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Bitcoin Tumbles After China Central Bank Bans Financial Companies From Using Digital Currency

Tyler Durden's picture




 

As we said back in March, when Bitcoin's parabolic rise first started, it was only a matter of time before first one, then all central banks take on Bitcoin for the simple fact that it present too great a threat to the fiat system. Sure enough, on the chart below of BTC China it is quite clear just at what point overnight the People's Bank of China announced that Bitcoin is simply a virtual commodity and "isn't a currency with any real meaning" (paraphrasing Alan Greenspan), and that it officially bans financial companies from Bitcoin transactions.

However, the reason why Chinese Bitcoin didn't tumble all the way to zero is because the PBOC added a loophole that the public is free to participate in internet transactions provided they bear their own risks.

FT adds:

The Chinese regulators noted three main risks. First, they said Bitcoin was an unsafe investment because the amount in circulation is small and can be easily controlled by speculators, making it highly volatile.

 

Second, because it is a largely anonymous product with few controls on it, they said that Bitcoin makes money laundering easy and can be used to support terrorism.

 

Third, they said there was a risk that it could be used by criminal organisations, noting that Bitcoin had been used internationally for the purchase of drugs and weapons.

 

“We have clearly stipulated that at the present moment all financial institutions and payment institutions cannot develop any business related to Bitcoin,” the central bank said. The regulators said that any websites serving as platforms for Bitcoin transactions would have to provide detailed information about their users and report any suspicious activity.

 

The central bank said it would continue to monitor Bitcoin trends and risks, adding that it would also focus on educating the public. “We will guide people to correctly understand the concept of a currency as well as investment theory,” it said.

However, as noted, the ban was not outright, and the PBOC did allow an option for continuing the use of Bitcoin. That said, with increasingly more central banks rejecting BTC and outright warning about its usage, one can expect that the main draw of Bitcoin, its independence from the legacy fiat system, will be increasingly more scrutizinied until it too is institutionalized, or until the BIS creates its own Bitcoin slamdown trading desk.

The Chinese government stopped short of banning Bitcoin altogether, saying that as an online product people were free to buy and sell it at their own risk. But it highlighted many dangers associated with it, including money laundering and criminality. From a systemic perspective, it noted that the one saving grace was that the amount circulating in the economy was too limited to pose a real threat.

 

“Although there are people calling it a ‘currency’, it is not issued by the monetary authority, it does not possess the attributes of a currency such as legal repayment and enforcement abilities,” the central bank said in a statement explaining the notice.

 

“Judged by its nature, Bitcoin is one particular kind of a virtual product. It does not have the legal status of a currency, and it cannot and moreover should not be allowed to circulate in the market as a currency.”

 

About a third of global Bitcoin transactions have been taking place in China and BTCChina became the world’s biggest bitcoin exchange by trading volume last month.

 

No major financial institutions have yet been involved in the Bitcoin trade in China, but online vendors on ecommerce group Alibaba’s platforms have started using it, as has Baidu, the internet search engine leader.

So that's that. Next, we hope to provide shortly the latest monthly total gold import number by China, where the PBOC has yet to provide an update of its total holdings since 2009.

 

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Thu, 12/05/2013 - 07:35 | 4216971 Dear Infinity
Dear Infinity's picture

I actually thought the move was rational on the PBOC's part. At least they extol the virtue of not being a reckless gambler on their banking system. They will also be funding new "education camps" to inform the public just what a real currency is.... money by force!

China: General public have freedom to participate in Bitcoin trading as a commodity trading on the internet on condition they assume risk.

Thu, 12/05/2013 - 07:39 | 4216988 GetZeeGold
GetZeeGold's picture

 

 

I spent many wondrous years in the education camps as a young lad.

 

Too bad it didn't take.....it cost my parents a fortune.

Thu, 12/05/2013 - 07:42 | 4216993 gold-is-not-dead
gold-is-not-dead's picture

everyone can say whatever they want about btc, it'll stay the same... buhahahahahahaha...

Thu, 12/05/2013 - 07:42 | 4216999 gold-is-not-dead
gold-is-not-dead's picture

HAHAHAHAHAHAHA, oh banksters of china, i-ching masters, you never go full retard...

Thu, 12/05/2013 - 07:45 | 4217000 gold-is-not-dead
gold-is-not-dead's picture

When will people realize that their opinion about bitcoin doesn't matter at all...

Thu, 12/05/2013 - 07:47 | 4217012 Oracle of Kypseli
Oracle of Kypseli's picture

It does 30%

 

Thu, 12/05/2013 - 07:51 | 4217018 gold-is-not-dead
gold-is-not-dead's picture

Ola, bankster, I just grabbed more....muhahahhahahh

Thu, 12/05/2013 - 07:59 | 4217040 Mad Mohel
Mad Mohel's picture

Your boyfriend fonestar is sleeping, so you're covering his shift?

Thu, 12/05/2013 - 08:08 | 4217058 negative rates
negative rates's picture

Wern't the Chinese the ones with 1/2 the investment in this lastest and greatest ponzi. You can't profit from a ponzi unless you can raise money somehow, and then take profit when the time arrives. You will play round robin with this coin as 3 or so big players take profit ramdomly as the Indians contribute slowly and steadly to build the new and exciting ponzi. This ponzi will stay in it's infint stage until it runs out of time and goes away.

Thu, 12/05/2013 - 08:28 | 4217099 gold-is-not-dead
gold-is-not-dead's picture

oh, now we're getting into the ad hominem field of corespodence... ok, I'm off now, until next bubble pop... 12th I think so far...

 

Thu, 12/05/2013 - 08:37 | 4217119 PP
PP's picture

Most Chinese don't believe Bitcoin, numerous criticism on Chinese Web. only less than 500,000 people invest in. (compare to 1.3 billion population). about 80% are young guy who dream that one day become billionaire by investing bitcoins. no house wifes involved

 

 

Thu, 12/05/2013 - 08:49 | 4217135 Oracle of Kypseli
Oracle of Kypseli's picture

Chinese people have been betting on grasshopper jumping. Why would you not expect them to bet on bitcoin?   

Thu, 12/05/2013 - 09:26 | 4217200 fonestar
fonestar's picture

OH NO IT'S OVER!!!!

