Somehow, this must be good for bitcoin
September 11, 2017 1:06 PM Subscribe
The People's Bank of China (PBoC) has drafted instructions banning Chinese platforms from providing crypto-currency trading services, the Wall Street Journal's Chao Deng reported citing people familiar with the matter. The move comes just a week after Beijing announced it was banning initial coin offerings, a virtual currency-based method of fundraising.
I mean, it's probably really good for Ethereum in the short term.
posted by lumpenprole at 4:59 PM on September 11, 2017 [1 favorite]
posted by lumpenprole at 4:59 PM on September 11, 2017 [1 favorite]
Crypto-Currency is nothing but bad news to the nation-state monopoly on currency and currency flows.
Its only a matter of time before they start deploying psy-ops to undermine faith in the crypto coin.
posted by Fupped Duck at 6:55 PM on September 11, 2017
Its only a matter of time before they start deploying psy-ops to undermine faith in the crypto coin.
posted by Fupped Duck at 6:55 PM on September 11, 2017
I've been following cryptocoins since about 2010, and it's been a wild ride, especially the ICO side of Ethereum and other ICOs. I don't have any money in crypto, but I sure wish I did drop 50 bucks or every last spare penny I had on BTC about 6 years ago.
Something I've been noticing more and more lately is that there's a couple of really big and rapacious whales out there that are definitely manipulating prices with ongoing pump and dumps in ways that would be mainly illegal in regulated markets - but notably these actions mirror the early street corner and coffee shop actions of Wall St.
Also, if you look at this coin chart and ticker right now and over the last couple of weeks you'll notice that many if not most of the coins are exhibiting similar price movement patterns in USD value. It's been doing this for the past month or so, and it wasn't so obviously linked across the board before that. Major coins like ETH, LTC and BTC sometimes briefly linked up on major runs, but they were all usually pretty independently valued and played against each other as people traded on arbitrage between them.
Now they're apparently tightly crosslinked and you sometimes you can see pump/dump spikes trading between them.
One of my theories about this is that there's a fuckton of automated microtrading going on. Many people are running similar scripts, and you can see some of this microtrading when looking at a good ticker and history chart for bitcoin as many small trades are executed at a hard stop limit, causing a weird sawtoothed "mesa" effect in price graphs when someone's moving a lot of coins in many small buys or sells right on the edge of the going market price.
The other theory is that it's logical to assume that trading and other kinds of cabals have formed, one that uses sophisticated cross-coin trading algorithms that are negotiated and interlinked for subtle/stealth and not so subtle market manipulation.
This is being fueled and turbocharged by, obviously, a whole lot of greed and inexperienced, wannabe investors and day traders.
It would essentially be impossible to regulate much of this without making cryptography itself illegal. Sure, you can ban public facing fiat-coin exchanges or try to regulate actual businesses within jurisdictions, but it's really hard to stop a flow of encrypted bits that look identical to all the other encrypted bits on a network.
posted by loquacious at 8:50 PM on September 11, 2017 [3 favorites]
Something I've been noticing more and more lately is that there's a couple of really big and rapacious whales out there that are definitely manipulating prices with ongoing pump and dumps in ways that would be mainly illegal in regulated markets - but notably these actions mirror the early street corner and coffee shop actions of Wall St.
Also, if you look at this coin chart and ticker right now and over the last couple of weeks you'll notice that many if not most of the coins are exhibiting similar price movement patterns in USD value. It's been doing this for the past month or so, and it wasn't so obviously linked across the board before that. Major coins like ETH, LTC and BTC sometimes briefly linked up on major runs, but they were all usually pretty independently valued and played against each other as people traded on arbitrage between them.
Now they're apparently tightly crosslinked and you sometimes you can see pump/dump spikes trading between them.
