China and the soaring price of Bitcoin • Hacker News Board

Re: China and the soaring price of Bitcoin

#21

Post by Anon84 » Thu, Nov 21, 2013, 10:32 AM UTC

ashray wrote: post #14

ericmsimons wrote: post #5

Okay, so with all of the talk about how China is buying more bitcoin than anyone else, why is the transaction volume not increasing accordingly? You can see it on the coinbase graph - https://coinbase.com/charts - it's basically seen the same volume since April, with the exception of July.

That's actually an interesting point. It's possible that people on BTC China are not in fact moving their bitcoins out of the exchange and selling them on another exchange to launder money. They're possibly holding bitcoins in their BTC China wallets. Those transactions will not influence the over all bitcoin transaction volume. Furthermore, per exchange volumes have been insanely high over the past few days. See: ht…

> Those transactions will not influence the over all bitcoin transaction volume.

Shouldn't there be a "MtGox wallet (say)" -> "chinese wallet" transaction somewhere in the blockchain?

Re: China and the soaring price of Bitcoin

#22

Post by ashray » Thu, Nov 21, 2013, 10:40 AM UTC

Anon84 wrote: post #21

ashray wrote: post #14

Earlier quoted context omitted.

That's actually an interesting point. It's possible that people on BTC China are not in fact moving their bitcoins out of the exchange and selling them on another exchange to launder money. They're possibly holding bitcoins in their BTC China wallets. Those transactions will not influence the over all bitcoin transaction volume. Furthermore, per exchange volumes have been insanely high over the past few days. See: ht…

> Those transactions will not influence the over all bitcoin transaction volume. Shouldn't there be a "MtGox wallet (say)" -> "chinese wallet" transaction somewhere in the blockchain?

There should be, if they chose to withdraw their bitcoins from Gox. But assuming that the article is right, there would be another transaction that moves the money from their private wallet to bitstamp/another exchange as well.

Basically all there is evidence of right now is that the Chinese are buying tons of bitcoins. No evidence of selling/moving as such.

It's not possible to use Gox for USD withdrawals at the moment so I don't think they'll try that anyway.

Re: China and the soaring price of Bitcoin

#23

Post by nl » Thu, Nov 21, 2013, 10:47 AM UTC

This shows surprising naivety about what is happening in China.

To generalise massively, Chinese aren't trying to move money out of China.

Instead, they are trying to find any safe store of value, because they don't trust their banks.

Chinese are desperate for any way to save money, because the four-grandparent policy (and no pension) means they need money in old age.

The optimal solution for them is overseas real estate (see the real estate market in Hong Kong, Sydney & Vancouver).

The non-optimal solution used to be domestic real-estate. This solution was less than ideal, because of the huge oversupply in the Chinese domestic market. Chinese investors are aware of that, but "happy" to lose some money, rather than all of it in the case of a bank (and additionally, inflation in China is ~8%, but banks only pay ~1% interest).

It looks like Bitcoin is taking the place of some of that domestic real estate demand.

Note this is only my personal theory, but based on observations from http://brontecapital.blogspot.com.au/2012/06/macroeconomics-...

Re: China and the soaring price of Bitcoin

#24

Post by chj » Thu, Nov 21, 2013, 11:59 AM UTC

A report in 2012: 3/4 of bitcoins are not circulating. Not sure if this still is true today, but it does reveal something worrying: BTC is not a currency as you might think.

http://eprint.iacr.org/2012/584.pdf

Re: China and the soaring price of Bitcoin

#25

Post by netcan » Thu, Nov 21, 2013, 12:12 PM UTC

nl wrote: post #23

This shows surprising naivety about what is happening in China. To generalise massively, Chinese aren't trying to move money out of China. Instead, they are trying to find any safe store of value, because they don't trust their banks. Chinese are desperate for any way to save money, because the four-grandparent policy (and no pension) means they need money in old age. The optimal solution for them is overseas real es…

This doesn't make sense to me.

Bitcoin right now is an incredibly bad long term value store. Right now it's a speculative investment. Either it will succeed and demand for bitcoin will go even higher or it will fail and it will be worth nothing. It's like investing in some risky VC fund. It makes sense for people to have wildly different ideas about potential and risk, but it makes no sense to expect it to just stay where it is.