PANIC AND SELL NOW!!!!

Thu, 12/05/2013 - 09:58 | 4217275 Rock On Roger
Rock On Roger's picture

It is about time you came to your senses.

 

Stack On

Thu, 12/05/2013 - 10:37 | 4217413 fonestar
fonestar's picture

Sorry, I need to be careful using sarcasm (special kids and sharp objects).

Thu, 12/05/2013 - 10:54 | 4217468 fonestar
fonestar's picture

....and since that time the deflationary tiger has doubled and tripled how many times (all of which I predicted)?

So you admit I was right then?  Here's another prediction for you that you can quote.  As Bitcoin spreads it will continue to increase in value and will cause a panic out of fiat currencies.  Nobody will be laughing or treat this as a joking issue as governments try unsuccessfully to crack down on a phantom blackhole that tears your world apart.

Thu, 12/05/2013 - 11:03 | 4217489 hedgeless_horseman
hedgeless_horseman's picture

 

 

....and since that time the deflationary tiger has doubled and tripled how many times (all of which I predicted)?

See, "Bitcoins go parabolic," in the equation.  It is right before, "Legislation by the government."

So you admit I was right then?

It is too early to tell who was right. 

Thu, 12/05/2013 - 11:29 | 4217581 fonestar
fonestar's picture

Well I am still here, emboldened, proclaiming anarchy and chaos.

Thu, 12/05/2013 - 11:52 | 4217593 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

seriously?  you gonna play it that way?   i despise shills with the best of them, but really....  i had more hope for you hedge....  admitting someone is correct with in a certain context is not defeat, plus it is the right thing to do.... over the long run - you are correct, but you are also skirting the issue and seeming very evasive with your response....  give fonestar his pound of flesh for some of his predictions have been quite accurate... how he derived those predictions is another story... but being right is being right no matter how unfortunate it is

Thu, 12/05/2013 - 15:16 | 4217814 fiftybagger
fiftybagger's picture

Okay, So you will tell us at what price you are/were wrong at?

3?

30?

300?

3000?

30000?

300000?

3000000?

Infinity?

Silver For The People

The Bitcoin Channel

Thu, 12/05/2013 - 12:46 | 4217840 dark pools of soros
dark pools of soros's picture

which is it HH?  You rant that it is the mark of the devil and part of the NWO and then on the other side ramp up the 'governments will crush it' banner

 

pick a side or just be total loony

 

Thu, 12/05/2013 - 17:01 | 4218987 hedgeless_horseman
hedgeless_horseman's picture

 

 

...on the other side...

Are not those two positions on the same side of the coin, if not for different reasons?

Fri, 12/06/2013 - 18:28 | 4222956 dark pools of soros
dark pools of soros's picture

if you are playing the loony hedge card sure..  got everything covered

Thu, 12/05/2013 - 13:29 | 4218033 Crash Overide
Crash Overide's picture

Hey fone, do you know if Bitcoin is a CIA op or not? You heard anything like that?

Thu, 12/05/2013 - 10:56 | 4217454 PT
PT's picture

Bit coin = Poster Child for BTFD.

Did Poseidon ever bounce like this?  Tulip bulbs?  South Seas?  etc etc.

How many times has bitcoin crashed and bounced now? 

EDIT:  I truly am ignorant in these matters so feel free to educate me.

Bitcoin theme song???:
I get knocked down, but I get up again.
You're never gonna keep me down...
 

Thu, 12/05/2013 - 10:59 | 4217484 fonestar
fonestar's picture

Yes good call.  Perhaps Bitcoin is chumbawamba?

Thu, 12/05/2013 - 10:51 | 4217449 eclectic syncretist
eclectic syncretist's picture

Meanwhile, in the world of real currencies, JPM bought another 238,900 ounces of gold yesterday at the CRIMEX.  This would more than double their current registered inventory. They also continue to buy silver, in sharp contrast to the constant selling they've been doing for the past couple of years or so.

But what's even more interesting is that HSBC was called to deliver 221,600 ounces, and they only have 80,257 ounces registered.  I wonder how that's going to work out for them?

http://www.cmegroup.com/trading/energy/nymex-delivery-notices.html

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsReport.pdf

 
Thu, 12/05/2013 - 10:56 | 4217477 fonestar
fonestar's picture

"real currencies" mind control victim?

Thu, 12/05/2013 - 13:33 | 4218057 Crash Overide
Crash Overide's picture

and haven't most of the banks repositioned on the long side of metals?

Thu, 12/05/2013 - 10:04 | 4217297 TeMpTeK
TeMpTeK's picture

And so it begins.... The attack on nerd money......Fonestar will still survive as he all his fellow bitcoinites can live on bitcoin alone...no need for cash exchanges, businesses who can accept btc..... PS..... Did u hear about the guy that stole 100 million in btc... You can watch the theft live here...

http://www.businessinsider.com/a-thief-is-attempting-to-hide-100-million...

Thu, 12/05/2013 - 10:41 | 4217415 fonestar
fonestar's picture

Yes, this time it's definitely "the end of Bitcoin".  For sure this time.  The other seventy-nine times were false alarms.

Thu, 12/05/2013 - 13:00 | 4217897 Itgoestoeleven
Itgoestoeleven's picture

Hi Fonestar,

Unfortunately Fiat will not go away. I am dead center middle class. About 53% of my production is taxed. Taxes need to be paid in fiat. To kill BC they only need to tax a little more. Unless, they collect taxes in the form of BC.  

Thu, 12/05/2013 - 13:18 | 4217989 TeMpTeK
TeMpTeK's picture

Not the end of btc ... But the end of the poor guy who got 100 million in btc stolen with no recourse or chance in hell to get them back..... But as far as youre concerned btc is still the greatest way to pay, save, invest? Just cross your fingers and hope crypto-nerd doesnt crack your password...no thanks

Thu, 12/05/2013 - 13:30 | 4218042 fonestar
fonestar's picture

I am crypto-nerd and I feel fine.  Thank-you.

Thu, 12/05/2013 - 10:19 | 4217357 Papasmurf
Papasmurf's picture

LOLOLOLOLOLOL

Thu, 12/05/2013 - 10:20 | 4217365 Gene Parmesan
Gene Parmesan's picture

Governments are powerless, right?

