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Bitcoin Price Falls Again On Reports that China is Shutting Down Local Exchanges (cnbc.com)
China's clampdown on cryptocurrencies has reportedly taken a new direction -- to close down local bitcoin exchanges. From a report: Initial reports from Chinese media that the government plans to close down domestic cryptocurrency exchanges have seen the virtual coin shed more than $100 since Friday. Bloomberg and the Wall Street Journal also reported Monday that that the country is planning to shut down digital currency exchanges. Bitcoin sunk to a low of $4,241 in late trading in the U.K. Friday, and reached a low of $4,108 on Monday, according to Coindesk data. It climbed to a record high of $5,000 dollars a little over a week ago, and has shot up by nearly 350 percent since the start of the year. The latest reported crackdown follows a decision by Chinese regulators -- including the People's Bank of China (PBOC) -- to ban initial coin offerings (ICOs). ICOs are a means of raising funds by selling off new digital tokens. A crackdown on ICOs would not affect the original cryptocurrency directly, but bitcoin still dropped more than $1,000 over a period of three days. China's latest move to shut down local exchanges would mark a new direction for the country in its efforts to regulate the market.
Please, someone, verify the math... how did Bitcoin lost more than $1000 and still be above $4000 when the all time high was $5000.
I'm suprised nobody has started arbitrating between different BC exchanges. With the current volatility the opportunities are massive. I guess you can't really short-sell but with a minimal investment you could make a mint!
sell while they are worth anything at all children...
Whereas they could fall in value to be a lot less than they currently are, I don't think they will be as completely worthless as the tulip bulbs. That's not a fair comparison. There will always be transactions that people want to hide from governments. Online, the closest thing to that you have are crypto-currencies. Bit coin will have value to some for the foreseeable future. It may drop a few thousand in value, but it's not going to crash completely. It's used too much for that to happen now.
"That's the way to do it" - Punch
Yes, it did drop to below $4100, but it has now rebounded to nearly $4300. Yes it's dropped some compared to Friday, but it's about where it was last Tuesday. Whaddayaknow, it goes up, and it goes down. Look at the 30 day chart, and the trend looks like a fairly steady rise from about $4000 to $4250. Much as journalists would like the story to be "Oh noes, the bitcoin is crashing!", it doesn't really stack up (yet).
Of course, reaching a peak value at a "significant" number like $5000 is a signal for a lot of people to sell, which drives down prices, and the real surprise is that that combined with the Chinese drama hasn't had an even more dramatic effect, but all it seems to have done is drive a relatively small correction in value back down to the underlying trend.
While I think it's probably stretching the facts to assume Bitcoin will behave exactly analogously, why is it unfair to make the comparison?
During the Tulip Mania, people actually did use tulip bulbs as a medium of exchange. They were compact, portable carrier of value that unlike, say, a bearer bond or letter of credit, couldn't be forged. If the Tulip Mania happened today, contraband dealers absolutely would be taking payment in bulbs.
The whole idea of Bitcoin is that there is no central authority that controls it; well if there's no central authority intervening in its valuation the market will send its value on a random walk. That random walk absolutely has one absorbing boundary: if the value of Bitcoin drops enough, people will lose confidence in it. This is unlikely to happen, because by design Bitcoin encourages deflation -- which means that by design it becomes more valuable on average as time goes on.
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I think the drop is people over-thinking it. With no local exchanged, that just means people in China have more incentive to keep transactions on bitcoin, and not pull out to local currency. I suspect it will result in more demand and therefore higher prices.
I also suspect that with the volatility, there will be a bitcoin futures market at some point.
It's becoming clear that BTC are pretty bad for trying to hide your transactions from the government, if they are somewhat keen to find out what you're up to. There are still a lot of regular (online) places that accept BTC payments, mostly because their payment gateways haven't dropped cryptocurrency yet, but you generally pay a bit extra if you use BTC compared to CC, PayPal or online banking. I doubt many people use that option. Then there are countries with high inflation where it's helpful to change your wages into something more stable (traditionally: cash $). But if BTC itself continues to drop, that market will dry up pretty quickly. The price of BTC is driven by demand, and once the tax evaders, online shoppers and people looking for a place to store value get out, BTC may well crash beyond the loss of a few thousand on the exchange rate. Right now, there's also a great many "investors" (speculators) holding BTC, but if the price continues to fall, they'll start selling off accelerating the process.
It will hold some value for a while, but I'm betting it will disappear eventually. There may be some coins that survive, like the ones from non-fraudulent ICOs (if there is such a thing) that offer a real stake in a company or access to an actually desirable service. But the former will be regulated, entities like the SEC have already said they are looking into ICOs.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Most of the Dutch tulip mania trading was actually in futures contracts rather than physical bulbs.