One of my theories about this is that there's a fuckton of automated microtrading going on. Many people are running similar scripts, and you can see some of this microtrading when looking at a good ticker and history chart for bitcoin as many small trades are executed at a hard stop limit, causing a weird sawtoothed "mesa" effect in price graphs when someone's moving a lot of coins in many small buys or sells right on the edge of the going market price.
The other theory is that it's logical to assume that trading and other kinds of cabals have formed, one that uses sophisticated cross-coin trading algorithms that are negotiated and interlinked for subtle/stealth and not so subtle market manipulation.
This is being fueled and turbocharged by, obviously, a whole lot of greed and inexperienced, wannabe investors and day traders.
It would essentially be impossible to regulate much of this without making cryptography itself illegal. Sure, you can ban public facing fiat-coin exchanges or try to regulate actual businesses within jurisdictions, but it's really hard to stop a flow of encrypted bits that look identical to all the other encrypted bits on a network.
posted by loquacious at 8:50 PM on September 11, 2017 [3 favorites]
Sure, you can ban public facing fiat-coin exchanges
Wouldn't this remove almost all utility value from cryptocurrencies, though? Like yes, I understand that you can buy things with them, but how many sellers of anything do you reckon would keep taking bitcoin in a world where it can't be converted into an actual real-world currency for paying your costs of living?
posted by Dysk at 5:26 AM on September 12, 2017 [1 favorite]
Wouldn't this remove almost all utility value from cryptocurrencies, though? Like yes, I understand that you can buy things with them, but how many sellers of anything do you reckon would keep taking bitcoin in a world where it can't be converted into an actual real-world currency for paying your costs of living?
posted by Dysk at 5:26 AM on September 12, 2017 [1 favorite]
Crypto-Currency is nothing but bad news to the nation-state monopoly on currency and currency flows. Its only a matter of time before they start deploying psy-ops to undermine faith in the crypto coin.
The more...enthusiastic...supporters do a great job of that all by themselves. The endless scams, Ponzi schemes, hilarious failures like the DAO debacle, and all those collapsing exchanges that "lose" all of their participants' coins probably don't help either.
posted by Sangermaine at 6:34 AM on September 12, 2017 [2 favorites]
The more...enthusiastic...supporters do a great job of that all by themselves. The endless scams, Ponzi schemes, hilarious failures like the DAO debacle, and all those collapsing exchanges that "lose" all of their participants' coins probably don't help either.
posted by Sangermaine at 6:34 AM on September 12, 2017 [2 favorites]
Wouldn't this remove almost all utility value from cryptocurrencies, though?
Not necessarily, no, especially since the end game for a lot of cryptocoin enthusiasts is the wholesale replacement of fiat currencies, at least in their own lives.
There's also the direct sale and exchange of cryptocoins by individuals via services like localbitcoin. This is actually one of the more reliable and cost effective ways to convert cryptocoins to fiat cash, or to purchase cryptocoins without having to get involved with bank transfers or wires to remote exchanges - where those exchanges hold those purchased coins for you until you either transfer them to your own wallet or spend them or whatever.
If anything exchanges are a necessary evil for cryptocoins. In the Platonic ideal crypto world everyone who wanted to own, hold, receive or spend coins would be running full nodes of whatever crypto network of choice, mining/verifying would happen naturally on the distributed network instead of concentrated in mining farms, nothing would be centralized and all transactions would happen entirely within that network, and exchanges wouldn't have a market to exist at all.
This also illustrates why I keep telling people to not underestimate cryptocoins as a world changing and extremely disruptive technology. Unless nations suddenly ban all cryptography or figure out how to separate cryptocoin network traffic, or turn it into a major capital crime punishable by long jail terms/death - this technology is likely to eventually severely disrupt traditional/fiat banking and monetary systems.
It's designed to be resistant to being outlawed or centralized. If you ban it and push it underground all that will happen is it assumes its idealized, Platonic form of complete decentralization.
That genie isn't going back in that bottle. Actually, this particular genie was born without a bottle at all.