Thu, 12/05/2013 - 10:36 | 4217407 fonestar
fonestar's picture

Yes, powerless.  A contraption that lives only in the minds of brainwashed individuals.

Thu, 12/05/2013 - 10:54 | 4217469 eclectic syncretist
eclectic syncretist's picture

Roll the dice fonestar.  History is not on your side.

http://www.britannica.com/EBchecked/topic/385600/Mississippi-Bubble

Thu, 12/05/2013 - 10:58 | 4217488 fonestar
fonestar's picture

As long as logic is.

Thu, 12/05/2013 - 14:31 | 4218381 funthea
funthea's picture

Speaking of logic... why will/should  bitcoin be worth anything over other crypto currencies that are vertually just as viable. Early adoption is certainly worthy as an argument, just not as the only argument...

 

Thu, 12/05/2013 - 20:11 | 4219718 TheHound73
TheHound73's picture

The free-market will hash this out but it will be winner-take-all.  Merchants are not going to support 50 currencies with 50 pay buttons, 50 wallets and 50 exchange rates.  It will be troublesome enough for a merchant to support 1 crypto-currency and they will support the one with the largest customer base.  

Miners, who provide security to the network, will apply their computer power to most attractive currency.  The weak currencies will be and have been attacked.

These are self-reinforcing qualities.

 

Tue, 12/10/2013 - 16:34 | 4233578 funthea
funthea's picture

I don't know about winner take all. Silver and Gold coexisted as monetary units for some time, enjoying a reinforcing a symbiotic relationship, giving etification to one another.

Thu, 12/05/2013 - 12:10 | 4217381 fallout11
fallout11's picture

Bitcoin is not a currency – and as long as it lacks the fundamental qualities that define a currency it will not be one.  It is, at best, a digital commodity much like World of Warcraft gold.
Currencies must:.....
1) Be a store of value.  That is, if I put some amount of value into it today that value should be reasonably stable over time.  Nothing that is fluctuating in purchasing power by +/- 5%, 10% or even 20% in a day can be said to have such a quality, irrespective of whether it is going up or down. BTC fails this test.

2) Be a medium of exchange.  In order to perform this function people must accept it in trade for other goods and services – real goods and services.  You need to be able to buy a gallon of gasoline, a basket of food, a car, a computer and similar with it.  The problem is that until it is a store of value it will not be a medium of exchange because the people who produce things would be insane to widely accept it when they cannot reasonably expect the value you give them to be constant for enough time for them to obtain more raw materials and similar with what you tendered to them. BTC currently fails this test.

3) Self-verifying, at least for reasonably-small transactions.  You should be able to know if the “coin” you intend to spend is valid (and not a counterfeit) by trivial examination. This is almost-impossible with digital currencies since one of the largest risks is that you can theoretically spend them more than once, but only the first such spend is valid.  A credit or debit card partially solves this problem via central clearing where serialization takes place.  A decentralized currency attempts to solve this by publication, but that requires a fair bit of time to insure that your “spend” is not duplicated.  For face-to-face transactions any sort of “online” requirement presents a material problem and for small but frequent transactions any sort of delay is unacceptable.  The credit card industry solved the “online” problem decades ago through the use of paper transaction imprints and receipts; there is no similar way to resolve that problem for purely digital currencies. BTC currently fails this test.

Thu, 12/05/2013 - 12:58 | 4217831 fiftybagger
fiftybagger's picture

Blah blah blah.  All refuted dozens of times before:

https://en.bitcoin.it/wiki/Myths

Okay.  Enough with reasoning with the dull witted.  Maybe a 9 year old can reach them:

Designed to be scarce their worth alone
beats every record we've known
A SHA for each block that's how miners roll
and the blockchain goes on and on

'Toshi got this program penned
to solve the problem of double spends
Proof of work with all that hash
making us some digital cash
Miners stack to save our spends
share their answers with all their friends
Silicon brains write chains of blocks
while Keynes can't refrain from throwing rocks
So all you fools shorting 'toshi,
bugs and statists with your glasses rosey,
when the world finds out we can't inflate
You'll join this party fashionably late

http://www.youtube.com/watch?v=WdrSP0V-KLg

Silver For The People

The Bitcoin Channel

Thu, 12/05/2013 - 14:34 | 4218400 gold-is-not-dead
gold-is-not-dead's picture

.

Thu, 12/05/2013 - 14:35 | 4218401 gold-is-not-dead
gold-is-not-dead's picture

hear ya brother

Thu, 12/05/2013 - 15:31 | 4218655 fallout11
fallout11's picture

Please refute any of my three points, which can be found in any ECON 101 textbook re: currencies, as https://en.bitcoin.it/wiki/Myths fails to address any of the three I mentioned.

What I see here is 'psychology of previous investment' at work. I'm not blind to BTC's value as a tradeable commodity, which is exactly what it is today, what I am saying is it does not meet these fundamental criteria to be considered a fungible currency (aka "money"), at present. It may at some point in the future, but not now.

Thu, 12/05/2013 - 13:23 | 4218006 Luckhasit
Luckhasit's picture

Don't leave out pigeon racing either!

Thu, 12/05/2013 - 20:14 | 4219723 TheHound73
TheHound73's picture

Father-in-law breeds racing pigeons, true story.  He accepts BTC.

Thu, 12/05/2013 - 09:19 | 4217143 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Not surprising what the Chinese government did you people seem to forget there is precedent for virtual currency in China and the Communist regime there trying to outlaw it.

A trip down the memory hole from 2006.

http://news.xinhuanet.com/english/2006-11/16/content_5337155.htm

BEIJING, Nov. 16 (Xinhua) -- China's central bank has threatened to step into a debate on a "virtual currency" issued by an Internet firm and bring it under government supervision.

    The currency is the Q-coin issued by Tencent, a leading Internet community operator, for the users of QQ, an on-line chat room that had 220 million users by March.

    It can be purchased with bank cards, telephone cards or QQ cards at an official price of one yuan (12.5 U.S. cents) and was originally intended to be used in buying on-line services providedby Tencent, including electronic greeting cards, cartoon portraits,chips in on-line QQ games and anti-virus software.

