China Bans Cryptocurrency Transactions

[Kbg]

This is going to get interesting. I still maintain this is the main problem with cryptos…while they are “independent” of government control, upon closer inspection this assertion doesn’t pass muster. Now we have some proof. Meanwhile large financial interests in the US are lobbying like crazy to make it more widely accepted/less regulated…any value is completely reliant upon government acceptance.

Anyway, still not anti, but crypto of any kind I don’t believe is a good long term hold.

[Kriegsspiel]

You mean they can't transact with it, as in buy goods/services or transact with it on a regulated market?

As long as they can still mine it/buy it privately, I'd think the Chinese would be very motivated to do that. It seems like a great way for them to get capital out of China.

[Kbg]

Can't mine either...

The article hits on a good point, enforcement and for how long?

https://www.cbc.ca/news/business/china- ... -1.6188011

[glennds]

Can't mine either...

The article hits on a good point, enforcement and for how long?

https://www.cbc.ca/news/business/china- ... -1.6188011

Interesting article.
The loyalist crypto and BTC fans say China has been throwing cold water on crypto since 2013 and it hasn't been enough to stop it.
As the article points out, the counter argument says this time is different.
But then the loyalists say the drop in crypto in light of this has been incremental and not precipitous, demonstrating its resilience and maturity beyond SIDS.
And the counter argument says this is a harbinger of action to come from other large economies.
Who can say where it will go?

But as to the idea of people in China transacting crypto underground and privately, I wouldn't be so sure of that. I haven't actually lived in China for any meaningful length of time, but from what I could tell when I was there, nobody had an appetite for antagonizing their government in even the slightest way.

I totally agree with you Kbg that government regulation is a major risk to crypto.
But when I've pointed this out to friends that I might call fervent fans, they tend to get surprisingly upset and one pointed me to Article II of the Constitution and then folded his arms in triumph like Daniel LaRusso after the crane kick.
The thing is, it doesn't have to be an outright ban. The government can create inhospitable market conditions for crypto in a myriad of creative ways. (I'm not saying they will, just that it is a risk that ought to be included in the calculus).

BTW, glad to see you're mended from the bout of Covid

[Kbg]

More

https://www.coindesk.com/policy/2021/09 ... iders-say/

[pp4me]

Private ownership of gold was once banned in the U.S.A. so I guess Crypto is just following the same pattern. Government printing presses don't like competition.

If they got really serious about it like they did with gold how hard would it be to shut down Crypto altogether? Much easier than gold, it seems to me. Maybe I don't really understand it but I'm pretty sure you can't bury it in the backyard. Could you even get to it if the power went out?

[Jack Jones]

I totally agree with you Kbg that government regulation is a major risk to crypto.

Is government regulation a major risk to gold? Why is it different?

[Kbg]

I totally agree with you Kbg that government regulation is a major risk to crypto.

Is government regulation a major risk to gold? Why is it different?

Sometimes yes and electronic vs. physical which has implications in many directions.

[boglerdude]

> Is government regulation a major risk to gold? Why is it different?

People use gold and bitcoin as an asset, not a currency. A successful crypto-currency might require inflation

[gaddyslapper007]

not sure why this is all being rehashed....its simple

1. Value lives within peoples imagination. You only accept USD because MOST other people will accept it as having value. (another way of saying this.....Governments (a collective group of people) force you to pay taxes in said currency / money and if you don't you go to jail. Since you likely don't want to go to jail, the citizen(s) adopt the government money as having value. (because it keeps you free)

2. the US government has done a superb job (war, worldwide welfare to other countries, etc) to hook the rest of the world on USD therefore making it more widely accepted by people. (thus less volatile in value as acceptance grows.)

Enter Bitcoin (a voluntary currency / money / digital real-estate, free speech text, digital beanie baby, energy value storage, etc...).....where individuals can voluntary participate in (or not....with no-gun to head to pay taxes in by collective people)........


Sure governments will see it as threat......the question is, will YOU politely Vote for freedom (support BTC with your dollars) or "opt-out" and vote with your dollars to support more FED / Government. (its really that simple......checking a box every 4 years for an R or D does nothing)


And yes.....Bitcoin won. (its over...."Crypto" lost)

[Kbg]

No because I’m a qualified free market capitalist and you are proselytizing a belief system with political bias. This is a great way to have poor returns. I want the best returns I can get with the limited smarts I have.