And this isn't all cryptofascist bad news. There have been some ostensibly positive projects coming out of Ethereum ICOs and smart contracts.
One is bringing very low cost, low friction banking and financial services to places that normally can't afford them, essentially realizing and building the microtransaction networks people have been talking about since the 1990s. This enables things like low interest rate loans (like Kiva) without the bureaucratic overhead, or low cost, low friction ledgers for things like property titles.
Another project I've seen in a couple of iterations is the ability for content creators to use blockchains for secure content publishing and to securely collect micropayment for that content. There's a couple of startups working in this space, where you can publish digital content directly on the blockchain itself. The data is embedded there and then lives in the blockchain kind of like a secured, encrypted version of bittorrent or Napster, where content consumers can search for, find and purchase content directly from the producer.
A number of newer coins are addressing the power consumption problems that BTC/BCC face with proof of work by using proof of stake instead. Ethereum does this, as do a few other coins. So no, not all of this cryptocoin networks are power-hungry monsters accelerating the heat death of the universe.
And if cryptocoins sound crazy to you, you probably don't actually understand how fiat currency works today.
Fiat currency works on trust. All fiat currency relies on trust. Trust is the only real currency.
While cryptocoins still rely on the trust of a public consensus of "this has this much value" just like gold or US dollars or anything else, it essentially attempts to remove trust entirely from the transaction and network side of things, replacing it with cryptography and mathematical proof that each and every transaction is real and valid.
Think about it, you can't counterfeit a cryptocoin. Sure, you can bamboozle someone with social engineering/hacking and steal just like you can anything else, but you can't actually create, deliver and spend a counterfeit cryptocoin. If it's not already a legit coin on the network, it won't verify on the network, therefore it's not a coin.
posted by loquacious at 11:33 AM on September 12, 2017
Not necessarily, no, especially since the end game for a lot of cryptocoin enthusiasts is the wholesale replacement of fiat currencies, at least in their own lives.
There's also the direct sale and exchange of cryptocoins by individuals via services like localbitcoin. This is actually one of the more reliable and cost effective ways to convert cryptocoins to fiat cash, or to purchase cryptocoins without having to get involved with bank transfers or wires to remote exchanges - where those exchanges hold those purchased coins for you until you either transfer them to your own wallet or spend them or whatever.
If anything exchanges are a necessary evil for cryptocoins. In the Platonic ideal crypto world everyone who wanted to own, hold, receive or spend coins would be running full nodes of whatever crypto network of choice, mining/verifying would happen naturally on the distributed network instead of concentrated in mining farms, nothing would be centralized and all transactions would happen entirely within that network, and exchanges wouldn't have a market to exist at all.
This also illustrates why I keep telling people to not underestimate cryptocoins as a world changing and extremely disruptive technology. Unless nations suddenly ban all cryptography or figure out how to separate cryptocoin network traffic, or turn it into a major capital crime punishable by long jail terms/death - this technology is likely to eventually severely disrupt traditional/fiat banking and monetary systems.
It's designed to be resistant to being outlawed or centralized. If you ban it and push it underground all that will happen is it assumes its idealized, Platonic form of complete decentralization.
That genie isn't going back in that bottle. Actually, this particular genie was born without a bottle at all.
And this isn't all cryptofascist bad news. There have been some ostensibly positive projects coming out of Ethereum ICOs and smart contracts.
One is bringing very low cost, low friction banking and financial services to places that normally can't afford them, essentially realizing and building the microtransaction networks people have been talking about since the 1990s. This enables things like low interest rate loans (like Kiva) without the bureaucratic overhead, or low cost, low friction ledgers for things like property titles.
Another project I've seen in a couple of iterations is the ability for content creators to use blockchains for secure content publishing and to securely collect micropayment for that content. There's a couple of startups working in this space, where you can publish digital content directly on the blockchain itself. The data is embedded there and then lives in the blockchain kind of like a secured, encrypted version of bittorrent or Napster, where content consumers can search for, find and purchase content directly from the producer.