As for Bitcoin, the deflationary design doesn't necessarily mean that people won't lose confidence in it. They must first accept that the "currency" has value in the first place. If I told you that I would sell you a "nealric coin" for $1,000 and that there will never be more nealric coins created, I doubt you'd be very interested in it, because nobody places any value in a "currency" that I just made up. Right now, Bitcoin has value mostly as the original and primary blockchain currency. But if another technically superior blockchain currency eventually supersedes it, the inherent difficulties of exchanging bitcoins may lead to people abandoning it, no matter how deflationary it is by design.
Yeah, like ransomware! Bitcoin and all the other cryptocoin fuckers can just die. Stupid assholes.
While I completely agree Bitcoin are just an idiotic concept, so is debt-based currency. Currency lacking a tangible backing is just all around stupid because it is in essence an abstraction for a quantity of Human labor and nothing more. Though at least debt-based currency has a whole host of Labor dedicated to it (not just wallstreet and bankers in general, but people who will stomp your shit in if you counterfeit it as well.)
Wanna bet?
Never mind, I'm sorry, I can't bet with you because you are a crazy person.
You are welcome on my lawn.
WIth often long delays in confirmation, pretty steep transaction fees even on basic transfers, having to deal with poorly secured or outright dodge exchanges. A better form of money? Not in its current form its not. Yes even large institutions are looking into blockchain techology, but mostly because they "have to" do so: it's firmly way up there in the hype cycle. Ask them for concrete, practical ideas of what they want to achieve with blockchain if you want a good laugh.
Both the technology and the coin have some use. And BTC might well sit at $10k next year, but it'll be because of a continued speculation-driven bubble, not because of widespread adoption. Because for the common man there still are no compelling reasons to pay or be paid in cryptocurrency,
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
China subsidizes electricity and hardware for bitcoin processing.
Ha. well that will be another interesting aspect of bitcoin--- it will arbitrage electric power subsidies out of existence.
Please correct me if I'm wrong because I might be but my educated guess about bitcoin is that there's no price bubble at all. My reason for stating this rests on the assumption that the price of mining a coin is exactly equal to the electricity and hardware costs plus a thin markup (thin-ness dictated by competition which is intense). By price here I mean the cost of buying a coin plus the pre-rated cost of a typical shared transaction fee on the coin for using it. (that is to say, the amount of money the miner gets).
So if that's right then the typical cost of mining a coin is about $4000.
Am I right?
Now lets drill down on this a little. The cost of mining is not identical for all miners.
imagine a histogram of miners with the X-axis being their cost of mining, removing the hardware cost from the cost of mining (a sunk cost) and just look at the marginal cost of electicity. this is different for different miners.
If you then you draw a vertical line at the current price then the area to the left is miners who are making money. The ones to the right are miners who either are not mining (because they lose money) or who mining because even though it's a loss they can get some cash flow to pay off debts,
You can draw a second histogram which includes the cost of the hardware. In this case the ones to the left are all the people who could profit by entering the mining industry and the ones to the right are the ones who should not purchase hardware because it would be a loss from the start.
One of the factors not included here is the re-sale cost of used hardware. That's a tricky thing to estimate since the future price and difficulty of mining are not known when you initially buy the hardware.
What determines the cost of electricity? Well if you can use the waste heat then the cost is free. And if your country subsidises electrictiy then for you, not your country, it's also cheap. And if you have electricity that would go to waste otherwise then it's also free.
What electricity goes to waste? Well renewables that need to be stored in batteries for one. instead of storing it in a battery just use it to mine. They buy back the power later when you need it. Much cheaper than buying batteries.
Some drink at the fountain of knowledge. Others just gargle.
Well, it sank to $3940 during the 4th but finished the day a little over $4000, then reached $4600 over the next few days before falling to $4100 yesterday. Don't blink. So somewhere in there it lost $1000 although it gained half of it back along the way.
I don't pretend on being able to predict the future; ultimately we're talking about how people feel about Bitcoin, and anything could happen to that. My point is that the design of Bitcoin makes an inflationary crash less likely, not impossible.
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A "currencies" with no physical embodiment and are "supported" entirely by people thinking happy thoughts? What could possibly go wrong?
You can't see ANYTHING from a car, You've got to get out of the goddamned contraption and walk...Edward Abbey
And what, exactly, gives any other physical "money" value other than whatever value we assign to it? If we have a gold backed currency it is no more or less valuable than we believe it to be, same as modern currency.