    But many people have begun paying Q-coins when trading among themselves and in buying commodities and services provided by other websites.

    The operators of some Internet forums reportedly receive Q-coins as their wages.

    There have been reports that some people earned thousands of yuan per month by selling Q-coins won in on-line QQ games, where 10,000 points can be changed into one Q-coin.

    The People's Bank of China (PBOC) said it would closely monitor the "virtual money", amid concerns that it may impact China's currency if it was left uncontrolled.

    The bank would put the Q-coin, a kind of popular "virtual money", under supervision if it entered into circulation, sources with the PBOC told Xinhua.

    However, Yu Guofu, a counselor with the Internet Society of China, dismissed the fears, saying the Q-coin was only a commodity,not a real currency that can be converted into the yuan.

    It was worthless for people who were not QQ users, Yu argued.

    Li Chong, a professor of finance with the Beijing Normal University, even denied the Q-coin is "virtual money" because it is "neither a medium of exchange nor a store of value".

    However, legal expert Zhao Fujun argued that speculators who bought large amounts of Q-coins at a low price and resold at a profit had made the "virtual money" circulate like a hard currency.

    Tencent said it would crack down on illegal sales of Q-coins in conjunction with the police, according to a report in the Beijing News.

    Yang Tao, a legal scholar, pointed out that as China's legal tender, the yuan must be offered in payment of any debt and only the central bank could issue money.

    Conversion between the Q-coin and the yuan, if unchecked, would lead to dire economic consequences, warned Yang.

    "Virtual money" could disorder China's financial markets by taking the place of the legal tender as an "on-line medium of exchange", he said.

    As the Q-coin was issued by an enterprise, not the central bank,the supply was not subject to the country's monetary policy and could cause the policy to fail, said Yang.

    However, analysts believe the Q-coin is unlikely to enter into circulation because once it is made convertible with the yuan, Tencent would be exposed to great risks, especially if there is a malicious drawing.

    No company would run the risk just to become a "virtual central bank", said a commentary in the Shanghai Securities News.

    Yu said inflation occurred only when money supply exceeded the value of available goods and services, but "the supply of the Q-coin is based on the amount people purchase, which is unrelated to the country's financial system".

    The sales volume of "virtual money" are estimated at billions of yuan every year in China and growing at an annual average rate of 15 to 20 percent.

 

Apparently they were wrong about the virtual bank part aka the exchanges which in essence act as defacto banks commodity or currency as long as crypto-currency is convertable to Central Bank funny money. And to counter PP I would say Chinese people did very much so believe in virtual currency based on those numbers. And this was a good 7 years ago.

Thu, 12/05/2013 - 09:46 | 4217241 fonestar
fonestar's picture

Because Bitcoin users care a lot about what some "government" says.

Thu, 12/05/2013 - 13:51 | 4218151 Crash Overide
Crash Overide's picture

Bitcoin is more of a conversion, transfer, and anonymity tool rather than a currency or money I would say.

It's not really a money or store of value argument the way I understand it.

Thu, 12/05/2013 - 10:06 | 4217306 tmosley
tmosley's picture

Gotta love it when 99% of the comments against an investment are as puerile as this.  

"W.well, if you own bitcoin then you're GAY!"

lol  Gotta love that "mania" and all that "public participation".

Thu, 12/05/2013 - 10:18 | 4217361 greatbeard
greatbeard's picture

>> 99% of the comments against an investment

You've picked an exceedingly rare comment out of the pack and presented it as compromising 99% of opinions.  I can't think of a better way to marginalize your opinion.

Thu, 12/05/2013 - 10:44 | 4217421 fonestar
fonestar's picture

They actually managed to come up with a dumber idea than an EMP killing Bitcoin (I didn't think it was possible)!  Get this, now Satoshi is going to come back and sue the world for copyright infringement!!!

LOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOL

Thu, 12/05/2013 - 13:08 | 4217935 fiftybagger
fiftybagger's picture

Yeah.  That's good one Fonestar.  I like Karl Dooshinger arguing that if you use Bitcoin you can be arrested for money laundering.  Bitcoin sure seems to easily ferret out all the fake libertarians.

Silver For The People

The Bitcoin Channel

Thu, 12/05/2013 - 14:58 | 4218508 greenbear
greenbear's picture

How many fake Libertarians like Schiff, North, Duane, Denninger, Still.. ad nauseum, got the message their number is up, time to throw careers and reputations under the bus to join the bankers war against bitcoin?  Throw in the internet trolls, and mind-controlled slaves of the Debt and Death paradigm for a great FUD bash.

Thu, 12/05/2013 - 07:47 | 4217002 GetZeeGold
GetZeeGold's picture

 

 

HAHAHAHAHAHAHA

 

Dude.....pace yourself.

Thu, 12/05/2013 - 07:48 | 4217013 gold-is-not-dead
gold-is-not-dead's picture

I will, I just got excited since I  grabed more coins in this mess... :)

 

got in under $1 and ive seen it all, hate, love, fear, whatever toward btc... it stayed the same... hyperdeflationary - if you disregard that, you loose money, money is what market says, not what some communist cb says....

 

Thu, 12/05/2013 - 07:49 | 4217016 GetZeeGold
GetZeeGold's picture

 

 

That's nice.

Thu, 12/05/2013 - 08:01 | 4217043 nmewn
nmewn's picture

lol...a virtual commodity.

And then this:

"However, the reason why Chinese Bitcoin didn't tumble all the way to zero is because the PBOC added a loophole that the public is free to participate in internet transactions provided they bear their own risks."

Ya know, like on-line poker ;-) 

Thu, 12/05/2013 - 09:53 | 4217214 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

is free to participate in internet transactions provided they bear their own risks.

And that is the real story here. they don't want people bitching and whining looking to them to bail them out if they lose their shirts. Plus if they banned in on that grounds then they'd have to ban things like paypal all other forms digital script like amazon coins. That would go over like a loud fart in church on a Sunday morning. There is no realistic way to stop it. Only discourage the zombies from having any signs of hope or wanting to use it.

Thu, 12/05/2013 - 10:24 | 4217380 Duke of Earl
Duke of Earl's picture

Sure they want that.  People bitch and whine and in return they regulate more...