A number of newer coins are addressing the power consumption problems that BTC/BCC face with proof of work by using proof of stake instead. Ethereum does this, as do a few other coins. So no, not all of this cryptocoin networks are power-hungry monsters accelerating the heat death of the universe.
And if cryptocoins sound crazy to you, you probably don't actually understand how fiat currency works today.
Fiat currency works on trust. All fiat currency relies on trust. Trust is the only real currency.
While cryptocoins still rely on the trust of a public consensus of "this has this much value" just like gold or US dollars or anything else, it essentially attempts to remove trust entirely from the transaction and network side of things, replacing it with cryptography and mathematical proof that each and every transaction is real and valid.
Think about it, you can't counterfeit a cryptocoin. Sure, you can bamboozle someone with social engineering/hacking and steal just like you can anything else, but you can't actually create, deliver and spend a counterfeit cryptocoin. If it's not already a legit coin on the network, it won't verify on the network, therefore it's not a coin.
posted by loquacious at 11:33 AM on September 12, 2017
It's designed to be resistant to being outlawed or centralized. If you ban it and push it underground all that will happen is it assumes its idealized, Platonic form of complete decentralization.
No, it won't. This is the near-religious nonsense that draws so much ridicule from non-enthusiasts. Governments don't need to ban or outlaw cryptocurrency, they just need to ensure that it's difficult or impossible to turn it into cash/actually usable normal currency.
Until people can buy their groceries or pay their rent with it (and no, don't bother linking to this on edge case where someone totally bought some bread or accepted Bitcoin for rent), and it's as easy and simply for the general population as cash, it's not going to magically be anything other than an interesting tool for certain limited purposes and also buying illegal items.
especially since the end game for a lot of cryptocoin enthusiasts is the wholesale replacement of fiat currencies, at least in their own lives.
The technolibertarian equivalent of "When Christ's Judgment ushers in the Kingdom of Heaven, all men will be as brothers."
There have been some ostensibly positive projects coming out of Ethereum ICOs and smart contracts.
That's a funny way of saying "scammers scamming scammers (or naive idealists)".
As with most things in life, the involvement of libertarians from the beginning really hobbled cryptocurrency development and acceptance. The people were not crying out for 100% trustless decentralized systems, this was the fixation of a small group of ideological zealots. Most people neither need nor want that. They want some of the problems of the banking and credit card systems fixed, not their wholesale replacement with something markedly less safe and reliable but FREEEE!!1111.
posted by Sangermaine at 12:05 PM on September 12, 2017
No, it won't. This is the near-religious nonsense that draws so much ridicule from non-enthusiasts. Governments don't need to ban or outlaw cryptocurrency, they just need to ensure that it's difficult or impossible to turn it into cash/actually usable normal currency.
Until people can buy their groceries or pay their rent with it (and no, don't bother linking to this on edge case where someone totally bought some bread or accepted Bitcoin for rent), and it's as easy and simply for the general population as cash, it's not going to magically be anything other than an interesting tool for certain limited purposes and also buying illegal items.
especially since the end game for a lot of cryptocoin enthusiasts is the wholesale replacement of fiat currencies, at least in their own lives.
The technolibertarian equivalent of "When Christ's Judgment ushers in the Kingdom of Heaven, all men will be as brothers."
There have been some ostensibly positive projects coming out of Ethereum ICOs and smart contracts.
That's a funny way of saying "scammers scamming scammers (or naive idealists)".
As with most things in life, the involvement of libertarians from the beginning really hobbled cryptocurrency development and acceptance. The people were not crying out for 100% trustless decentralized systems, this was the fixation of a small group of ideological zealots. Most people neither need nor want that. They want some of the problems of the banking and credit card systems fixed, not their wholesale replacement with something markedly less safe and reliable but FREEEE!!1111.
posted by Sangermaine at 12:05 PM on September 12, 2017
To be clear I'm not advocating for this lunacy, just analyzing it.
