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Bitcoin Soars As China's Creeping Capital Controls Loom
Since China devalued the Yuan and surprised the world's carry traders (and central planners) by stirring up FX volatility, the demand for 'paper' gold has begun converging to the demand for physical precious metals. Gold prices are now up over $100 since August 10th, but it is another (easier to 'transport') alternative currency that has soared. Bitcoin has spike post-China-devaluation (since dipping on 'governance' concerns), accelerating from under $200 to almost $300 today, and up 25% since our September 2 explanation why China's capital account crackdown is "great news" for bitcoin.
The demand for alternatives to fiat currencies appears to be soaring:
However, the last week or two suggest, perhaps more importantly, that China easing (and outflows implict from further devaluation) now appears to go straight to Bitcoin.
As Overstock's Chairman noted previously: gold is great, but tough to transport; thus, forcing Chinese into Bitcoin as we previously explained:
As we concluded previously, while China is doing everything in its power to not give the impression that it is panicking, the truth is that it is one viral capital outflow report away from an outright scramble to enforce the most draconian capital controls in its history, which - as every Cypriot and Greek knows by now - is a self-defeating exercise and assures an ever accelerating decline in the currency, which authorities are trying to both keep stable while also devaluing at a pace of their choosing. Said pace never quite works out.
So what happens then: well, China's propensity for gold is well-known. We would not be surprised to see a surge of gold imports into China, only instead of going to the traditional Commodity Financing Deals we have written extensively about before, where gold is merely a commodity used to fund domestic carry trades, it ends up in domestic households.
However, while gold has historically been the best store of value in history and has outlasted every currency known to man, it is problematic when it comes to transferring funds in and out of a nation - it tends to show up quite distinctly on X-rays.
Which is why we would not be surprised to see another push higher in the value of bitcoin: it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the previously documented "forking" with Bitcoin XT), however if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.
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Digital Money....meh...
OMFGAWD IT'S BITCOIN SATOSHI WE LOVE YOU!!!!
Just wait untill China decides to hack all bitcoin sites and destroy all wallets.
And people flood into bitcoin because it's easy to buy and easy to sell but remember that the big boys are waiting to dump their worthless coins to the morons once the price is good and it will crash to the floor again.
I do use bitcoin myself but I don't store money in it for myself. I use it to pay a few suppliers who live off the grid and they can't own a official bank account because their funds would be confiscated.
If you are going bankrupt, it's the good way to hide the remainder of your money and milk everything for the last penny so you've got something when you're on your own.
But it's such a risky thing to do. Once you don't have access to a bitcoin terminal in the above case, you're fucked.
And China doesn't even has to block all the bitcoin sites. It can just say to the bank of china for example: Don't allow transactions to bitcoin sites and don't allow deposits from bitcoin sites and you've got a shitload of money floating in thin air that has become worthless.
OMG I'VE BEEN BIT CONNED!
Bitcoin, for many, is as good as gold... you can certainly buy gold and silver with it!
UNFORTUNATELY, Bitcoin and other crypto currencies are more volatile than the stock market was in 2008. It has flopped around between zero and several hundred dollars per unit since inception.
So, one day, you can buy nearly an ounce of gold with a bitcoin. Today, about a quarter of an ounce.
Fucking A, that - a 75 % drop in buying power. Sucks if you bought bitcoin at the high water mark, and need to redeem it's value immediately.
So, no, fuck crypto currency and the control it gives to the high priests of electrons.
OMFGAWD YOU'VE GOT SOME SORT OF GAY ASSED BROMANCE GOING ON THERE.
Maybe I am missing something. I get it and respect the present presumed anonymity of it and ease of crossing borders with large sums of money. I see it as a sign of the desperation people have reached when they are willing to put their fortunes into 1s and 0s on a puter somewhere. Pull a plug and poof, it's gone. Same can be said for most other forms of savings minus lake bottom PMs so maybe it is just a cleanest dirty shirt thing?
Have you ever made a transaction with it? It has to be witnessed. The feeling of sending value, actually using something other than fiat, or credit cards for a transaction, without any central permission, no matter where in the world the other party is, instantly. You can't do that with your lake bottom PMs. Maybe a dude in your neighborhood would trade you something for a silver coin, but not likely.