 

Thu, 12/05/2013 - 08:11 | 4217070 negative rates
negative rates's picture

Mkt says no to bit coin, you say bad interpretation of mkt, I call BS.

Thu, 12/05/2013 - 10:40 | 4217418 balanced
balanced's picture

So Central Banks are the Market now?

Thu, 12/05/2013 - 11:10 | 4217522 hedgeless_horseman
hedgeless_horseman's picture

 

 

So Central Banks are the Market now?

Yes, in US Treasuries.

Thu, 12/05/2013 - 10:21 | 4217372 Papasmurf
Papasmurf's picture

People doubled down on pets-dot-com too.

Thu, 12/05/2013 - 07:47 | 4217006 Oracle of Kypseli
Oracle of Kypseli's picture

Give it another year and bitcoin will be a distant memory. Tulips anyone?

Thu, 12/05/2013 - 07:52 | 4217023 gold-is-not-dead
gold-is-not-dead's picture

who in the world would trade drugs for tulips?  not even in hollland...

Thu, 12/05/2013 - 08:02 | 4217044 CCanuck
CCanuck's picture

Happens all the time, oldest trade in the world...drugs for twolips.

Thu, 12/05/2013 - 07:53 | 4217024 bitcoinbear
bitcoinbear's picture

Can I get your worthless tulips? I make sure that they are destroyed according to ecological governmental standard. 

1Hw6yCpw7wjoKtcVYFYrZM1HDGtKb6pAqg

Thu, 12/05/2013 - 08:37 | 4217118 bitcoinbear
bitcoinbear's picture

Crap! I have yet not received any bitcoins to spend on peace loving war efforts or quantitative easing to help the bitcoin economy back on its feet. I guess there is still some value left ni bitcoin then. 

Thu, 12/05/2013 - 07:54 | 4217029 AUD
AUD's picture

A bad comparison. Tulips are nice flowers & likely of greater value than the shitty credit of whatever bank issued notes in 17th century Amsterdam.

Thu, 12/05/2013 - 09:50 | 4217253 fredquimby
fredquimby's picture

Hey Oracle, wanna bet?

I bet you a gram of gold that 1 bitcoin is worth more than 1 ounce of gold (in USD terms) on December 5th 2014.

 

Thu, 12/05/2013 - 10:47 | 4217432 Oracle of Kypseli
Oracle of Kypseli's picture

Honestly speaking I don't want bitcoin to fail, as I am on the side of free choice. What I realy want is to see that it is stable first, transparent and have proven record that it is secure and the price is stabilized. Then I can put some money for preservation.

However, you cannot blame me or anybody else for skepticism, as governments have proven again and again that they do not like competition. Besides, what can be coded by men, can as well be decoded by smarter men or by coopting or threatening while one of the smartest users is in the hands of the feds. 

All in all, I hope that you guys make money while you can, but it may be at the expense of others and not necessarily the governments.

Now tell me if I should be junked by bitcoiners

 

Thu, 12/05/2013 - 13:17 | 4217978 fiftybagger
fiftybagger's picture

"Give it another year and bitcoin will be a distant memory. Tulips anyone?"

When Bitcoin is not a distant memory in a year will you promise to go away and be one?

Silver For The People

The Bitcoin Channel

Thu, 12/05/2013 - 14:35 | 4218402 Exponere Mendaces
Exponere Mendaces's picture

Oracle, can we come back in a year so you'll eat your words? Pretty please? Bitcoin has been declared "dead" so many times, and has persisted through each of those foolish proclamations enough to make the most seasoned investor take notice.

But you know what, you guys would just rationalize that billionaires being involved, VCs, etc.. were just the "stupid ones". Love the one-way street you have here, did you pave it yourself?

Thu, 12/05/2013 - 07:50 | 4217019 unrulian
unrulian's picture

it's as if a million geeks cried out...and were suddeny silent...

Thu, 12/05/2013 - 07:55 | 4217031 TheHound73
TheHound73's picture

Made 25% profit on my trading position from this dip.

Thu, 12/05/2013 - 10:28 | 4217392 quasimodo
quasimodo's picture

Made 25%? Cool, so that means you took that 25% out and now actually have something to show for it? Otherwise, you didn't make jack shit. 

Next

 

Thu, 12/05/2013 - 11:04 | 4217499 TheHound73
TheHound73's picture

For now the profit is sitting in fiat waiting to see the market's next move.  Will probably slam it back to BTC if I get a feel of an upward draft. As the consequence of the trades I am neither up nor down a satoshi.

Thu, 12/05/2013 - 07:57 | 4217033 Sudden Debt
Sudden Debt's picture

I guess bitcoins is where pipedreams go to die...

Thu, 12/05/2013 - 08:08 | 4217064 SAT 800
SAT 800's picture

Something like that. Nice use of English. Well said.

Thu, 12/05/2013 - 10:11 | 4217327 tmosley
tmosley's picture

The comments of you bitcoin sour grapers are pretty ironic, given what has happened in gold and silver, and the comments people made about gold and silver during their bull run.  Every little dip people would say EXACTLY this kind of shit.

Why are you such hypocrites?

Thu, 12/05/2013 - 10:28 | 4217394 Richard Head
Richard Head's picture

Because gold and silver are time tested money, while BTC is the fad of the moment?

Thu, 12/05/2013 - 12:33 | 4217796 tmosley
tmosley's picture

Right, because you can only have one or the other, right?  

I'm sure there were people who thought real estate in the New World was a fad too, but people just kept going over there, to the point where people thought for generations that the price of real estate only goes up.

Bitcoin and PMs are complimentary.  One increases the value of the other.  

But hey, if you want to fight hard to keep the Fed and central banks in control of transactional currencies, I guess that's your business.

Thu, 12/05/2013 - 13:27 | 4218030 Richard Head
Richard Head's picture

Even it BTC does have value as a "transactional currency", there is no reason for it to be worth $10, $100, $1000, or $10,000.  It's all speculative value based on the greater fool theory.  

Thu, 12/05/2013 - 14:33 | 4218387 fiftybagger
fiftybagger's picture

What should it be "worth" ?

Thu, 12/05/2013 - 15:39 | 4218682 fallout11
fallout11's picture

Exactly what someone will pay for it. Price discovery.

