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Bitcoin China

Bitcoin Exchange Value Halves After Chinese Ban 475

Posted by Unknown Lamer
from the newton's-law-of-should-have-gotten-out-last-week dept.
An anonymous reader writes with news of the latest major fluctuation in the price people are willing to pay for Bitcoins. From the article: "China's ban on its financial institutions handling bitcoin causes world's largest exchange to cease trading, halving the value of the currency from $1,000 to less than $500 in a matter of days. The country's central bank took a hard line on Bitcoin in early December when it banned financial institutions from handling the decentralized crypto-currency, and as a result BTC China, the world's largest bitcoin exchange, has stopped accepting deposits from its users." Just watch that line trend downward.
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Bitcoin Exchange Value Halves After Chinese Ban

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  • And this (Score:5, Interesting)

    by FooAtWFU (699187) on Wednesday December 18, 2013 @11:30AM (#45726109) Homepage
    And this is why we're still decades away from having mortgages denominated in bitcoin. :P
    • I dunno....seems slightly more reliable than getting a mortgage from a US bank.

      • Fixed rate home mortgages in the U.S. are backed by the federal government, who provides insurance in order to "incentivize" ownership. For reasons unrelated to the present discussion, I think this is a bad idea, but that doesn't influence the main point that mortgages in the U.S. tend to have lower interest rates than in most other countries.

        • by gl4ss (559668)

          doesn't matter who it is backed by if they can just issue foreclosures on it at will and the court agrees for some weird reason("bank wouldnt lie, would they?")

          • Re: (Score:2, Informative)

            by Anonymous Coward

            While that has happened, it's extremely rare, to the point of not even being a statistic.

            • Does your statement make sense to yourself?

              The only way the probability of an event can not have a statistic is if it is not measured.
              And if fraudulent behaviour by banks isn't measured then the US really is stuffed.

              • by AK Marc (707885)
                "Bank errors" aren't measured. One guy's fraud is another man's error. There are a handful of cases out there (handful as in 5-10) where address errors were made. But I didn't find any where, when faced with proof of a bank error, the foreclosure proceeded. It looks like it was never fraud, but simple errors. Your house is worth more than everything else you own, combined, but is a rounding error to one day's transactions to the bank. Stealing homes wouldn't gain them anything. They just get careless
        • by Richy_T (111409)

          Low interest rates because the govt is printing money (via the Federal Reserve) to lend to banks to lend to buyers.

          If you actually had to borrow that money from people who are investing to, y'know, save for their retirement or rainy days & such, interest rates would be higher. Instead, they have to watch while their savings dwindle in true value due to inflation (the aforementioned printing).

          Hence Bitcoin.

          Yeah, the price dropped. Discovery is an interesting process. It's still up on April's ATH and more

          • You actually want to pay back a mortgage in a deflationary environment. You're nuts. Think about what that would actually mean.

  • by Anonymous Coward on Wednesday December 18, 2013 @11:31AM (#45726119)

    Totally legal but...

    States do everything to prevent access to it... shutting down clinics left and right..

    And if you do find a clinic you to face a picket line

    Given the responses from all these governments you can tell that Bitcoin is something big... that is.. maybe not the actual coins, but the intellectual underpinnings:

    - Decentralized
    - Limit in coins
    - No one governs/owns

    It is really what the world has been waiting for.. something that can not be corrupted by any government, is safe and fast. The internet needs this

    • by u38cg (607297)
      Yep, except it's total bullshit.
    • by u38cg (607297) <calum@callingthetune.co.uk> on Wednesday December 18, 2013 @12:10PM (#45726563) Homepage
      Yep, except it's total bullshit. [arxiv.org]

      Apologies, forgot to actually hyperlink...

      • That paper has factual errors. For example, on page 6 it says "...because bitcoins are mined in integer units, not satoshis". This is incorrect. The mining reward halves every 210,000 blocks (about 4 years). It dropped from 50 in Jan 2009 to 25 in Nov 2012, the current rate. The next halving, in about 3 years, will reduce it to 12.5 bitcoin units per block. The arithmetic series 50 + 25 + 12.5 + . . . = 100, and since it stays at that level for 210,000 blocks at a time, the total number of coins has a

    • I think the problem the government has with bitcoin is that bitcoin has the potential of destroying the US government. In fact, any currency other than the US dollar does actually.