No where does anonymity come into it for 95% of users. You don't have to put a fortune into it, even a few thousand bucks, as much as 1 oz of gold, just in case you are wrong, just in case it is successful and goes to a couple hundred k.
After you buy a little use it. If anything critique from experience is more real and honest.
This is a great comment. Yes, using cryptocurrency for the first time really has to be experienced to be believed. I remember the first time I sent someone money across the internet with it, and I couldn't believe it - I had just sent real money, instantly, with no one's permission.
THE FREE MARKET SHOULD ONLY BE ALLOWEDED TO USE METAL AS MONEY , ANYTHING ELSE THE FREE MARKET DECIDES TO CHOOSE FREELY AS MONEY SHOULD BE OUTLAWED AS LONG AS IT'S NOT METAL. ONLY METAL IS MONEY , ONLY METAL IS MONEY , ONLY METAL IS MONEY ..........
Bitcoin kills borders DEAD!
Coinhead, resident globalist.
> FREE MARKET SHOULD ONLY BE ALLOWED ...
That's an oxymoron.
NO IT IS NOT. BITCOIN IS A SCAM SCAM SCAM , YOU CANNOT EVEN TOUCH IT SO HOW CAN IT BE REAL ???? ITS A CROSS BETWEEN A PONZI SCHEME AND A TULIP BULB , MY OLD GRANNY TOLD ME SO , SO SHE EVEN SAYS THE EARTH IS FLAT AND EVEN HAS A MAP OF IT , SHE LIVES IN HER BASEMENT WAITING FOR ARMAGEDDON , SHE SAYS WHEN WW-III IS OVER WE CAN USE GOLD TO BUY MORE PREPPER FOOD AND BITCOIN WILL BE USELESS BECAUSE OF THE E-M-P THERE WONT BE ANY ELECTRICITY NOT EVEN SUNLIGHT WILL GET THROUGH THE EMP
"ONLY METAL IS MONEY"
I have been saying this for years and no one will listen. They usually just walk off.
SLAYER!!!!!
Yeah only metal is money because it can be backed by a shovel , fuck the free market choosing something different or better as money .....
You'll find that the vast majority of people who openly disdain BitCoin barely know a thing about BitCoin.
I remember this same thing happening when the Internet was first starting to become popular - people often told me they would never use it. Same with digital cameras - "meh, I'll only use film".
Well, my friends, BitCoin and the blockchain may very well be a game changer and you're a fool if you dismiss it without knowing in the least much about it except what you regurgitate from all the other clueless peons.
"...same thing happening when the Internet was first starting to become popular "
That's absolutely right! Dr. Gouda, a network professor at UT Austin told his class, he interviewed with AT&T after getting his PHd. in the 70s. The interviewing manager asked him, "What would a phone company do with a computer network?"
Six years into the revolution and the boneheads on ZH still don't understand Bitcoin! Bitcoin is the tax-haven of the 21st century!
Better not forget your password...
True that, teh we has been doing alot with passwords lately and breaking them with pyrit and cudahashcat and best64.rule. Getting around 200,000 PMKs/second so far but plan on upgrading. It is true what they say, humans are not very random!
(cudahashcat even has an option specifically for Bitcoin/Litecoin .dat wallet files)
One gold bug guru said to move your money overseas, sell everything, buy bitcoin, get to your destination country and buy gold/silver. Pretty damn smart idea!
Yeah that's a good idea. Bitcoin isn't useless. The anonymity angle is overstated, though, along with some other problems.
Bitcoin protocol does not claim anonymity, but services on top like mixers can provide that.
Sarah smile.
http://www.coindesk.com/following-the-money-bitcoin-black-market-purchas...
Zero anonymity.
Have you tried it?
Yes, Bitcoin is tracable and public.
This is why the Cryptonote protocol was developed. Look into Monero. Using cryptographic ring signatures we finally have the first truly private cryptocurrency, and very few people know about it yet (it just came out in 2014).