I support a stable currency that is widely accepted even if forced by law. BTC is a horrid currency.

[gaddyslapper007]

HFSP

[Kbg]

Oops, too late for that thank you very much.

To be clear however, I’ve consistently stated BTC has been and at least for now is a stellar speculation. One of the best. I just happen to think it is a joke as a currency substitute and is not likely to end well as a longer term investment. I could be wrong, wouldn’t be the first time and surely not the last.

[bitcoininthevp]

Funny thing here is that Bitcoin only has value to the degree that governments mismanage the money.

If governments behaved, Bitcoin would have little or no value.

Why? (sorry for being repetitive)

Because Bitcoin is a censorship-resistant, inflation-resistant, seizure-resistant, pseudonymous digital asset.

If there was no censorship, inflation, confiscation, or surveillance, Bitcoin wouldn't have a value proposition.

China, the most misbehaving of the bunch, bans Bitcoin? Bitcoin goes up 20% in value. Of course other things are going on, maybe unrelated to China. But does make you think...

[bitcoininthevp]

Oops, too late for that thank you very much.

To be clear however, I’ve consistently stated BTC has been and at least for now is a stellar speculation. One of the best. I just happen to think it is a joke as a currency substitute and is not likely to end well as a longer term investment. I could be wrong, wouldn’t be the first time and surely not the last.

Bitcoin is a horrible unit of account and wildly volatile.

As you state it is a speculation. The speculation (bet) is that Bitcoin will eventually be good money (and stable unit of account). Every time someone buys BTC to "hodl" it, not only are they betting on that outcome but they are adding to the liquidity, increasing the price, and dampening the volatility. A bit of a self fulfilling prophecy.

[Kbg]

Oops, too late for that thank you very much.

To be clear however, I’ve consistently stated BTC has been and at least for now is a stellar speculation. One of the best. I just happen to think it is a joke as a currency substitute and is not likely to end well as a longer term investment. I could be wrong, wouldn’t be the first time and surely not the last.

Bitcoin is a horrible unit of account and wildly volatile.

As you state it is a speculation. The speculation (bet) is that Bitcoin will eventually be good money (and stable unit of account). Every time someone buys BTC to "hodl" it, not only are they betting on that outcome but they are adding to the liquidity, increasing the price, and dampening the volatility. A bit of a self fulfilling prophecy.

I agree with almost everything except that anyone who buys BTC to hodl actually reduces its liquidity. Once it becomes more widely accepted the hope is that there will be greater market depth. More liquidity will make for a more stable price.

In all of human history there is not a single example of a fixed quantity currency that has been stable under economic duress. As I've mentioned numerous times on the board...that is the tradeoff. Instability is baked into the approach...it's mathematical as to why.

Currency stability is created by the ability to print and withdraw paper money from the system. The concept is not wrong and has been proven to work multiple times since the Great Depression. Now I will grant you that humans can and have screwed things up, but the difference is that mathematically, you can basically prove how stability is achieved.

In sum, instability is guaranteed in the former. We at least have "hope" in the latter. One may not like hope as an option, but it's better than knowingly having something that WILL be unstable.

[I Shrugged]

Fiat person: Hard money doesn’t let governments create money to fend off deflation.

Hard money person: So what? Let the bad debts liquidate, and get on with it.

[boglerdude]

If bitcoin goes up people will hoard it and use something else as currency aka IOUs. So whats the crypto version of a customizable IOU

[bitcoininthevp]

I agree with almost everything except that anyone who buys BTC to hodl actually reduces its liquidity. Once it becomes more widely accepted the hope is that there will be greater market depth. More liquidity will make for a more stable price.

I said people buying and holding adds to liquidity.

[Kbg]

Really, truly, hard money people need to read up on what happened during the Great Depression...but I'll try to make it as simple as possible.

1. You lost your job, meaning you have no way to obtain currency

2. Prices are plummeting, meaning a second other person is incentivized to hold gold backed money because the longer they do, the better it is for them in real terms.

3. The effect of both together is a cycle of continuous downturn...fewer people are spending therefore more people are out of work and down we go

Even JP Morgan and the banker boys in the early 1900s knew understood this and basically flooded the economy with private money.

Perhaps, just perhaps, the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong and not for conspiratorial reasons.

