Bitcoin Tumbles Below Gold As China Tightens Regulations

Tyler Durden's picture

Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.

A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.

As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates they aim to bring practices in line with how bitcoin is traded in other markets. The draft states that Chinese bitcoin exchanges would be subject to current banking and anti-money-laundering laws and be required to collect information to identify customers, according to people familiar with the matter. They say the draft, if implemented, would require exchanges to install systems for collecting and reporting suspicious trading activity to authorities; China’s central bank would be in charge of handling violations by the exchanges. The people said officials could still revise the guidelines, which were passed to exchanges in recent days.

Chinese investors have fled the market since authorities started scrutinizing bitcoin trading in the country, prompting exchanges to install trading fees and, in some cases, to suspend withdrawal of bitcoin from their platforms.

The central bank opened up investigations in January at the country’s three largest bitcoin exchanges, Huobi, OkCoin and BTCC, and delivered a terse warning last month that bitcoin platforms risk being shut down if they skirt rules on money laundering and foreign exchange.

In the past 30 days, yuan-denominated bitcoin trades accounted for 17% of global volumes, down from 97% in the past six months, according to data tracker Bitcoinity.

However, as Bitcoin has dropped, Ethereum has exploded in popularity since the JPMorgan-linked blockchain alliance news hit...

The 'other' virtual currency has seen its price explode to almost $50...

 

Massively outperforming Bitcoin

* * *

For those who are new to Ethereum and are curious about the distinctions between that technology and bitcoin, below is a quick primer courtesy of CryptoCompare:

1. In Ethereum the block time is set to 14 to 15 seconds compared to Bitcoins 10 minutes. This allows for faster transaction times. Ethereum does this by using the Ghost protocol.

2. Ethereum has a slightly different economic model than Bitcoin – Bitcoin block rewards halve every 4 years whilst Ethereum releases the same amount of Ether each year ad infinitum.

3. Ethereum has a different method for costing transactions depending on their computational complexity, bandwidth use and storage needs. Bitcoin transactions compete equally with each other. This is called Gas in Ethereum and is limited per block whilst in Bitcoin, it is limited by the block size.

4. Ethereum has its own Turing complete internal code... a Turing-complete code means that given enough computing power and enough time... anything can be calculated. With Bitcoin, there is not this form of flexibility.

5. Ethereum was crowd funded whilst Bitcoin was released and early miners own most of the coins that will ever be mined. With Ethereum 50% of the coins will be owned by miners in year five.

6. Ethereum discourages centralised pool mining through its Ghost protocol rewarding stale blocks. There is no advantage to being in a pool in terms of block propagation.

7. Ethereum uses a memory hard hashing algorithm called Ethash that mitigates against the use of ASICS and encourages decentralised mining by individuals using their GPU’s.

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nuubee's picture

I dont trust Ethereum at all if JP Morgan is getting involved. You can't trust a system that exists on printing money to maintain a currency.

China can't stop people from masking the origins of their coins, which is why Darkcoin is also exploding in price.

The money changers are losing their grip.

Raffie's picture

The big issue with China is getting caught in China.

There is many work arounds.

Time will tell.

tmosley's picture

Another finger in the dam. "Surely THIS will be the end of shitcoin," said the utterly broken people of the ZH comment section for the 5343rd time this year.

Pladizow's picture

I'll take my chances and bet along side JPM!

Raffie's picture

I bought some ETH when it was mid $18 so, not feeling bad about my purchase right now. Whe it tags $60 might sell.

Douche McGoosh's picture

Permission to douche out on Bitcoin thread SIR??

https://localbitcoins.com

Raffie's picture

Don't do it.

An stop spamming the local btc link please.

I own some Btc and Eth....

Douche McGoosh's picture

Okay.. but part of why I am so into localbitcoins.com is because it forces people to use the actual QT Client, to download the blockchain and forces them to learn how to use and store Bitcoin. You get none of that when you use an Exchange. And all the Bitcoin exchanges will be wiped out during the banking collapse, so if that's where your ETH/BTC is stored you will lose everything.

InjectTheVenom's picture

so if someone owns a little BTC in a standard Coinbase account, what's the best way to physically store it now so that it'll be safe in a banking system collapse ?