Much in the same way I don't advocate EVE online, it's interesting to watch and research.
I do find it interesting how angry people seem to get when you talk about cryptocoin, or express the opinion that it's already changed the world and it's likely going to continue doing so.
posted by loquacious at 1:50 PM on September 12, 2017
Much in the same way I don't advocate EVE online, it's interesting to watch and research.
I do find it interesting how angry people seem to get when you talk about cryptocoin, or express the opinion that it's already changed the world and it's likely going to continue doing so.
posted by loquacious at 1:50 PM on September 12, 2017
I think you're misunderstanding. People aren't getting angry, they're getting tired of the community. If there's anger, it's at the lack of serious attempts to address real problems that affect people's lives that arise out of these technologies.
You're right, cryptocurrency and blockchain technology are becoming more important and changing things. But precisely because of this, it creates sources of real harm and risk for people. Yet the community, as a whole, seems largely unconcerned with this, instead obsessing over the System and how it's Trustless and Decentralized and Liberty. There's endless talk of how governments can't stop these things and regulations are viewed as evil encroachments. Yet, if people are to integrate these technologies into their lives the problems of fraud, rampant speculation, wild valuation fluctuations, etc. need to be seriously examined and addressed. Regular people want to be able to use currency without fear of being cheated by some unknown entity, or instantly robbed blind the moment they try to use a cryptocurrency or do something with a smart contract. Regular people want to know their life savings aren't going to tomorrow be worth 10% of what they are today because a group of speculators somewhere went nuts last night, or a Chinese mining consortium decided to flex their muscle.
Where are the solutions to those problems? All we ever hear is libertarian ideological nonsense, and even active resistance to even the concept of consumer protections. I'm tired of hearing about the inevitable glorious future that nothing can stop or control. What about the problems of today?
posted by Sangermaine at 3:26 PM on September 12, 2017
You're right, cryptocurrency and blockchain technology are becoming more important and changing things. But precisely because of this, it creates sources of real harm and risk for people. Yet the community, as a whole, seems largely unconcerned with this, instead obsessing over the System and how it's Trustless and Decentralized and Liberty. There's endless talk of how governments can't stop these things and regulations are viewed as evil encroachments. Yet, if people are to integrate these technologies into their lives the problems of fraud, rampant speculation, wild valuation fluctuations, etc. need to be seriously examined and addressed. Regular people want to be able to use currency without fear of being cheated by some unknown entity, or instantly robbed blind the moment they try to use a cryptocurrency or do something with a smart contract. Regular people want to know their life savings aren't going to tomorrow be worth 10% of what they are today because a group of speculators somewhere went nuts last night, or a Chinese mining consortium decided to flex their muscle.
Where are the solutions to those problems? All we ever hear is libertarian ideological nonsense, and even active resistance to even the concept of consumer protections. I'm tired of hearing about the inevitable glorious future that nothing can stop or control. What about the problems of today?
posted by Sangermaine at 3:26 PM on September 12, 2017
> I do find it interesting how angry people seem to get when you talk about cryptocoin, or express the opinion that it's already changed the world and it's likely going to continue doing so.
To me, this boils down to the wide chasm between that separates the claims of how many different aspects of the world that cryptocurrency and blockchain tech in general will change (and how much it will change them) from the rather modest changes that have actually occurred. Like, absolutely, a distributed ledger, proof of work, the ability to solve some but not all of the problem associated with electronic voting... these are very cool! But the most real-world impact the tech seems to have had is to speed up money laundering and separate fools from their expendable income. Particularly when a lot of the pangloss rhetoric about the tech comes from libertopians who have an interest in it mainly in service of their political/ideological goals, it becomes rather tiresome when the tech is oversold, and somewhat satisfying when those who ignored the risks and problems associated with the tech are forced to confront the reality of the situation.