      The government currently has a habit of going perpetually further into debt (spending exceeds income every year for the last few decades, the only exception being during the economic bubble of the late 90's where tax revenues were artificially high.)

      So long as the government maintains control of the value of the dollars that it sp

      • by JeffAtl (1737988)

        So China is banning the currency because it wants to protect the United States?

      • I think the problem the government has with bitcoin is that bitcoin has the potential of destroying the US government. In fact, any currency other than the US dollar does actually.

        The government currently has a habit of going perpetually further into debt (spending exceeds income every year for the last few decades, the only exception being during the economic bubble of the late 90's where tax revenues were artificially high.)

        Just to point out, the last time the US Government ran an honest-to-goodness surplus of income, and paid down its debt because it had money left over (rather than increased its annual debt) was in 1957 under President Eisenhower.

        It's been 3 generations since we've actually had a surplus at the Governmental level. The surpluses of the late 90s were strictly on-paper/on-budget items only, but every fiscal year since 1957 has seen the US Federal debt increase. Sometimes by huge amounts (like now), sometime

  • Price not value. (Score:4, Insightful)

    by trout007 (975317) on Wednesday December 18, 2013 @11:31AM (#45726125)

    Both parties in a trade value what they are getting more than what they give. The person selling the item values the cash higher than the item. The person buying values the item higher than the cash. The price is where the exchange takes place where both parties value what they get more.

    • Re:Price not value. (Score:5, Interesting)

      by Trepidity (597) <delirium-slashdot@@@hackish...org> on Wednesday December 18, 2013 @11:36AM (#45726189)

      Both parties in a trade value what they are getting more than what they give.

      For a certain definition of value, yes, but not necessarily for the common one. In an idealized market, you do hope this is true for the common definition also: people have independently assessed how much they value some commodity, and offer a price accordingly. The price then converges on some aggregation of values.

      But in real markets, this is often recursive: someone is offering $x for a commodity not because they themselves consider it to have a certain value, but because they think they will be able to resell it for $(x+y), due to market fluctuations. They may themselves consider it a worthless pile of trash valued at $0; day-traders, unlike value investors, don't make trade decisions based on their own assessments of the underlying value of the commodities or equities they're buying and selling. Instead they base their decisions on statistical estimates of market dynamics, independent of whatever the underlying item is and whether it may or may not have any value at all (models often don't even consider the underlying item in the equation).

      • by trout007 (975317)

        Speculators still value the prospect of future gains over the cash they give in the trade.

        • by Trepidity (597)

          Sure, but that's a market-internal "value" that doesn't lead to the kind of idealized market that actually makes any sense.

          You can see this fairly clearly if you study dynamical systems. Some of them are "well-behaved", in which inputs/ouputs relate as you might expect. But many have internal pathologies that they can fall into if they reach certain states: feedback loops and chaotic behavior and such that's driven by system-internal (aka market-internal) dynamics and disconnected from anything else (such a

          • by trout007 (975317)

            All value is subjective anyway which is why often it doesn't make sense. I don't understand why people get tattooed. You would have to pay me quite a bit of money to get one.
            And yet some people spend fortunes on them.
            To me it makes no sense.

    • by dj245 (732906)

      Both parties in a trade value what they are getting more than what they give. The person selling the item values the cash higher than the item. The person buying values the item higher than the cash. The price is where the exchange takes place where both parties value what they get more.

      This is a key part of the economic argument (The "Scrooge" argument) on why giving non-cash gifts is a colossal waste of time and money. It is difficult to know how much another person values something unless they tell you.

      • by myowntrueself (607117) on Wednesday December 18, 2013 @12:49PM (#45727075)

        Both parties in a trade value what they are getting more than what they give. The person selling the item values the cash higher than the item. The person buying values the item higher than the cash. The price is where the exchange takes place where both parties value what they get more.

        This is a key part of the economic argument (The "Scrooge" argument) on why giving non-cash gifts is a colossal waste of time and money. It is difficult to know how much another person values something unless they tell you.

        Thats part of the fun of gift giving.

  • I guess this why Litecoins halved from $30 to $15 each too.

  • by i kan reed (749298) on Wednesday December 18, 2013 @11:34AM (#45726163) Homepage Journal

    Kind of a sideline approach here...