Keep your password, burn your passport.
It's that and much, much more:
http://www.cryptonews.biz/how-bitcoin-will-end-the-nation-state-jeffrey-...
What is BitCoin backed by again?
Mathematics. Instead of guns and the foreign bribery attached to them:
http://www.zerohedge.com/news/2015-05-06/obamas-real-motive-behind-iran-...
I am trying to create a coin, a digital currency, backed with a fractional reserve of allocated gold, but it isn't easy, given that I am just your average bloke and on my own. Anyone want to help?
Forget fractional reserve of gold (which is where modern banking got its start: http://dollarcollapse.com/banking/fractional-reserve-banking-from-goldsm...) and look, for instance, at Uphold — https://uphold.com — with the understanding that it's a centralized system and therefore susceptible to government attack and shutdown.
I figure a distributed bitcoin clone is more where it is at. I am going ahead so i'll find out the hard way.
Bitgold.com is rarely mentioned, though it is a viable alternative. I wonder why it isn't more heavily promoted? After all, they have a ratio of 1:1 of allocated gold.
My guess is that bitgold isn't tradable on the typical run of the mill bitcoin exchange...
hence the reason for a bitcoin clone.
Mike "Mish" Shedlock is a Bitgold principal. I suggest you contact him:
http://globaleconomicanalysis.blogspot.com
Too late. It already exists. Its called bit gold
Considering gold is backed by a shovel I would go with bitcoin , math & cryptology & energy vs. shovel ?
Bitgold is the stupidest idea ever: take decentralized protocol and load it with whole lot of counterparty risk.
What is the Dollar, Euro, Yen, Ruble, Renminbi, Pound backed by again?
. . . other than central bankster hot air fueled by mass ignorance.
Fiat is backed by threat of violence and violence. Bitcoin is not, it is backed by mathematics.
It's like gravity or the fact the sun and not the earth is the center of universe - you can hate it, refuse to believe it, enact laws against it and imprison or shoot anyone who uses it, but this does not matter because it is still there no matter what anyone attempts to force you to do.
1 + 1 will always equal 2.
fiat = force, bitcoin = consensus
In the end a society which decides for consensus over force is a more advanced civilization.
Bitcoin is backed by force too. The force of the free market.
What?
Electronic storage devices don't show up on xrays?
News to the author...they do show up.
But after xraying they tend to be blank or otherwise corrupted.
You can even transport Bitcoin in your brain, Google brain wallets you would not even need a electronic device :)
I prefer Electrum for a brain wallet when crossing borders.
Lol. Capital controls are yesterdays news.
And you are even not required to report your brain wallet when crossing border.
you can write your encrypted private key on paper , or engrave into a stone , or memorise it ...
Come on man, the author didn't say that. He said that bitcoin doesn't show up on xrays. The fact is PM coins are very distinctive, while apps on your phone aren't. You could even email your coins to yourself by sending an encrypted private key, or store them on any number of website accounts like exchanges. Simply login anywhere and send bitcoin. Use an everyday looking debit card charged by bitcoin.
Don't hate tech. Don't be scared of tech. Tech is just a tool. The internet is your only country.
So how do you buy, hold, and sell bitcoins without getting phucked over by the various intermediaries involved? Who is to be trusted?
Buy a ledgerwallet for storage, buy Bitcoin directly from multiple online sellers.
localbitcoins.com, find a seller near you with over 100 trades and 100% positive feedback.
Mine your own.
Or buy from coinbase but you will deal with KYC/AML.
e.g Coinbase, itbit, Gemini are US corporations. Latter two are regulated as US financial institutions. If you don't trust them enough, do small amounts step by step.
CarpetShag, I strongly advocate that you practice using small amounts of bitcoin before you go full in. For that purpose you can actually use dogecoin as it's nearly worthless, but has the same feel as bitcoin.
1. Practice
Get Dogecoin or Bitcoin wallet app on your mobile. Get your initial doges/bitcoins using free "faucet" services. Alternatively, post your address here and I'll zap you some accross (address starts with digit 1 in bitcoin and with capital D in dogecoin).
