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China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

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Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#241

Post by rtkwe »

tstyle wrote: post #152
Animats wrote: post #27

So the PBOC is taking further steps to plug the leak. Not unexpected. China has exchange controls. Internal yuan cannot be easily converted to euros or dollars. There are limits on capital outflows. The controls are leaky; the classic leak is to send all your relatives to Hong Kong loaded up with the maximum allowed amount of yuan in cash. The current limit is about $50K/year/person. Small leaks are thus tolerated. B…

Is the control on the yuan really that tight? How are Chinese citizens able to buy such a massive amount of premium Seattle/SF real estate with ease? Isn't ownership of foreign real estate a big leak?

Real estate purchases are one of the exceptions carved out where Chinese citizens are able to take more money out of the country. That's part of why it's so popular as an investment, because it's one of the few ways to move large amounts of money out of the country there's almost always another rich Chinese person or real estate speculator willing to pay the massively inflated prices which then gives the owner money outside of China.

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#242

Post by ftlio »

anovikov wrote: post #238
Animats wrote: post #27

So the PBOC is taking further steps to plug the leak. Not unexpected. China has exchange controls. Internal yuan cannot be easily converted to euros or dollars. There are limits on capital outflows. The controls are leaky; the classic leak is to send all your relatives to Hong Kong loaded up with the maximum allowed amount of yuan in cash. The current limit is about $50K/year/person. Small leaks are thus tolerated. B…

Why do they need exchange controls, having the biggest surplus already? Exchange controls seem to be used only by countries struggling with deficits.

My understanding was that between debt purchasing and exchange controls, China can keep the yuan cheap and demand for their exports high. I say 'was' because it's been a while since I tried to grok China's economy.

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#243

Post by qznc »

moufestaphio wrote: post #208
chatmasta wrote: post #205

If miners shut down, mining rate slows, supply goes down, so price should go up. Right?

No. Bitcoin algorithm automatically adjusts every 2016 blocks, to make the average block time 10 minutes. If the number of miners drops, the algorithm will adjust the difficulty of finding a 'good' hash. Meaning as an individual miner you have a better chance of finding the correct hash, but the overall network has the same rate.

If all the chinese miners drop out suddenly, how long does it take to mine those 2016 blocks? More precisely, how much longer than 20160 minutes (2 weeks)?

If Bitcoin transaction rate would be significantly reduced for weeks or months, would that kill it in the sense that Litecoin or Ethereum would take over?

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#244

Post by chaostheory »

anovikov wrote: post #238
Animats wrote: post #27

So the PBOC is taking further steps to plug the leak. Not unexpected. China has exchange controls. Internal yuan cannot be easily converted to euros or dollars. There are limits on capital outflows. The controls are leaky; the classic leak is to send all your relatives to Hong Kong loaded up with the maximum allowed amount of yuan in cash. The current limit is about $50K/year/person. Small leaks are thus tolerated. B…

Why do they need exchange controls, having the biggest surplus already? Exchange controls seem to be used only by countries struggling with deficits.

ftlio is right, but another reason is Taiwan. Someone can correct me if things have changed - a lot of Taiwanese businnesses have strong links to the mainland in the form of manufacturing facilities, and so on. China encourages these links with one big stipulation: these Taiwanese businesses cannot transfer their funds out of China. Why? China considers Taiwan to be a renegade province that it would like back just like Macau and HK. It will do almost anything to make that a reality i.e. influencing elections, tempting and pressuring the business sector, etc... It's such an emotional issue that I feel even a costly invasion would be on the table if there was enough provocation from pro-independence factions in Taiwan

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#245

Post by seanmcdirmid »

Sargos wrote: post #219
seanmcdirmid wrote: post #137

Earlier quoted context omitted.

Sure. But it still can't grow forever without dragging down the real economy, at some point soon growth has to stop, and then what?

That's not how government debt works. There is no ceiling on the amount of debt you can have except in extreme cases like 2-3x debt to GDP ratio which China is nowhere near. Government debt is really just a record keeping system for funding and not really debt like you and me have. Look up US debt and how it works to fund the economy.

Velocity is important. China went from no debt to 2X in less than a decade. If they are 3X a few years from now, how will that work. They have to deleverage somehow, or at least stop the growth.

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#246

Post by [deleted] »

aianus wrote: post #190
mirimir wrote: post #98

Earlier quoted context omitted.

Well, domestic capital leaving China is largely illegal. So circumventing laws through Bitcoin is arguably money laundering. And indeed, US laws against money laundering apply regardless of the source.

> Well, domestic capital leaving China is largely illegal Says whom? I imagine anyone who got rich legally in China would also try to get the capital out and diversify in more developed countries.