Personally I'd rather have my idiots at home glued to the TV than out doing idiotic things
There are many people who do Bitcoin arbitrage. Software for doing so is readily available. Exchange fees and the time required to settle transactions limit the profitability and increase the risk. You don't know for sure if your transaction will settle until days later. Recently, there were 200,000 transactions awaiting settlement.
There is also risk from exchange issues, and not just frauds and hacks. An FDIC-insured bank has to prove it has sufficient assets to cover liabilities, both liquid and long term. With no such regulation of Bitcoin exchanges, it's natural for exchanges to try to increase profits by pushing the limits on liabilities vs actual cash available. An honest but eager exchange owner can easily accidentally create a situation in which they aren't able to make promised pay outs.
"Anyone and everyone "investing" in any type of digital (fake, nonexistent, not linked to anything tangible) currency is just plain fucking stupid. At least dirt is real. Bitcoin is just 1s and 0s and linked to nothing of value."
Odd that my ROI with this fake money was 10 fold in real $$. Also, you do realise that all fiat currency isn't based on anything tangible. While US$ used to be based on gold, that hasn't been the case for decades. That dollar in your wallet is only worth the value that society gives it.
Some days I get the sinking feeling Orwell was an optimist.
Given what most people use btc for, it's more like poppy bulbs than tulip bulbs. I hear opium holds value pretty well, although you can't store it for as long as you can store a Bitcoin.
>Bitcoin has value mostly as the original and primary blockchain currency.
Indeed. Even if one were to assume that crypto-currency would be around forever, that doesn't imply the same for Bitcoin. Bitcoin's value, compared to other crypto-currency, is basically because it's popular. In a way, it's popular because it's popular. Much like the leading social network. Plenty of sites offer features similar to Facebook, but people use Facebook because that's what their friends use. Everybody is on Facebook because everybody is on Facebook. But many of us remember when Myspace was the one everybody used. Just because Myspace was dominant didn't mean it would remain dominant, or even relevant. It was replaced by Facebook, and the fall of Myspace was pretty rapid. Similarly, Bitcoin could be replaced by Facecoin at any time.
From this perspective, all money except precious metal is fake.
NO SIG
All cash is "fake, nonexistent, not linked to anything tangible".
NO SIG
Please, someone, verify the math... how did Bitcoin lost more than $1000 and still be above $4000 when the all time high was $5000.
By asking that question you have shown you clearly don't have what it takes to be an investment banker.
The thing of value isn't the coins, it's the blockchain and the processes around it. Other blockchains have been built but the stability of one that's deeply rooted like the Bitcoin BC is valuable. No saying BC is "worth" what it's going for, but it's not backed by nothing either.
The fact it's shiny and shiny things are the oldest currency for the oldest profession. Gold has remarkably few uses when you account for how much we have vs how little it takes even for our most advanced technology. it is a physical thing which is a base element with only 1 stable isotope (it can be neither created nor destroyed at any practical energy level,) it is a finite thing which is really difficult to inflate the supply of, and it's relatively easy to confirm the existence of in a sample. Bitcoin on the other hand requires a massive technological infrastructure to support (image shit hit the fan and the economy collapsed, go ahead and assume you have electricity, how long until the last bitcoin-capable computer dies? Maybe 20 years given modern planned obsolescence? How about the shorter term where you have some multi-month division in the internet, not even a fullscale collapse, how long until everyone's blockchain becomes corrupted by double spending? Given the number of hackers using it probably not more than a few days to a week. It excels in being useful for nothing else and thereby not competing with anything for it's finite supply (save perhaps someone trying to create an absolutely massive rainbow table, which is probably the intended use of bitcoin, but that's about it. Moreover it has a serious drawback over cash or gold: it is infinitely traceable. If someone knows who gave them one they can track down every single person who owned it before them, and before you start screaming "muh crypto" just think how cheap it is to beat someone with a wrench, cut off their finger, or scoop out their eyeball with a spoon - all computer security is a joke when it comes to anything more than securing a terminal from someone who happens to be walking down a hall, physical security is the only real security in communications and physical possession is the only real possession when it comes to money.
A "currencies" with no physical embodiment and are "supported" entirely by people thinking happy thoughts? What could possibly go wrong?
You just described the dollar and many other state issued currencies. The only thing that makes the dollar worth anything is that people are willing to exchange it for other things.
"That's the way to do it" - Punch
Basically, after some of us pointed out that the bitcoin exchanges were enabling Russia and North Korea to delay climate change action, and China had decided to force all new vehicles to become electric, they had to do something.