Get familiar with terms like public key, private key, address, hash, block, blockchain, transaction, confirmation, wallet. Experiment with transferring funds back and forth between your mobile wallet, encrypted paper wallet, brain wallet. Watch your transactions in online block explorers. Play with various fee levels and observe clearing time. Play Satoshi Dice, donate bitcoins, send some to your spouse/gf/bf, make her/him send it back.
2. Trade
There is many options. If you want to be stealth use localbitcoins.org, where you meet in real life and trade hand to hand. If you value convenience, use one of the exchanges out there - I use kraken.com and bitbay.com
Important: as soon as you've purchased some bitcoins take them off the exchange IMMEDIATELY to minimize the risk of being Goxed (having bitcoins stolen in hacking attack on exchange).
3. Secure
Keep only modest amounts on your mobile. Protect your mobile wallet with pin. Make an encrypted copy of mobile wallet, email it to yourself. For larger amounts just use bitaddress.org where you can generate a paper wallet with proper password. Make a photocopy of that paper wallet and store it in several locations for redundancy.
4. Educate
Bitcoin is much more than just money. It's the whole new internet of services, not just financial services: notarization is a big one, asset registration and deeds/titles transfer is another, smart contracts are still some time in the future right now, but once they mature commerce is not going to be the same.
&CGruze
Appreciate this info, many thanks.
Couple questions
1. how do you buy - credit card ? bank transfer?
2. Have you ever converted BC back to fiat? How is this done ? Would be tempting if the USD price goes up. Everyone else I ask says they have never done so and have no intention out of principle.
1. You buy with wire transfer. CC is not an option because of chargebacks.
2. Yes, you go back to fiat on those very exchanges you use for buying bitcoin.
If you're interested in receiving small amount int btc, paste your bitcoin wallet address here (starts with 1). I'll be watching this thread for few hours more.
Wire or CC, even debit is ok. Multiple large service providers are around, Coinbase, Circle, Xapo allow CCs.
How do you know who to trust? How do you trust anyone in a free market? Research a little bit and go with your gut. Bitcoin is relatively new, so there are a few scams out there. Stick to any of the larger service providers and buy in small chunks < $5k and you should be perfectly fine.
A few good standard practices is to use 2 factor authentication (2FA) whenever possible. That's like when you are sent a code to your email or phone to use as a second form of authentication. A password alone won't work. Most bitcoin service providers who handle your coins offer that including exchanges. Another good practice is to not store your coins in one address. All major mobile, desktop, or online wallets allow you to make several addresses. I'd recommend not storing more that $10k in one address.
You can also use multi-signature wallets, where you need 2 of 3 valid signatures to send coins from it, but are a little more complicated. These will surely be an upcoming topic of defining ownership. If you have a key, your attorney has one, and a trust or other third party has one, but you need two of three to technically own the bitcoin, who "owns" the coins for tax reasons?
Anyway, good luck.
Not as easy yet. But with continued growth, work for bitcoin - trade for bitcoin, once it reaches high levels of liquidity, why covert back to fiat?
You can accept bitcoin for your services or products right now. It is not impossible to see fiat currencies measured in bitcoin not the other way around some day.
What a scuttlebutt!
IMF, after the acquiesence of the USA, which blocked it in early September resulting China's action in devaluing Yuan, which then caused over hundred billions of so called Quantative Tightening, causing over trillion dollars loss of market value....gigantic damages done....now clearly indicated that Chinese Yuan will be included in the SDR in coming November....
The condition precedent of including in the SDR......NO CAPITAL CONTROL.
So, this article is a b** s** of scuttlebutt....it only makes sense....talking books?
Yuan included in SDRs won't occur until late 2016. IF Boeing opens a plant in China without "hurting American employees".
The capital controls are real today.
And somehow the Yuan included in the IMF makes Bitcoin less of a store of value?? Because while it will be printed willy nilly at least there aren't capital controls?!?
You'd almost swear the bitcoin worshippers have zerohedge on a methamphetamine RSS feed...
Standard Disclaimer: It's almost Pavlovian.