[deleted]

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#247

Post by AlexCoventry »

seanmcdirmid wrote: post #168
AlexCoventry wrote: post #144

Earlier quoted context omitted.

From the PRC's perspective, the yuan is a just a tool to stimulate productive activity in their population towards the goals expressed in state budgets. If they can muster the political will, they can simply levy highly progressive taxes to reduce inflation and keep on spending. There is nothing stopping them, ideologically.

If growth is mostly currently debt fueled, that growth can easily stop and reverse when the debt is pulled back. Recession at best, depression at worst, definitely there will be a few crashes along the way. Do you think real estate can really be sustained at it's current levels? Much of it has been bought as a speculative asset (no property taxes makes that easy) with the idea that it can only keep going up because o…

The purpose of the growth, from a governance perspective, is to keep the population satisfied through a rising standard of living, and to continue to develop the country through sane budget allocations. They can continue to do that using debt, because the only risk from doing so is inflation, which they can keep low with taxes on the present debt holders.

The housing market may crash: I was talking about the claim that economy in general crashing. But I think the PRC might see a housing market crash as desirable, as it would raise the standard of living for most citizens. They certainly seem bent on slowing it down. https://www.reuters.com/article/us-china-economy-property-in...

China does have economic problems, but they are more problems of political will, not intractable from a strictly economic perspective. The solution involves the country's elite taking a haircut.

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#248

Post by Animats »

peoplewindow wrote: post #218
csomar wrote: post #183

Earlier quoted context omitted.

China breakdown on exchanges has begun before the ICO rage. Top exchanges did hold crpyto withdrawals for all their users for a long period of time (several months). I think it is a little bit of 1. China understanding the risks posed by bitcoin capital flight and 2. bitcoin turning from a small community to $100bn+ market thing. Needless to say this is about all crypto and not just bitcoin.

There's also the rumour that the exchanges are fractional reserve to a huge extent. I suspect that plays a role.

Well, we're going to find out very soon. As the Bitcoin exchanges in China shut down, they're going to have to pay back all their customers. "Platforms should also tell the government by Wednesday Sept. 20 how they will allow users to make withdrawals in a risk-free manner and handle funds to ensure that investors' interests are protected."[1]

The executives of the exchanges were told not to try to leave China. Somebody foresaw this problem.

[1] http://fortune.com/2017/09/15/china-shutting-down-beijing-bi...

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#249

Post by SkyMarshal »

sitepodmatt wrote: post #157
tryingagainbro wrote: post #130

Earlier quoted context omitted.

Bitcoin is irrelevant, compared to still-tolerated and massively-more voluminous alternatives, for capital controls. This is a red herring. At one point all crypto had reached $160B in market cap. Not small at all and risked getting much larger. Lesson #1: if China wants something done they will do it. No courts, no public discussion, nothing. Don't be surprised if these execs end up in jail.

It's refreshing that a country can act this quickly even if we don't agree with the action. In many countries this would require several meeting of understanding, a dozen committees forming sub-committees, accusations of corruptions and biased interest and several related court cases, and endless other shit. IMO it's actually a very smart move, to ensure a fair and complete dissolution, and if those execs dont have t…

>It's refreshing that a country can act this quickly even if we don't agree with the action.

Once you really consider that idea a bit more you may realize it's actually the exact opposite - it's refreshing when a powerful country can't move quickly, can't get anything done fast, and has tons of gridlock due to differing opinions combined with strongly institutionalized laws and procedures. Human beings are terribly whimsical creatures, and institutions that prevent us from acting on our whims and instead force us to go through a thoroughly deliberative process are one of mankind's greatest inventions.

Re: China Bans Bitcoin Executives from Leaving Country, Miners “Preparing for Worst”

#250

Post by moufestaphio »

qznc wrote: post #243
moufestaphio wrote: post #208

Earlier quoted context omitted.

No. Bitcoin algorithm automatically adjusts every 2016 blocks, to make the average block time 10 minutes. If the number of miners drops, the algorithm will adjust the difficulty of finding a 'good' hash. Meaning as an individual miner you have a better chance of finding the correct hash, but the overall network has the same rate.

If all the chinese miners drop out suddenly, how long does it take to mine those 2016 blocks? More precisely, how much longer than 20160 minutes (2 weeks)? If Bitcoin transaction rate would be significantly reduced for weeks or months, would that kill it in the sense that Litecoin or Ethereum would take over?

It should happen right away I believe. As soon as the next block after the 2016th is accepted, the difficulty updates.

The transaction rate would only be affected for a max of two weeks as I understand it. As for how the 'market' would react if all Chinese miners dropped out, I have no idea :)

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