Thu, 12/05/2013 - 14:35 | 4218412 Exponere Mendaces
Exponere Mendaces's picture

@unrulian

More like - it's as if a million ZH trolls barked like seals, and were suddenly silent as BTC rallied again.

You fools never learn, do you.

"DEAD", "DEAD", "DEAD"... oh wait.. it isn't... well, its "STUPID" then. LOL, you people are nutcases.

Thu, 12/05/2013 - 08:11 | 4217072 ZH Snob
ZH Snob's picture

I'm surprised this decision would affect the bc holders at all.  they claim the bc system is outside of all government control, decentralized and all, why would they let it determine its value? 

could it be because, in reality, it is completely dependent on the very same governments and systems it claims to be able to circumvent?

Thu, 12/05/2013 - 09:33 | 4217215 freet0pian
freet0pian's picture

"they claim the bc system is outside of all government control" That's valid to some but a straw man for any sensible bitcoin holder.

"outside of all government control" & "completely dependent on" now you're just living in a B&W world like your avatar.

Thu, 12/05/2013 - 09:58 | 4217276 TheHound73
TheHound73's picture

<<the bc holders>> are like a herd of cats, you can't generalize them much.  It was pretty easy to spot the downward break in price today, roll on over to reddit for some news... yep, looks like news... sell some coins at $1,200 pick them back up at $900.  Pretty much a no brainer.  The depth of the market is wimpy compared to gold or stocks ($12b market cap), so price movement is amplified, for now. Back trading near $1,100.

Thu, 12/05/2013 - 07:40 | 4216991 gold-is-not-dead
gold-is-not-dead's picture

who cares what central bank of china thinks of bitcoin... cmon... are they going to solve the prime number faster while saying anything?

Thu, 12/05/2013 - 07:49 | 4217014 Ghordius
Ghordius's picture

I agree. note the "...focus on educating the public. “We will guide people to correctly understand the concept of a currency as well as investment theory,” it said." The Dutch National Bank's focus was on "be careful, you are on your own and you will not be bailed out - as in IceSave"

Thu, 12/05/2013 - 08:00 | 4217025 TheHound73
TheHound73's picture

Translated from the official notice:

1 Correct knowledge of Bitcoin

Bitcoin has four main characteristics: no central issuer, limited quantity, no geographical limits and anonymity. Although it is called money, it is not issued by a monetary authority, it does not have the status of legal tender and obliged payment status of money, it is not money in the true sense. Bitcoin is a specified virtual commodity, it does not have equal legal status with money, and it cannot and should not be used as money on the market.

~~~~

Chinese banks are told to stay away (good!), BTCChina exchange allowed to stay in business but implement KYC/AML.  BTC receives, at minimum, "commodity" status... like gold.

Thu, 12/05/2013 - 08:01 | 4217046 StychoKiller
StychoKiller's picture

If anyone understands FIAT, it would be the Chinese, given their long History with its usage.

Thu, 12/05/2013 - 10:29 | 4217390 Drifter
Drifter's picture

"focus on educating the public"

That's the worst thing central bankers could do, get people thinking about it, because people would figure out what their central bank currency really is.

Best thing they can do is keep quiet about it.  Don't say anything.  Keep people in their sheep ignorance.

By the way, central bank currency isn't worthless.  When someone accepts it in payment for their labor, it represents the value of that person's labor, so it's not worthless.  It has no intrinsic value, but it has value as a medium of exchange, just like a bus token or casino chip, no intrinsic value, but value as a medium of exchange.  In that sense, a bus token is a currency, a casino chip is a currency.  It has value if someone will accept it as payment, even if it has no intrinsic value.

Bitcoin is like a bus token or casino chip.  No intrinsic value, but value as a medium of exchange if someone will accept it as payment, which makes it a currency in the same way a bus token or casino chip is a currency.  But it has charcateristics closer to company stock shares or bonds, limited number, unique individual identification (serial number).

 

 

Thu, 12/05/2013 - 07:55 | 4217026 SAT 800
SAT 800's picture

T he reason that a fiscal conservative is conservative; that is to say; interested in and oriented to the methods and modalities of the past; is that they have a history; they work. they proved themselves. Do they know something that the people who write the 800 page textbooks on "economics" don't know? Probably not; but so what? When I got out of high school in 1960 I could take a quarter out of my pocket and buy a gallon of gas with it. Today, I can take the same 1960 Silver Quarter out of my pocket and buy a gallon of gas with it. Thus, the concept of savings becomes possible. It's not necessary for your savings account to "pay interest"; because you will profit from the millions of people;s monies which are deteriorating as their false savings accounts pay false interest. Store up your savings in monetary metals; and let other people confuse themselves with exciting new "ideas".

Thu, 12/05/2013 - 10:42 | 4217419 swmnguy
swmnguy's picture

Didn't Paul Volcker say the only real innovation in finance over the past several decades was the ATM?

Thu, 12/05/2013 - 08:55 | 4217139 williambanzai7
williambanzai7's picture

I just thought I'd mention that "financial institutions" do not include the so called shadow banking system, which is where the bulk of consumer level micro transacting occurs.

So while Chinese speculators or flight capitalists may not like this, those who use it directly as an alternative currency, may not care as much. 

The idea of exchanging bitcoins for cash at Chinese Bank ATMs is a pipe dream.

Thu, 12/05/2013 - 14:38 | 4218367 Exponere Mendaces
Exponere Mendaces's picture

William, the day will come. They haven't shut down Macau to prevent people from using chips to move money, why would they crack down substantially on Bitcoin either.

This is a non-issue, you'll see.

Thu, 12/05/2013 - 08:58 | 4217152 CPL
CPL's picture

China PBOC just got very unlucky.

<jazz hands>

Thu, 12/05/2013 - 10:30 | 4217396 thunderchief
thunderchief's picture

China's got over a trillion of worthless bullshit in their central banks.  They are called US dollars.  Can you blame them for not wanting this cyber garbage?

Stay with gold and start buying more silver China.

Thu, 12/05/2013 - 14:26 | 4218342 Exponere Mendaces
Exponere Mendaces's picture

I'm lucky enough to know a few people living in China, and their translation of this isn't the big problem everyone seems to think it is. (Well, the usual haters.) It isn't an outright ban, its to prevent their banks going crazy making products for speculation based on BTC. Seems prudent given the proclivities of everyone over there to invest in real estate, etc...

Anyway, just another sovereign nation taking the steps to recognize what Bitcoin can do, without scaring the citizenry. I'm not surprised by the cautionary stance at all. Of course, Tyler can't help himself reporting when Bitcoin falls, its one of the few pure markets left that are allowed to do so.

Perhaps he is a bit nostalgic for when the equities would as well. Bitcoin sure makes some beautiful waterfall-like formations, you know, like S&P 500 used to before it got completely corrupted.

 

Thu, 12/05/2013 - 07:32 | 4216973 Capitalist
Capitalist's picture

Another government becomes hostile to bitcoin. I wonder why?

Thu, 12/05/2013 - 07:37 | 4216983 Sudden Debt
Sudden Debt's picture

To many idiots out there who actually think bitcoin is a investment vehicle and they need to protect the lemmings against it.

Thu, 12/05/2013 - 07:51 | 4217021 Ghordius
Ghordius's picture

spoken like a true OldWorlder. yes, on the greater landmass there is this expectation on governments to at least warn populations from dangers. I see this as a fact and a huge cultural gap

Thu, 12/05/2013 - 08:01 | 4217042 Sudden Debt
Sudden Debt's picture

It's just a warning he.

http://thumbs.dreamstime.com/z/stay-back-warning-sign-cliff-edge-1018489...

They don't force ya but sometimes it's smart to listen to the government.

Thu, 12/05/2013 - 14:27 | 4218353 Exponere Mendaces
Exponere Mendaces's picture

Haha, I knew it. You ARE a government apologist, Sudden Debt. Well, at least you came clean, finally. Must be a symptom of living in the EU, things are so fucked up there, you have to rationalize it somehow.

Thu, 12/05/2013 - 14:39 | 4218422 fiftybagger
fiftybagger's picture

Exactly.  Bitcoin exposes very quickly all the statists, socialists, communists and fascists hiding among us

Thu, 12/05/2013 - 10:16 | 4217352 tmosley
tmosley's picture

Wow, your hypocrisy just knows no bounds, does it?  Now you are a fucking big government apologist?  Do you have any principles at all, or do you just do whatever it takes to reinforce your "side", which is apparently completely defined by your portfolio?

You make me sick.

Thu, 12/05/2013 - 14:40 | 4218440 fiftybagger
fiftybagger's picture

That's right tmosely, and look who gets the thumbs down.  You do!  Zerohead I'll call it from now on.

Thu, 12/05/2013 - 08:45 | 4217128 DosZap
DosZap's picture

Second, because it is a largely anonymous product with few controls on it, they said that Bitcoin makes money laundering easy and can be used to support terrorism.

 Third, they said there was a risk that it could be used by criminal organisations, noting that Bitcoin had been used internationally for the purchase of drugs and weapons.

 

 

 AND,these two alone, not counting cutting the FED out,will be the death knell for BC,use, and get ready to be Pulp Fictioned like the Pawn Shop scene.

 

Thu, 12/05/2013 - 11:07 | 4217511 Calmyourself
Calmyourself's picture

Actually those look like benefits in this environment.   Wise men diversify even slightly helps me sleep.  TPTB want nothing sure but an ever changing set of rules none of us can get footing upon, think about why.

Thu, 12/05/2013 - 07:34 | 4216975 Iam Yue2
Iam Yue2's picture

Somebody tell Hugh Hendry that "Bitcoin crashes 30% after China's central bank issues warning" is now trending."

Thu, 12/05/2013 - 09:27 | 4217201 Mine Is Bigger
Mine Is Bigger's picture