Most Bitcoiners including myself love zerohedge, we are fed up with manipulation , fraud, and destruction of the markets and fiat currencies the Bitcoin blockchain has a real chance of ending all of the above and more.
Once you understand and use Bitcoin everyone has this moment where you literally almost shit your pants at how amazing the technology is and the implications for humanity.
Mine was sending $4000 from Mtgox to Russian exchange BTCE with a click of a button and it arriving almost instantly. It blew my mind so badly I quit my career to learn everything about it.
Bitcoin is already being adopted for commercial purposes, it's being admitted slowly all over the place that this wil happen. All the talk of things like "...not too excited about Bitcoin prospects" as opposed to "...we're seeing a lot of promise in blockchain technology integration", etc?
That's what that is.
The public will come on to an undetermined extent if this experiment is meant to survive and it looks like TPTB like it and/or can't avoid it, not necessarily in that order.
To this day I fail to understand why even ZH'ers can't see the value in BTC. Perhaps it's simply stubborness? It can be the perfect compliment to one's "financial affairs", even a ZH'er-huddled-in-the-basement-with-gold-guns-and-beans person but it seems to be totally maligned and ridiculed. Of course it's still risk capital as a holding but as a "currency" it is proven. Nobody said it was perfect or infallible but nothing is and Bitcoin serves many purposes between two parties directly already that are elegent, fast, secure and very low cost.
As the internet had problems in it's infancy, so does Bitcoin but if it survives it will change the world. Yeah, more than it has already to say the least.
Bitcoin (and blockchain tech /s), BTChez
It's real, whether anyone likes it or not.
Raole - I think the majority of ZH'ers do in fact get bitcoin and the good things about it. What you are seeing is the (very) vocal minority who comment the most.
IMO, the biggest downside to it, other than the crazy volatility, is how techie it is. That will be the biggest obstacle in slowing down adoption of bitcoin (or other virtual currency) amongst a big % of humanity. Honestly, people are just kind of stupid and not willing to take the time to learn new things on their own. Stuff like this has to be spoon fed to the masses slowly and surely. Even then, there will be many who throw up their hands and excaim they just cannot understand it and will not use it. Thus I think it will not be until GenX are the new 'oldsters' and GenY/Millenials/GenZ are the new leaders that this stuff really will be mainstream.
I think it is a good idea for all of us to take a spec position in bitcoin now before it is too late. I'm still learning all about it myself, but I plan on buying around 10 bitcoins just as a small spec for the future. The problem is figuring ou the best way to go about it. Maybe localbitcoins is the way to go.
If you want to try a hybrid between fiat and crypto, maybe try a debit card from E-coin or ANX, although the transaction feees aren't cheap. I've read good things about Circle but I haven't tried them.
I agree with you that most are too stuck in their fiat ways. But they won't be when they are living hand to mouth, while bitcoin adapters are doing much better. After a week long banking holiday, which is coming eventually, people won't be able to access the money (or.more importantly their credit, or their gold and silver is confiscated), bitcoin will still flow. That is when techie bias will disappear. That day could come, and then there is no limit to the price.
"...To this day I fail to understand why even ZH'ers can't see the value in BTC. Perhaps it's simply stubborness?..."
Most ZH readers are goldbugs and they strongly resist the challenge to gold's value as money.
If the status quo are pushing bitcoin, then, I want the opposite of virtual. Give me physical.
Yeah , don't let the free market decide what it want to use as currency...
Let me guess - you were all about the physical before too right? That's call confirmation bias. We don't change our minds easily and only cherry pick the news that helps us keep believing what we've already bought off on. Too easy to ignore information that doesn't make you feel good about what you've already chosen. That uncomfortable feeling you are having strong enough to make comments to show your opinion is also “cognitive dissonance”. The new incoming data doesn’t fit with your previous knowledge so it must be wrong so you can continue to feel right.
Perhaps it’s time to re-evaluate the new information without disregarding it first. Perhaps there is something new here you didn’t see before? Words like “ponzi’ have that effect on us – makes us ‘turn off the lights’ automatically. But when it sticks around for six more years and just seems to gather steam- what could that mean?