The lessons of the GD for the US, fiat money is stupid (and we went back to it and it broke again) and we need unemployment insurance.

If you are a hard money guy answer this question? What is the basic problem with mild inflation? In advance, I can tell you you won't have a good answer other than you have to change your pricing reference point. Gas was .25 cents in the early 70s, now it's over $3.00, so what other than the number changed...I'll bet your paycheck has kept pace, therefore it means nothing.

Finally, inflation only happens when there is excess money AND scarcity. Scarcity due to supply chain disruptions is why now we are having inflation and from 2008 to 2020 there wasn't any inflation and the Fed was printing money at unprecedented rates.

A hard money philosophy is a religion, not a good way to run a monetary system.

This stuff is nothing but a leftover from the mercantile system.

[bitcoininthevp]

In all of human history there is not a single example of a fixed quantity currency that has been stable under economic duress. As I've mentioned numerous times on the board...that is the tradeoff. Instability is baked into the approach...it's mathematical as to why.

Currency stability is created by the ability to print and withdraw paper money from the system. The concept is not wrong and has been proven to work multiple times since the Great Depression. Now I will grant you that humans can and have screwed things up, but the difference is that mathematically, you can basically prove how stability is achieved.

In sum, instability is guaranteed in the former. We at least have "hope" in the latter. One may not like hope as an option, but it's better than knowingly having something that WILL be unstable.

Bitcoins volatility is decreasing over time. I believe it will continue to do so, as long as the price/market cap/liquidity goes up. While volatility will decrease, I dont think the value of anything will be fixed/perfectly stable over time.

A floating money supply is a problem as you mention. But I think you seem to underplay the issues of such fiat currencies. Of all fiat currencies the vast majority have ended in spectacularly high volatility, going to ZERO and ruining the holders of it. Its hard for me to reconcile ~all fiat currencies ending in such a way as "better" or "more hopeful" than what has occurred under a gold standard or might occur under a bitcoin standard. I admit this is not something Im really familiar with, so if someone can illustrate that fiat currencies base cases of ending is better than a gold base case of "having some volatility during economic duress", I would love to learn more here.

[Kbg]

In all of human history there is not a single example of a fixed quantity currency that has been stable under economic duress. As I've mentioned numerous times on the board...that is the tradeoff. Instability is baked into the approach...it's mathematical as to why.

Currency stability is created by the ability to print and withdraw paper money from the system. The concept is not wrong and has been proven to work multiple times since the Great Depression. Now I will grant you that humans can and have screwed things up, but the difference is that mathematically, you can basically prove how stability is achieved.

In sum, instability is guaranteed in the former. We at least have "hope" in the latter. One may not like hope as an option, but it's better than knowingly having something that WILL be unstable.

Bitcoins volatility is decreasing over time. I believe it will continue to do so, as long as the price/market cap/liquidity goes up. While volatility will decrease, I dont think the value of anything will be fixed/perfectly stable over time.

A floating money supply is a problem as you mention. But I think you seem to underplay the issues of such fiat currencies. Of all fiat currencies the vast majority have ended in spectacularly high volatility, going to ZERO and ruining the holders of it. Its hard for me to reconcile ~all fiat currencies ending in such a way as "better" or "more hopeful" than what has occurred under a gold standard or might occur under a bitcoin standard. I admit this is not something Im really familiar with, so if someone can illustrate that fiat currencies base cases of ending is better than a gold base case of "having some volatility during economic duress", I would love to learn more here.

BC, you're just wrong. Name a single currency where that has happened and the country wasn't totally jacked up politically. (This event is why gold does make some sense if one assumes it will be usable as a medium of exchange.)

[bitcoininthevp]

Really, truly, hard money people need to read up on what happened during the Great Depression...but I'll try to make it as simple as possible.

1. You lost your job, meaning you have no way to obtain currency

2. Prices are plummeting, meaning a second other person is incentivized to hold gold backed money because the longer they do, the better it is for them in real terms.

3. The effect of both together is a cycle of continuous downturn...fewer people are spending therefore more people are out of work and down we go

Even JP Morgan and the banker boys in the early 1900s knew understood this and basically flooded the economy with private money.

Perhaps, just perhaps, the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong and not for conspiratorial reasons.