And it's up 30% now and back at the level before the plunge.  By the end of next week, 1 Bitcoin will probably worth more than 1 oz gold.

Thu, 12/05/2013 - 07:36 | 4216981 Zero Point
Zero Point's picture

Baahahaaaaa! Green.

Thu, 12/05/2013 - 07:59 | 4216996 GetZeeGold
GetZeeGold's picture

 

 

Please keep us updated in 5 second intervals.

Thu, 12/05/2013 - 08:04 | 4217050 SAT 800
SAT 800's picture

I'm sorry, I really don't care enough about what "the world" thinks about it to push my finger on the little button. What strange spasms pass through the mass mind. What next? Captain Crunch cerial box tops?

Thu, 12/05/2013 - 08:29 | 4217100 greatbeard
greatbeard's picture

>> Captain Crunch cerial box tops?

Oh, thanks, I'm on it.  All in baby!!! Captain Cruch box tops are beyone the reach of the PTB.  Nothing can stop the Captain Crunch Box Top craze.

 

 

Edit: I'm hoping there wasn't a sarc in there. You were serious right? RIGHT????

Thu, 12/05/2013 - 08:42 | 4217122 TeamDepends
TeamDepends's picture

foney already has that market cornered.  Did you really think you could keep up with him?

Thu, 12/05/2013 - 09:11 | 4217170 Hobbleknee
Hobbleknee's picture

Can I interest you in a Captain Crunch cereal box top allocated account? You own the tops outright and they are stored under a custody arrangement, in a professional cereal box top vault.

Thu, 12/05/2013 - 09:19 | 4217186 greatbeard
greatbeard's picture

>> Can I interest you in a Captain Crunch cereal box top allocated account?

No need bro, I lost them all in a boating accident (ha!! learned that from some gold bugs).  They are waterproof, right?

 

 

Thu, 12/05/2013 - 10:42 | 4217422 L G Butz PhD
L G Butz PhD's picture

Somebody's gonna have to go back and get a shitload of bitcoins.

What'll that asshole think of next?

Thu, 12/05/2013 - 09:21 | 4217192 TeamDepends
TeamDepends's picture

Will they be guarded by Fruit Loops? 

Thu, 12/05/2013 - 14:31 | 4218374 Exponere Mendaces
Exponere Mendaces's picture

Sudden Debt, you're a capslocking idiot. Nothing to add to any conversation, just your wildly gesticulating old-meme avatar and the rest of your EU-sponsored apologist fantasies.

Don't you have a goat to milk or something? Christ.

Thu, 12/05/2013 - 07:36 | 4216978 Zero Point
Zero Point's picture

BTFD.

Waskily wabbits.

Thu, 12/05/2013 - 07:36 | 4216980 Sufiy
Sufiy's picture


Bitcoin Crashes As China Bans Financial Companies From Bitcoin Transactions


 After Peter Schift, The Economist, Forbes and even Mr Bubble himself - Mr Greenspan - have called Bitcoin The Bubble it took the announcement from China to Crash it down from Double Top and parity level with Gold. It is important to note thatChina has been buying the record amount of Gold this year and has encouraged its citizens to accumulate it. Now China is explicitly warning its people about the dangers of Bitcoin speculative Bubble and effectively taking its out of official monetary system.   Now position of FED and Congress on Bitcoin is getting more interesting: do we have the Mexican standoff between Gold backed China, FED backed US Dollar and ... NSA, sorry Satoshi Nakamoto backed Bitcoin?   Gold should be waking up to the Bitcoin action after this Chinese move and its timing is very important as well: Gold is very close to retest this year low. http://sufiy.blogspot.co.uk/2013/12/bitcoin-crashes-as-china-bans-financ...

Thu, 12/05/2013 - 10:27 | 4217387 tmosley
tmosley's picture

"Crash"?  Come on.  My bowel movements precipitate large BTC price swings than this.  

Thu, 12/05/2013 - 11:31 | 4217586 BadDog
BadDog's picture

A crash by rigged market standards.  It is back above $1,000 and from the fiatleak site, it hasn't slowed down the fiat flow from China one bit (11:30p.m. Bejing).  It's clocking about 4 times the U.S. flow right now and I had to set the flow rate from 20 to 50 to 100 just to get the alarm to quiet down.

Thu, 12/05/2013 - 07:43 | 4216995 Tinky
Tinky's picture

What, me worry? My Bitcoins still produce the same reassuring ultrasound signature.

Thu, 12/05/2013 - 07:59 | 4217037 SAT 800
SAT 800's picture

Does it sound as nice as two 50peso Mexican Gold Coins when you tinkle them together like two little finger cymbals? Probably, not. eh?

Thu, 12/05/2013 - 09:10 | 4217166 Tinky
Tinky's picture

You apparently suffer from the recently discovered genetic disorder SBSD*.

*Sarcasm Blind Spot Disorder

Thu, 12/05/2013 - 07:43 | 4216998 Cognitive Dissonance
Cognitive Dissonance's picture

The Bitcoin digital currency 'mines' fiat Kryptonite.

Thu, 12/05/2013 - 07:46 | 4217003 J Pancreas
J Pancreas's picture

The loudest zealots just crapped their pants. In my experience, once something gains an almost religious status among the common townspeople online, in the news, etc. Its time to run. BTC is a Momo traders toy and not a lot else. 

Thu, 12/05/2013 - 07:50 | 4217009 GetZeeGold
GetZeeGold's picture

 

 

They don't call it a cult for nothing.

 

Grape Koolaid anyone?

Thu, 12/05/2013 - 08:04 | 4217049 TheHound73
TheHound73's picture

BREAKING NEWS: Largest most authoritarian government in the world manages to slightly inconvenience Bitcoin, knocking the price back 1 week.

Thu, 12/05/2013 - 08:09 | 4217056 GetZeeGold
GetZeeGold's picture

 

 

I'm sure you meant to say the 2nd most authoritarian government in the world.

Thu, 12/05/2013 - 08:14 | 4217079 TheHound73
TheHound73's picture

Touche, indeed, thanks for the correction.

Thu, 12/05/2013 - 09:24 | 4217196 bwh1214
bwh1214's picture

Trust me this is not what “trying” looks like for a major government.  If for whatever reason TPTB decide they are threatened by bitcoin it will look much different then this small mention by the Chinese.  I think it will look like bitcoin losing all its value, when the US gov dumps tons they have been acquiring at times of low liquidity.  It will be interesting to watch.

Thu, 12/05/2013 - 10:28 | 4217393 Papasmurf
Papasmurf's picture

Goldman Sachs will dump first, right after issuing a buy instruction to the muppets.

Thu, 12/05/2013 - 11:20 | 4217551 TheHound73
TheHound73's picture

Interesting thing about the statement from China, banks and financial institutions there are very clearly prohibited from dabbling in Bitcoin.

Thu, 12/05/2013 - 14:40 | 4218428 Exponere Mendaces
Exponere Mendaces's picture

You're right, the gold cult is pretty entrenched.

Thu, 12/05/2013 - 14:32 | 4218392 Exponere Mendaces
Exponere Mendaces's picture

There are people, "pancreas" that have more wealth than you'll ever see in your lifetime because of Bitcoin.

Keep on going with the sour grapes though, its amusing to see you rationalize why you can't understand it at all.

Thu, 12/05/2013 - 14:45 | 4218461 fiftybagger
fiftybagger's picture

What's that saying?  Oh yeah:

success is the best revenge

Thu, 12/05/2013 - 07:47 | 4217007 elOso
elOso's picture

How is China's stance on Bitcoin any different then its official stance on Gold? they told their people they are free to buy it and don't want banks speculating with cheap credit to buy it. You can't buy rice or water in China with Gold but you are free to buy the commodity at your own risk. 

From a headline perspective from reading other sites you would think its an all out ban but sometimes an official announcement gives clarity for people to understand the government position. As I read other sites interpretations of the news, this seems to be the not so obvious but apparently understood wink wink nod and all clear for wealthy people in China to continue buying.

While American publication and news mediums are gonna have a field day calling for the end of BTC, I like this opportunity and want to take this pullback to grab some. 20% down move seems modest for BTC, unfortunately bc its impossible to move money quickly enough into any exchanges I am relegated to the daily buy limit of 10BTC at coinbase for an immediate transaction.  

Thu, 12/05/2013 - 07:57 | 4217032 lewy14
lewy14's picture

It's possible the PBoC actually did BTC a huge favor here.

Between Nation-States and "Financial Companies" most currencies don't have a chance.

But if nations and banks eschew Bitcoin? Ultimately bullish for BTC.

 

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