which was only of any use in company-owned stores, e.g. the Cornish mine pennies.

However, I can find no evidence for this; maybe if you elect to be paid in Triganic Ningis [1] everything is cool, but you can't be forced to be paid so.

[1] http://hitchhikers.wikia.com/wiki/Universe

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Re: relevant?

"I'd like to think one of the goals of bitcoin is to make national currencies irrelevant and make them go the way of the franc, the mark and the drachma."

Governments fear BTC for the simple reason that they can't easily tax it.

The same applies to all grey-market transaction systems (even bartering is frowned upon)

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Pint

well now the filters are up...

how about filtering thing related to bitcoin, ways to circumvent controls etc...

I'm sure someone is thinking about this option....

P.

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Anonymous Coward

Put that under your digital mattress

Bitcoin (BC) has a niche, a bit like Penny Blacks (PB) or Pokemon Cards (PC). Liked by nerd/collector types of various kinds, essentially human media artefacts created in limited quantities. BC has a couple of other interesting properties in connection with decentralised protocols for creation and transfer of these limited edition numbers. Maybe like PBs they will be valuable to a few nerds for a long time or maybe like PCs they will have occasional comebacks but will die the way of all such crazes. Maintaining a collection of PBs or PCs doesn't place a liability on the electric supply, and as far as I can tell most of the electricity used to maintain the BC system isn't paid for by the operating beneficiaries, it's provided by spotty faced teenager pool members' parents, by BOFH employers and by physical owners of botnetted PCs.

PCs were also a playground currency for a while, but no idiot ever claimed they would replace double entry book-kept money. Banks may charge exorbitant fees for book-keeping, but they can afford to reimburse you when something goes wrong and regulators require they do. Cash is non-repudiable and once it's gone it's gone, so only suited for small transactions unless you're into criminal activity. The security infrastructure we pay for in bankers' bonuses, drug dealers pay for in costs of protection, violent means of payment enforcement and drug warfare. BCs cost more in electricity than they are worth but that's an economic and environmental externality like the cost of the Victorian polluting mill-owners effluent stream, see who pays the bill above.

As to keeping your BC securely, maybe you can manage that risk if you're smart enough, but even botnet operators risk getting caught and doing jail time. And they can inherently do the BC risk management most securely of all, being able to operate through a different chain of proxies for each transaction to avoid giving away real location IP addresses. Even if you've managed to remember your BC numbers or keys and don't have copies other than in memory, you'll still be vulnerable to rubber-hose cryptanalysis at the last resort. See also the RIPA in relation to the willingness of the state to use imprisonment to obtain the crypto keys it wants.

The moment someone successfully uses BCs to purchase a hit, then all the BC to cash exchanges will be shut down as potential accessories to the crime and the BC bubble will then burst. Seems DPR the Silk Rd founder tried to use BC to buy a hit, but didn't succeed.

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