Douche McGoosh's picture

To take delivery of the BTC. It needs to be encrypted in your own wallet.dat file. Only you should have that password and only you should have access to that file.

Logan 5's picture

Mom's basement dwellers ~ meet the politburo

City_Of_Champyinz's picture

lol, China shuts it down & it goes the way of the Dodo bird.  How people cannot see that is beyond me, they can turn of the net there in a heartbeat, then what are the Chinese going to do with their bitcoins that they cannot use?

Douche McGoosh's picture

China can not "shut down" Bitcoin you fool. They can shut down Bitcoin EXCHANGES... which is a great thing for Bitcoin.

Notveryamused's picture

ETH is not a bad investment but it's not a currency, they have already rolled back a major event they didn't like (DAO Hack) nothing to stop them blacklisting and cancelling transactions of 'bad' people in the future.

China has many workarounds though but the actual reason BTC is struggling is because it may fork soon as they struggle to agree the best approach to upgrade the blockchain. All the major exchanges announced a joint statement on it today - there will be two tradeable Bitcoins, the new fork will be called Bitcoin unlimited. In which case you may look to XMR or DASH as currency alternatives that would benefit in that scenario and they are also more private. (They have both enjoyed enormous gains this last week due to this.)

exartizo's picture

You're absolutely right.

BItCoin is now obviously manipulated by the Chinese government, and others who can conduct 51% mining attacks.

There was a time when BitCoin was not manipulated.

That time is now long past.

Anyone who thinks otherwise is a Fucking Idiot.

One of the original premises of BitCoin was that it was beyond the control of governments.

Obviously, that is no longer the case.

Douche McGoosh's picture

And do not trust your wallet.dat file to a single USB Storage Key or Hard Drive! They DO DIE!

Store your encrypted wallet.dat file on multiple devices in a cool, dry, static-free environment, preferably in multiple geographic locations.

Logan 5's picture

Quick ~ Put up a chart that shows fonestars ass tightening along side these Chinese officials

Douche McGoosh's picture

Too bad... none of fonestar's Bitcoin is tied up in these ponzi exchanges. They have lots of Yuan, they have lots of Dollars, they have no Bitcoins.

EHM's picture

Or tattoo it on your ass

Raffie's picture

https://electrum.org/#home

Use stand alone wallet.

KEEP THE SEED SAFE.......

Setup wallet, download coins to wallet and long as you have the seed you are good to go.

I have tested it and kept the seed, deleted the applicaiton and all history of it.

Loaded application, put seed in and poof, the test amount of btc I had came right up once it was back online.

Logan 5's picture

So I guess on the day that the EMP hits & the nukes start flying, you'll be the only one on your block[chain] that'll be able to tun down to the grocery store to buy bread, water, and a gallon of gas.

 

I'm pretty sure also that the first guy you run in to on the way, you know, the one pointing a Glock at you, will gladly trade the Glock in that moment for your little flash drive thingy there after you tell him what it's worth.

 

Douchbaggery is more immortal than time itself.

Raffie's picture

The EMP thing is pretty funny because the WHOLE PLANET would have to be EMP'd to maybe kill all the open ledges since they are global. 

Would not doubt if some places are hardened against EMP.

Once way to find out.

I do enjoy how you 'assume' Btc would be all I got.

Also if nukes are flying, you're bitcoins will be the least of your worries.

I have a wide range of assets to use online and offline as well and ofc Pb to guard it all.

Night Vision is my next purchase and will have it locked up in EMP proof container with other items should I need them.

 

Logan 5's picture

The plain fact that you bothered to answer is testimony enough to discover the worth of "you're" bitcoins &/or the wide range of assets you proclaim...

 

NIGHT VISION... rotflmfao

Golden Phoenix's picture

'Sure, you're up 54,000% but if the world ends, I'll be the smart guy'.

Do you have any idea just how retarded that sounds?

crazytechnician's picture

Create a new wallet that only you hold the key to and transfer to that. Keep it encrypted and make several backups.

Douche McGoosh's picture

Teh funny thing is that most of the ppl here who are open to Bitcoin and think they own Bitcoin actually own no Bitcoin.