Let me guess - you were all about the physical before too right? That's called "confirmation bias". We don't change our minds easily and only cherry pick the news that helps us keep believing what we've already bought off on. Too easy to ignore information that doesn't make you feel good about what you've chosen to believe. That uncomfortable feeling you are having strong enough to make your opinion public is also “cognitive dissonance”. The new incoming data doesn’t fit with your previous knowledge so it must be wrong so you can continue to feel right.
Perhaps it’s time to re-evaluate the new information without disregarding it first. Perhaps there is something new here you didn’t see before? Words like “ponzi’ have that effect on us – makes us ‘turn off the lights’ automatically. But when it sticks around for six more years and just seems to gather steam- what could that mean?
Let me guess - you were all about the physical before too right? That's called "confirmation bias". We don't change our minds easily and only cherry pick the news that helps us keep believing what we've already bought off on. Too easy to ignore information that doesn't make you feel good about what you've chosen to believe. That uncomfortable feeling you are having strong enough to make your opinion public is also “cognitive dissonance”. The new incoming data doesn’t fit with your previous knowledge so it must be wrong so you can continue to feel right.
Perhaps it’s time to re-evaluate the new information without disregarding it first. Perhaps there is something new here you didn’t see before? Words like “ponzi’ have that effect on us – makes us ‘turn off the lights’ automatically. But when it sticks around for six more years and just seems to gather steam- what could that mean?
I wonder if you could hollow out a flash drive and put gold in there instead, and when the airport guys ask what's that, you coudl say that's my bit coin wallet.
nah ...
People should know before buying that Bitcoin is reaching capacity which is only a mere 3.5 transactions per second. The XT fork or a fork to another BIP has to happen, if it doesnt and it stays capped it will eventually be taken over by another cryptocurrency. Some of the proposals in the community such as BIP 100 are awful, so its not looking great.
It's bizzare to think that a community can reach agreement and fork the financial network, creating two streams, an old, and a new. The consensus involved is complex.
Yep it hard to gauge conseuns you can only really read the vote of miners but the wider conseus of the users and service providers is relativley unknown.
Bitcoin will find its value, and it will vary over time. Just as any other limited tradeable commodity. Is supply of gold restricted/capped? Or will they find more and more as value goes up? How many more tonnes?
Bring capital controls, so people use Bitcoin, so fiat currencies automatically devalue, so inflation goes up, so QE achieves its intended purpose.
My take on bitcoin...you want your bitcoin, you can keep your bitcoin. I'm going to stick with gold. I think bitcoin is a pilot for going to a cash-free society, although the use of the word free would probably be a misnomer.
you mean control by central government types?
doubt it. those guys want a cash free society so that they can get people to spend, and so they can track & tax all transactions. with bitcoin, if you take proper precautions, there is no way to link a bitcoin address with a personal identity, so it would defeat the purpose of tracking & taxing.
The sad fact is that Bitcoin has very little liquidity. Try and cash out a lot of bitcoin? Say a million dollars or two? Nope. It's going to take you a long time to get your cash.
Of course the exchanges will happily SELL you all bitcoin, you want. For large amounts? Going the other way is very difficult.
Total market cap of bitcoin is arond 3 billion dollars. Liquidity? Whatever hard currency is in the bank accounts of the exchanges.
Fortunately, gold is highly liquid. One can convert gold to cash in less time than it takes to perform an ACH transfer.
The liquidity will be there....
How EXACTLY Will there be any liquidity? The ONLY liquidity is from people BUYING Bitcoin with hard currency.
Cashing the Bitcoins you hold is entirely dependent on someone else buying bitcoins for hard currency, injecting liquidity into the system.
what this site and the replys confuse me, err nothing to say...
Government reads ZH. Immediately starts selling Ross Ulbrich stash
Everyone on Zero Hedge needs to familiarize themselves with both Bitcoin and Monero.
Bitcoin will over time become the dominant public ledger of the world (because it uses a public blockchain and all your transactions can be seen by others), and Monero will likely become the dominant private ledger (uses cryptographic ring signatures to achieve true privacy for the first time with a fairly launch cryptocurrency).