Originally published at: https://boingboing.net/2017/09/12/cryptocurrency-controls.html
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All this did was remind me about how China is supposedly suppressing the value of their currency, although in relation to the article; i don’t imagine this having a happy ending
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Wow, I always knew that the value of the bitcoin was way off, but if those numbers are even partly accurate, bitcoin is deriving most of it’s value from people smuggling money out of the PRC.
Sell it if you have it, I suppose.
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I wonder how this would affect the supply-side monopolization issues, with a small Chinese cabal controlling the majority of the mining (assuming that’s still true). Shutting down local exchanges is one thing, the miners could still use foreign exchanges, right? But if the miners get shaken up, that could have big effects? With close to $100 billion market capitalization in the top few coins, and a small number of Chinese controlling most of the mining. What is that scenario? What would they be trying to do by shutting down the exchanges that wouldn’t lead to that?
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Could someone smarter than me help me out here? Two questions.
Why is China so afraid of bitcoin that they’re acting like it’s a matter of national security ans sovrency?
What do they gain here?
Currency stability can reasonably be considered a matter of national security. Since the PRC has a dual currency structure (Renminbi internally and Yuan externally) the only way stability can be maintained is through tight controls of any markets. Here they want to plug what they see as a hole in that Renminbi/Yuan structure.
Stability not just as above but also probably trying to prevent widespread and unregulated trading that could easily end up destabilizing regular householders, not just the super rich.
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All of what @Israel_B has said, plus: their cut.
Or to be precise, not losing their cut.
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Supplies are limited! Hurry and buy yours today, before all the exchanges are closed. One day those Bitcoins will be valuable collectibles!
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There are a bunch of wealthy Chinese that understand that their wealth is dependent upon their standing with the party. They want to insulate themselves from the vagaries of the party by offshoring as much of that wealth as possible. Bitcoin helps facilitate that. The party doesn’t like people squirreling away massive amounts of capital in places inaccessible to the government.
Anyone thinking governments will sit tight watching people bypass national currencies is just oblivious. Enforcement will be as simple as outlawing the ties with legal banking (credit cards, wire transfers, etc)
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Silly question here, then why do they turn a blind eye to the overseas housing boom that certain markets have seen from Chinese buyers? Like those in Australia and Canada? Is it seen as a different issue or is it not forbidden informally by the party?
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They haven’t been turning a blind eye to real estate purchases. China has been going after foreign real estate under the auspices of anticorruption efforts for years. It’s just very difficult to track down the properties. Real estate agents don’t have the same reporting requirements that banks do. So while showing up to a bank with a million dollars in cash will sound the alarm bells, showing up to escrow the same way won’t.
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There are places where forex is illegal for private individuals but otherwise
Not a silly question at all! The difference is that this control over bitcoin exchanges has to do with what happens within China which the government can control. Chinese law has no standing outside China. Overseas real estate purchases, all they can do is try and stop the flow of Yuan to other currencies. This however is more difficult than shutting down bitcoin exchanges, it would require going over the books of just about every company within China and trying to do so for every subsidiary and shell company setup from China to see which ones own real estate and what the actual purpose and nature of that real estate is. Rather difficult and even if it were done, it comes back to Chinese law has no standing outside China.
North Korea Opens Doors To Bitcoin ‘Mining’ Amid Sanctions
http://www.kitco.com/news/2017-09-13/North-Korea-Opens-Doors-To-Bitcoin-Mining-Amid-Sanctions.html
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