OMGWTFLOLLULZ!!!!

OpenThePodBayDoorHAL's picture

It's a pretty easy four-step process:

1. Most wallets include an "export encrypted keys as QR code" function

2. Export your keys and print them out on some waterproof material

3. Take the material and roll it into a tight roll, try to smooth it so there are no sharp edges

4. Jam it up your ass

 

Raffie's picture

Seriously?

If you do not want to help that is fine, but to reply with a insult?

crazytechnician's picture

It's actually not an insult but one way of avoiding capital controls at a border.

Prisoners_dilemna's picture

Electrum Wallet is user friendly.

twh99's picture

Download the full client from bitcoin.org and run it on your computer.  Depending upon the speed of your computer it may take a few days to get current on the blockchain, but after that there is little computer effort to get current.

TaaDaa's picture

yep. JPM is a bunch of sheisters

LawsofPhysics's picture

...or buying and selling cryptos...

if the past is any sort of precedent remember that the bankers and financiers have always been creating problems in order to get people to run into the "next solution"...

I knew good programmers back in the 90's who went to work for the primary dealer banks on cryptocurrency.

Nothing new under the sun.

Ignatius's picture

Everybody wants to write BTC's obit.

BTC doesn't need central exchanges.  My gut tells me it will survive as a medium of exchange, it's true value.

Douche McGoosh's picture

Bitcoin has died 125 times. You can leave your thoughts and wishes for Bitcoin's surviving relatives here...

https://99bitcoins.com/bitcoinobituaries/

dumbhandle's picture

Buttcoin may not die, but it just withered out USD200mm in the last few days.  Where did that capital flow to?  Ethereum.

MrYukonC's picture

JP Morgan is getting involved

They're not "involved" in the sense that you're suggesting.

JP Morgan and others (meaning tons of non-banking related companies) are "using" Ethereum to build services and functionality on top of.  That's what Ethereum is -- it's a decentralized programmable platform that happens to make a solid cryptocurrency (ETH) courtesy of its 15 second transaction times.

Ethereum is nothing more than an open-source protocol and is developed by a group of publicly known developers that comprise The Ethereum Foundation (Stiftung Ethereum), which is a non-profit based out of Zug, Switzerland (which is quickly turning into the crypto capital of the world).

dumbhandle's picture

Stop making sense.  This zerohedge.com.

crazytechnician's picture

SHIIIIIT BITCOINS CRAAAAASHED !!!!!!!!!!!!!!

To where it was last week. Yawn.

Skateboarder's picture

Meet the new coin, same as the old coin.

*bangin guitar riff*

Douche McGoosh's picture

Ain't nothin' like the real Bitcoin baby!

Jubal Early's picture

Is/Was Townsend a pediphile?

Douche McGoosh's picture

No... he looked up some "questionable" material. The spooks came to visit him and he wound up on a list.

Jubal Early's picture

That is the story anyway.  I was long a Who fan in my youth but since my awakening I have learned about MKUltra and Laurel Canyon.  The "Who" are highly suspect.  When Townsend said he was researching pedophilia I believed him.  But I was still under MKUltra influence then.  I consider myself to be mostly awake now and I wonder what the real story is about Townsend's arrest.

Golden Phoenix's picture

Ahhhhh, the wonders of lithium.

Dirtnapper's picture

Ethereum's goal is be able to handle 10,000 transactions @ sec and confirm in 4 seconds.

Sizzurp's picture

Blockchain seems to be the future but much like internet stocks in 1996, it's hard to know who the ultimate winner will be.  Pick the biggest 3 and hang on I suppose.

LawsofPhysics's picture

How many producers (farmers, energy companies, etc.) accept blockchain as payment?

 

Ultimately, there are producers and consumers and an equilibrium must be maintained.  If consumers start to outnumber your producers you are fucked no matter what.

aminorex's picture

Quite a few, mostly on dark net markets.

MrYukonC's picture

How many producers (farmers, energy companies, etc.) accept blockchain as payment?

Probably none at the moment.

But watch this and tell me they couldn't intelligently find ways to leverge the blockchain to cost-reduce and help optimize their processes: https://www.youtube.com/watch?v=lKJrTeNQGZE