    This is the clearest evidence yet that the pro-bitcoin libertarian segment misunderstand how government control works. The argument goes "government prints the money, and tracks the money therefor can tax me." The presumption of bitcoins is if the currency doesn't come from the government, they don't have any means to control it.

    Good ol' actually tyrannical China comes along, and does the thing any government is capable of doing. Saying "if we catch you dodging our system, our system will throw your stupid self in jail." Poof.

    If having a wallet.dat is a crime, the fact that the coins inside of it are encrypted won't protect you.

    • by IamTheRealMike (537420) <mike@plan99.net> on Wednesday December 18, 2013 @12:16PM (#45726645) Homepage

      I think only the most naive anarchists argued that (and I've called them on it many times before in various Bitcoin forums). The gamble being made there is effectively that given a choice, a government would choose not to become totalitarian and oppressive, and would prefer to give up some control over the financial system.

      Well, only an idiot would believe China would do that. They are already totalitarian and oppressive, no surprise they'd be willing to jail anyone who uses Bitcoin.

      In contrast, many European countries are sorting out how they're going to handle it. See the recent announcement from Denmark saying that Bitcoin is fully legal, and people who want to run exchanges don't even have to be regulated as financial institutions at all! It seems very unlikely that the governments of Norway or Denmark are going to start jailing anyone who sells sandwiches for coins.

      America is somewhere in the middle. It's not as free or liberal as most of the smaller European states, but it's not as oppressive as China. Hence the confused approach there where the US government is saying one day Bitcoin is cool and it's all OK, and then next day threatening Bitcoin businesses with jail time. They can't quite decide which direction to go in, it seems.

      • And, that seems like a perfectly reasonable belief. But bitcoin suffers from an excess of "true believers".

      • Hence the confused approach there where the US government is saying one day Bitcoin is cool and it's all OK, and then next day threatening Bitcoin businesses with jail time. They can't quite decide which direction to go in, it seems.

        Huh? There's no confusion at all. The US Government is 'totally cool' with Bitcoins so long as you comply with existing financial regulations. The Bitcoin business (the physical coin dealer) wasn't threatened with jail because he dealt in Bitcoins - but because he didn't so

    • It is china, where they execute people for bankrupting a company. I doubt they'd just throw them in jail because of that.

      • Part of having inappropriate punishments for crimes is that they aren't necessarily going to correspond to any metric in particular, but the whim of the leadership. That includes light sentences sometimes.

        • Oh I know, I'm just expecting a news report that china executes someone for BTC use within the next year or so. After all, it is china.

          • Remember that the overarching goal of government in China is "glorious harmony." They want a monoculture, and they're more inclined to use work-camps with no trial involved than bring people up on summary charges and execute them. You basically have to be an image problem to get executed in China(they kill fewer people than the U.S., for example).

            • And that means a very vocal and visible dissident, or a high profile business refusing to comply. It's not like china hasn't had many of those cases.

  • by PolygamousRanchKid (1290638) on Wednesday December 18, 2013 @11:41AM (#45726251)

    Now that they have driven the price of bitcoins down, they will now buy up all of them at low prices . . . and then . . . announce that the will accept them as currency . . .

    Profit!

  • Crypto COMMODITY (Score:5, Interesting)

    by brunes69 (86786) <slashdot AT keirstead DOT org> on Wednesday December 18, 2013 @11:42AM (#45726269) Homepage

    I wish people would stop calling these "crypto-currencies", because it is a total misrepresentation of what these things are. They are crypto-commodities. BTC is just like gold right now - it is not used to transact, it is used as a value store - except it is much worse as a value store because it is orders of magnitude more volatile. No one can use BTC as a currency because its value fluxuates so wildly. Everyone who is SUPPOSEDLY using it as a currency just has it pegged to the US dollar with a live update.

    • Re: (Score:2, Interesting)

      by DaveV1.0 (203135)
      Perhaps you should tell that to the inventors of Bitcoin.

      Bitcoin is an innovative payment network and a new kind of money.

      How about reading their their FAQ [bitcoin.org] where it specifically says Bitcoin is a cryptocurrency? You might learn something.

  • by gapagos (1264716) on Wednesday December 18, 2013 @11:42AM (#45726273)

    Bitcoiners on reddit are completely delusional. They constantly interpret any kind of news from China as "good news" and any price drop as a sign to "buy more Bitcoins at a cheaper price". Wake up people. This "currency" is never going to have anything close to wide adoption.