tl;dr: If pointing and laughing at reckless 'coiners is wrong, I don't want to be right.
posted by tonycpsu at 3:27 PM on September 12, 2017 [1 favorite]
To me, this boils down to the wide chasm between that separates the claims of how many different aspects of the world that cryptocurrency and blockchain tech in general will change (and how much it will change them) from the rather modest changes that have actually occurred. Like, absolutely, a distributed ledger, proof of work, the ability to solve some but not all of the problem associated with electronic voting... these are very cool! But the most real-world impact the tech seems to have had is to speed up money laundering and separate fools from their expendable income. Particularly when a lot of the pangloss rhetoric about the tech comes from libertopians who have an interest in it mainly in service of their political/ideological goals, it becomes rather tiresome when the tech is oversold, and somewhat satisfying when those who ignored the risks and problems associated with the tech are forced to confront the reality of the situation.
tl;dr: If pointing and laughing at reckless 'coiners is wrong, I don't want to be right.
posted by tonycpsu at 3:27 PM on September 12, 2017 [1 favorite]
Much in the same way I don't advocate EVE online, it's interesting to watch and research.
It's pretty interesting to me how often those two overlap.
posted by lumpenprole at 5:03 PM on September 12, 2017
It's pretty interesting to me how often those two overlap.
posted by lumpenprole at 5:03 PM on September 12, 2017
Do you know what else China recently banned? That's right!
Also, I think Mt. GoX's original name Magic the Gathering Online Exchange really captures the essence of BitCoin regulation: I think governments basically regulate the markets because if they did not then all profits would flow into mattresses as people stopped being gullible and realized they could not invest in anything because they lacked the time to do their due diligence. There is a diminishing point of returns for government regulations though. Yes, they could trivially kill bitcoin by requiring that miners carry emoney emitter licenses or whatever insanity serves that purpose in the the U.S., or much worse investment house licenses. Do they want to regulate money in EVE or World of War Craft? etc.
Right now, these crypto-currencies are pretty transparently pyramid schemes built on fundamentally non-scalable technology that makes them purely investments backed by nothing, not any form of actual currency. It's plausible the path between them and more conventional financial networks is smooth enough that we can devise payment systems that operate efficiently and privately using blind signatures, ala Taler, and ensure both solvency and legitimacy through a combination contracts, stake, and transparency, but avoid the expensive regulatory capture perpetrated by Visa, Master card, Bank of America, Goldman Sacks, etc.
posted by jeffburdges at 3:12 PM on September 20, 2017
Also, I think Mt. GoX's original name Magic the Gathering Online Exchange really captures the essence of BitCoin regulation: I think governments basically regulate the markets because if they did not then all profits would flow into mattresses as people stopped being gullible and realized they could not invest in anything because they lacked the time to do their due diligence. There is a diminishing point of returns for government regulations though. Yes, they could trivially kill bitcoin by requiring that miners carry emoney emitter licenses or whatever insanity serves that purpose in the the U.S., or much worse investment house licenses. Do they want to regulate money in EVE or World of War Craft? etc.
Right now, these crypto-currencies are pretty transparently pyramid schemes built on fundamentally non-scalable technology that makes them purely investments backed by nothing, not any form of actual currency. It's plausible the path between them and more conventional financial networks is smooth enough that we can devise payment systems that operate efficiently and privately using blind signatures, ala Taler, and ensure both solvency and legitimacy through a combination contracts, stake, and transparency, but avoid the expensive regulatory capture perpetrated by Visa, Master card, Bank of America, Goldman Sacks, etc.
posted by jeffburdges at 3:12 PM on September 20, 2017
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So I assume the next step is to prohibit companies doing business in China from accepting crypto-commodities? Otherwise the money laundering and money migration issues would continue, albeit at a slower pace, right?
posted by Slackermagee at 1:34 PM on September 11, 2017