You can still exchange bitcoin legally, but only in person.
Consequences are like that. China does what it's going to do.
-- Tigger warning: This post may contain tiggers! --
There will always be transactions that people want to hide from governments.
And that is where blockchain currencies completely fail. Yes, your blockchain can be anonymous - but if it is tied to you, then EVERY SINGLE TRANSACTION in that blockchain is also tied to you. With cash, if they tie one transaction to you - the others are still anonymous. Cryptocurrencies are 100% traceable and indentifiable to a single user; once you know who that user is, you know everything they've ever done with their blockchain.
Cash is still king for anonymity, as it requires ZERO identification for any transaction and each transaction is completely decoupled for every other transaction. Buy illicit drugs with your blockchain? Make one connection to you, and I now know you purchased Oxycontin 43 times over the last 3 years. Buy with cash? I get you for one purchase - and don't know about the other 42.
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In major currencies, cash is linked to gold held by the central bank (e.g. Bank of England) or similar.
That depends. Which year do you believe it is currently?
it's in my head
I think there was some misunderstandings here from both of us, I thought you were panning things like the US dollar and not Bitcoin. Bitcoin is trash and a terrible store of value, but I think that has more to do with the rampant speculation than it does with the concept.
Personally I'd rather have my idiots at home glued to the TV than out doing idiotic things
Price changes like this are not what you want in a medium of exchange, but they are exactly what you want in a pump-and-dump stock.
how did Bitcoin lost more than $1000 and still be above $4000 when the all time high was $5000.
Bitcoin is so unstable and changes so fast, that by the time you finish your subtraction the numbers doesn't mean anything anymore.
And I'm only half joking.
Seriouly, do we *Really* need a new /. article each time the exchange value of BTC jolts ?
At that pace we could actually use the exchange rate as an entropy source for random number generators.
Stick to the bitcoin *protocol* as a way to make decentralized transactions only, and keep using *fiat* for your long-term storage needs.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Currency is useful as a means of decoupling barter from direct person-to-person exchange. I don't have to go to a dairy farmer, a butcher, a corn farmer, a winery, and the newspaper printer - I can go to the local Von's and buy everything there. I give them paper to procure goods; they give some of that paper to others for goods, and so on. Currency is great because it's universally accepted at a recognized value.
Bitcoin? Where the price can bump 20% in a matter of a few days (and plunge by that too) is terrible, because that same dairy farmer couldn't quote a price and be relatively certain the quote can last for more than a few hours. Stability is crucial - and having a currency that is recognized by Governments as legal tender (meaning - it can be legally used to pay off debts and contracts) is crucial. Bitcoin is neither stable nor legal tender. Meaning - great for speculation, but pretty poor for basing an economy upon.
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Stability of Bitcoin? I can't see where it was stable...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
There will always be transactions that people want to hide from governments.
And that is where blockchain currencies completely fail. Yes, your blockchain can be anonymous - but if it is tied to you, then EVERY SINGLE TRANSACTION in that blockchain is also tied to you. With cash,...
That's why I said that "ONLINE" they are the "CLOSEST THING". Online crypto currency is still more anonymous and less trackable than any other form of payment even if not completely secure.
You can't pay with cash online.
"That's the way to do it" - Punch
Stability of the blockchain ledger that underpins bitcoin. It's a well established blockchain with a large number of resources devoted to running the consensus algorithm, and thus more difficult to subvert than a freshly minted blockchain. That has utility and utility is value.
I purchased my first Bitcoins about a week ago, and I'm known to have that kind of effect.
I can also stop a cashier lineup just by standing in it.
I can walk into my local grocery store (Albertson's, Von's, Ralph's), plunk down $500 cash and walk out with a prepaid VISA card that can be used online. Zero trace to me - it was a cash purchase. Done. Online Crypto isn't close to anonymous or less trackable - in fact, that's the whole point of blockchain: EVERY transaction is trackable and your entire history is recorded on purpose.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
They're not stupid. They're rich. They're simply leeches, draining money out of the economy while contributing no productivity whatsoever, not even as much use as the banking and stock leeches (who at least supply money to productive people).
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China bubble will pop soon.
WIth often long delays in confirmation ...
Compared to what? Typical credit card charges can be reversed for months afterward. With cryptocurrency the time to settle might be a significant fraction of an hour but when it's done, the cost was a tiny fraction of the transaction and the "money" is 100% really really transferred, this removal of trillions of dollars of economic drag on the economy in the form of fees to "trusted 3rd parties" is another huge potential benefit of such digital currencies.