    The inability to charge back is the #1 reason that prevents any consumer from perceiving it as a safe currency against vendor fraud. It serves no benefit to the consumer.

    Its incredible volatility is the #1 reason that prevents any vendor from seriously adopting it. It's impossible to do business when you have no control of your prices. This is why every "Bitcoin accepted" vendor isn't actually adopting bitcoins, just merely accepting them at current exchange rate. Bitcoins will get "adopted" when vendors start listing their prices in fixed bitcoins, i.e never.

    Posting this on reddit gets you instantly downrated because users there only upvote anything positive about Bitcoin, no matter how ridiculous it is. Whenever somebody with any form of economics, finance or political education reminds Bitcoiners of the realities of world foreign exchanges, people downvote it to hell and ignore it because those people have been "brainwashed by the system".

    Bitcoiners have been warned, and ignored all sensible advice, only motivated by their greed. Now, after constantly bragging about their virtual billions earned and insulting their friends who are not convinced and reminded them to be careful, they are upvoting the National Suicide Hotline for the U.S. Too bad not many people will feel sorry for them after this whole fiasco.

    • by IamTheRealMike (537420) <mike@plan99.net> on Wednesday December 18, 2013 @12:20PM (#45726721) Homepage

      The inability to charge back is the #1 reason that prevents any consumer from perceiving it as a safe currency against vendor fraud. It serves no benefit to the consumer.

      Minor correction - dispute mediated transactions have been a part of the design since day one [bitcoin.it]. The problem is lack of surrounding infrastructure like "file dispute" buttons in wallets and the various protocols needed to organise that, companies that run dispute mediation services with those protocols and so on. But there is widespread consensus that it's a good idea and basically, it's just waiting for someone to do the design and implementation work to make it happen.

      Its incredible volatility is the #1 reason that prevents any vendor from seriously adopting it.

      It's certainly a PITA at the moment, yes, although when Bitcoin is out of the public eye and governments aren't busy banning it there have been relatively long stretches of peace and stability. During those times you HAVE seen vendors price things in Bitcoins, actually, although yes most prefer to peg to an exchange rate.

      Over time the instability will go away because governments will all decide on their policies around it, the technology will mature and become boring, most people will have heard about it and decided what they think, etc. The huge volatility you see at the moment is because almost every day there's some important piece of news that affects people's perception of future value.

      As to the /r/bitcoin posters, yes, the over-excitability there is quite something. But that doesn't mean all people who use Bitcoin or like it think the same way.

    • by Trepidity (597)

      Bitcoiners on reddit are completely delusional.

      A sentence that is guaranteed to be true for two independent reasons. ;-)

    • by ljw1004 (764174)

      Wake up people. This "currency" is never going to have anything close to wide adoption. The inability to charge back is the #1 reason that prevents any consumer from perceiving it as a safe currency against vendor fraud.

      Do you feel the same way about cash?

  • by MarkvW (1037596) on Wednesday December 18, 2013 @11:49AM (#45726335)

    Somewhere in China a group of Bitcoin-speculating bureaucrats are very happy right now.

    Must make the Bitcoiners really happy to know that their financial world can be so readily disrupted . . ..

  • by timholman (71886) on Wednesday December 18, 2013 @11:51AM (#45726357)

    When a couple of my friends started posting "now is a great time to buy into BitCoin" messages on my Facebook feed a couple of weeks ago, I had a feeling the BTC price was about to take a strong downward turn. It is never a good sign when the "true believers" begin actively recruiting new buyers into a price bubble.

    The collapse of BitCoin as a speculative investment is inevitable, and its own success will be its downfall. The speculative frenzy over BTC is based strictly on artificial scarcity. The problem is that there are an infinite possible number of cryptographically signed digital currencies. If only X amount of gold exists in the world, there is no replacement for it, assuming you desire the exact physical qualities of gold. But if only Y digital coins exist, it is trivial to create another digital coinage with a slightly different protocol that behaves exactly the same way as far as a user is concerned.

    The boom in BTC has led to several new competitors, with similar frenzies growing around some of them. And given the low barrier to entry, you can expect more and more competing digital currencies to appear. It is only a matter of time before people realize that they're fighting over a particular set of tulip bulbs while standing in an infinitely large field of tulips. Once that happens, the speculative bubble will pop for good for all digital currencies. In the long run, this is a good thing, because once the speculators are gone, some digital currencies may actually prove useful as a real medium of exchange, with values that don't fluctuate wildly from one day to the next.