Re: China and the soaring price of Bitcoin

#26

Post by IgorPartola » Thu, Nov 21, 2013, 12:38 PM UTC

netcan wrote: post #25

nl wrote: post #23

This shows surprising naivety about what is happening in China. To generalise massively, Chinese aren't trying to move money out of China. Instead, they are trying to find any safe store of value, because they don't trust their banks. Chinese are desperate for any way to save money, because the four-grandparent policy (and no pension) means they need money in old age. The optimal solution for them is overseas real es…

This doesn't make sense to me. Bitcoin right now is an incredibly bad long term value store. Right now it's a speculative investment. Either it will succeed and demand for bitcoin will go even higher or it will fail and it will be worth nothing. It's like investing in some risky VC fund. It makes sense for people to have wildly different ideas about potential and risk, but it makes no sense to expect it to just stay…

I don't know. I've held it since I bought it at $13/BTC. Seems like so far I am doing OK.

Re: China and the soaring price of Bitcoin

#27

Post by thisiswrong » Thu, Nov 21, 2013, 12:42 PM UTC

I'm not sure that the author of this article is correct. Why would the Chinese gvt push bitcoin, for it then to be used to undermine the Yuan? Doesn't make sense.

From what bitcoin followers have been saying: the Chinese government has been indirectly supporting the rise and adoption of Bitcoin through state-run Bitcoin documentaries [1]. This is seen by some as China pushing for alternatives to the USD as a world reserve currency (following US gvt shutdown) [2].

[1] https://cryptocointalk.com/topic/226-cctv-bitcoin-documentar... [2] http://www.scmp.com/news/china/article/1330873/chinese-state...

Re: China and the soaring price of Bitcoin

#28

Post by obtino » Thu, Nov 21, 2013, 12:48 PM UTC

netcan wrote: post #25

nl wrote: post #23

This shows surprising naivety about what is happening in China. To generalise massively, Chinese aren't trying to move money out of China. Instead, they are trying to find any safe store of value, because they don't trust their banks. Chinese are desperate for any way to save money, because the four-grandparent policy (and no pension) means they need money in old age. The optimal solution for them is overseas real es…

This doesn't make sense to me. Bitcoin right now is an incredibly bad long term value store. Right now it's a speculative investment. Either it will succeed and demand for bitcoin will go even higher or it will fail and it will be worth nothing. It's like investing in some risky VC fund. It makes sense for people to have wildly different ideas about potential and risk, but it makes no sense to expect it to just stay…

> Bitcoin right now is an incredibly bad long term value store.

It's a deflationary currency. Sure there may be rises and falls, but in the long term, the trend will only be in one direction.

Re: China and the soaring price of Bitcoin

#29

Post by netcan » Thu, Nov 21, 2013, 12:53 PM UTC

IgorPartola wrote: post #26

netcan wrote: post #25

Earlier quoted context omitted.

This doesn't make sense to me. Bitcoin right now is an incredibly bad long term value store. Right now it's a speculative investment. Either it will succeed and demand for bitcoin will go even higher or it will fail and it will be worth nothing. It's like investing in some risky VC fund. It makes sense for people to have wildly different ideas about potential and risk, but it makes no sense to expect it to just stay…

I don't know. I've held it since I bought it at $13/BTC. Seems like so far I am doing OK.

You are doing more than OK ;)

Risky investment doesn't mean bad investment. Startup equity can be a good investment too. I'm just saying bitcoin is not a safe value store, which is what nl was hypothesizing in his comment.

Re: China and the soaring price of Bitcoin

#30

Post by Retric » Thu, Nov 21, 2013, 1:43 PM UTC

obtino wrote: post #28

netcan wrote: post #25

Earlier quoted context omitted.

This doesn't make sense to me. Bitcoin right now is an incredibly bad long term value store. Right now it's a speculative investment. Either it will succeed and demand for bitcoin will go even higher or it will fail and it will be worth nothing. It's like investing in some risky VC fund. It makes sense for people to have wildly different ideas about potential and risk, but it makes no sense to expect it to just stay…

> Bitcoin right now is an incredibly bad long term value store. It's a deflationary currency. Sure there may be rises and falls, but in the long term, the trend will only be in one direction.

Only if something else does not supplant it. Right now it's like investing in 1980's baseball cards, sure there not making more but nothing guarantees anyone want's them in 10 years.