The lessons of the GD for the US, fiat money is stupid (and we went back to it and it broke again) and we need unemployment insurance.

If you are a hard money guy answer this question? What is the basic problem with mild inflation? In advance, I can tell you you won't have a good answer other than you have to change your pricing reference point. Gas was .25 cents in the early 70s, now it's over $3.00, so what other than the number changed...I'll bet your paycheck has kept pace, therefore it means nothing.

Finally, inflation only happens when there is excess money AND scarcity. Scarcity due to supply chain disruptions is why now we are having inflation and from 2008 to 2020 there wasn't any inflation and the Fed was printing money at unprecedented rates.

A hard money philosophy is a religion, not a good way to run a monetary system.

This stuff is nothing but a leftover from the mercantile system.

I freely admit not being an expert here but I do have some thoughts.

The federal reserve existed during the GD and the money supply decreased by some large amount around the period of the crash and GD.

Two reasons come to mind why inflation might be bad:

1. If money is being debased, no one saves in the money. It pushes people to, instead of saving in money, to speculate in stocks, real estate, etc.

2. The new (inflated) money needs to appear somewhere, thus you get the Cantillon Effect and all the bad that results from politically connected government cronies getting new money.

"the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong" - Im not sure the conclusion follows logically from the premise here. I think that governments that are able to siphon the most from their economies have ended up as stronger and fiat partly enables such a scheme. (aside: I believe in The Sovereign Individual they outline that this is why capitalism "won" over communism in the cold war period, capitalism allowed for more government more access to the populations income to fund itself)

I think part of the discussion here is a difference between what is best for an "individual now" vs a "society in the future". To me its clear the benefits of Bitcoin to the individual now. Im not so sure about a utopian bitcoin standard for society in the future to be honest. I think many people gloss over the transition to such a standard as well as how different life might be on such a standard. But as the stoics say, focus on what you can control.

[bitcoininthevp]

BC, you're just wrong. Name a single currency where that has happened and the country wasn't totally jacked up politically. (This event is why gold does make some sense if one assumes it will be usable as a medium of exchange.)

Im not sure the point here. Most currencies implode and your retort is that’s because the people in charge of the currencies were jacked up? I suppose all we need is those non-corrupt good guy governments (central banks) that stay good indefinitely and then the money would be good?

If thats your point, I guess I agree, if governments were "good" forever, a fiat currency could be "ok":

Funny thing here is that Bitcoin only has value to the degree that governments mismanage the money.

If governments behaved, Bitcoin would have little or no value.

Why? (sorry for being repetitive)

Because Bitcoin is a censorship-resistant, inflation-resistant, seizure-resistant, pseudonymous digital asset.

If there was no censorship, inflation, confiscation, or surveillance, Bitcoin wouldn't have a value proposition.

China, the most misbehaving of the bunch, bans Bitcoin? Bitcoin goes up 20% in value. Of course other things are going on, maybe unrelated to China. But does make you think...

But, like, we live in reality.

[Kbg]

BC, you're just wrong. Name a single currency where that has happened and the country wasn't totally jacked up politically. (This event is why gold does make some sense if one assumes it will be usable as a medium of exchange.)

Im not sure the point here. Most currencies implode and your retort is that’s because the people in charge of the currencies were jacked up? I suppose all we need is those non-corrupt good guy governments (central banks) that stay good indefinitely and then the money would be good?

If thats your point, I guess I agree, if governments were "good" forever, a fiat currency could be "ok":

Funny thing here is that Bitcoin only has value to the degree that governments mismanage the money.

If governments behaved, Bitcoin would have little or no value.

Why? (sorry for being repetitive)

Because Bitcoin is a censorship-resistant, inflation-resistant, seizure-resistant, pseudonymous digital asset.

If there was no censorship, inflation, confiscation, or surveillance, Bitcoin wouldn't have a value proposition.

China, the most misbehaving of the bunch, bans Bitcoin? Bitcoin goes up 20% in value. Of course other things are going on, maybe unrelated to China. But does make you think...

But, like, we live in reality.

You do see the irony here, right? BTC is completely reliant on government acceptance (as is everything). For the majority of people in China, unless the have access to external finance markets, BTC's value is now zero in terms of goods and services. Given it is a financial asset, it has no inherent worth in and of itself, like a bond, or a swap, or an option or a paper dollar.