    • by kencurry (471519) on Wednesday December 18, 2013 @12:10PM (#45726573)
      Your point that digital currency value is based upon scarcity, yet nothing prevents a new one popping up anytime is a good one. A sober reality check and one I hadn't though of.
    • Re: (Score:2, Interesting)

      by Anonymous Coward

      to your first paragraph: it's said that Joseph Kennedy sold most/all of his shares weeks before the 1929 crash because "he knew it was time to get out of the market when he received stock tips from a shoe-shine boy." http://en.wikipedia.org/wiki/Joseph_P._Kennedy,_Sr.#1929_Wall_Street_Crash

      Personally I knew the "new market" bubble would burst months before it did - because everyone and their dog bought shares and told me to do so, too.

    • by ADRA (37398)

      "it is trivial to create another digital coinage with a slightly different protocol that behaves exactly the same way as far as a user is concerned."

      The sad thing is, this will almost single handedly end the bitcoin craze. With hundreds/thousands of competing crypto-systems of exchange who in the world is going to maintain and trust in these systems? Do you see valuation agencies looking at these things and go, uh yeah this is a good valuation? They will laugh at it and say there is no valuation to judge on

  • by geogob (569250) on Wednesday December 18, 2013 @12:00PM (#45726467)

    Looking at the data provided in the summary's link, the value got from under 200 to over 1000 within a month. How is a drop of 50% within a few days any surprising? I would expect any currency that volatile and - above all - unregulated (in the sense of regulation through central banks), to do about anything.

  • It was a standard parabolic bubble. It's happened three times with bitcoins now, and they always have a 40 to 60 percent drop when they pop followed by a random walk as they deflate. The 3rd one just happened to occur just as the second finished its random walk, and China just had to be the last to say anything about bitcoin before it poped. These will just keep getting close, and closer until the fun begins. My bet is the next one in 3 months, then a month, followed by ... fun. Who would have thought that
    • Bubbles sometimes need a nudge to burst. Just a small one. This story could be that nudge.

      If it hadn't been this, it'd be something else eventually.

  • They promised that THIS time it's DIFFERENT!
  • Is it time to buy them now?

  • Looks like BITC is recovering fast. 585 USD as I write this.

    -jcr

  • by Chas (5144) on Wednesday December 18, 2013 @12:50PM (#45727091) Homepage Journal

    "I have zillions of dollars worth of comic books! Wizard says I do!"
    "I have zillions of dollars worth of Bitcoin! The exchange says I do!"

    *Together* Let's cash out!

    "WTF? Nobody wants to buy my comics at massively inflated prices!"
    "WTF? Nobody wants to buy my Bitcoin at massively inflated prices!"

    Cue the Python!

    SCAM! SCAM! SCAM! SCAM! SCAM!

  • BREAKING NEWS! (Score:4, Insightful)

    by GameboyRMH (1153867) <[moc.liamg] [ta] [hmryobemag]> on Wednesday December 18, 2013 @01:33PM (#45727597) Journal

    Bitcoin value continues to be incredibly unstable! Also the sky is blue and water is wet! More updates as news develops!

  • by es330td (964170) on Wednesday December 18, 2013 @03:10PM (#45728677)
    Bitcoin has a legitimate purpose; a truly portable store of value not needing physical storage that is also not under the control of any government entity has a fundamental value. The true mark of the legitimacy of any currency is the existence of as-of-yet unknown 3rd parties willing to accept said currency. Shells, salt & grain have all been used in the past because a person accepting said currency trusted that somebody else would take that same currency in return for goods or services at some future date. Bitcoin is going to swing between overvalued and undervalued for a while, but eventually a critical mass of parties willing to trade in Bitcoin alone will exist. Someday a farmer will accept Bitcoin for his wheat, and then use those Bitcoins to pay for his diesel and tractors and not once will any party have to convert Bitcoins to <insert fiat currency here.>

    It make take a while, but so long as Bitcoin remains uncorrupted by counterfeiting it will stabilize because it will remain out of the sphere of government influence.

My problem lies in reconciling my gross habits with my net income. -- Errol Flynn Any man who has $10,000 left when he dies is a failure. -- Errol Flynn

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