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China to block centralized trading of cryptocurrency

By Greg S ยท 15 replies
Jan 15, 2018
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  1. China in 2017 was a hotspot for cryptocurrency trading and investment. As technologies have matured and regulators have stepped in, however, China has tumbled from being a leader of digital currencies.

    Chinese government plans indicate that any form of centralized trading platform is about to be put under intense scrutiny. Residents will be blocked from accessing domestic and foreign methods that allow for cryptocurrency to be traded in any central location. There is no indication how Chinese authorities plan to restrict access to decentralized currencies.

    One upcoming improvement to protocols related to blockchains that could make trade regulation extremely difficult is the introduction of atomic swapping. An atomic swap is a direct conversion between two currencies or crypto tokens without the need for a third-party. A piece of shared blockchain is modified to switch out one coin for another, effectively making trades possible without a peer to fill a buy order.

    Trading currencies between peers is relatively easy and fast. It can take just a few seconds to transfer newer and more efficient coins. Although Bitcoin is most well-known, the blockchain it runs on has grown to tremendous size and its network has not scaled to remain a cheap and quick way to transfer value. It currently can cost upwards of $5 to send a small Bitcoin transaction within minutes instead of the seconds it would take using Litecoin, Ethereum or any other coin with a less congested network.

    Even though it may be considered illegal for Chinese citizens to engage in cryptocurrency exchanges, individual peer-to-peer transactions will not be a primary target for regulators. Given the somewhat anonymous nature of cryptocurrencies, it is unclear whether it would even be possible for regulators to go after individuals for small transactions. Monero is a cryptocurrency that is designed specifically to prevent regulators or anyone else from tracking the flow of value.

    For now, China remains popular for large farms of Bitcoin mining equipment. Should regulators somehow make it difficult to transfer Bitcoin in and out of the country, rest assured that miners will find a way to get their hardware out of the country and resume businesses elsewhere.

    Permalink to story.

  2. yRaz

    yRaz Nigerian Prince Posts: 2,668   +1,921

    There is literally no way for them to enforce this, that's the entire point of crypto. You can use any enchange anywhere in the world and depending on what you're putting into the exchange there is no way to follow the money.

    the only way to stop crypto is to shut off the internet completely and we can all see how good china is at that
    SirChocula, Reehahs and ZackL04 like this.
  3. tonylukac

    tonylukac TS Evangelist Posts: 1,376   +72

    I invested $1200 in bitcoin and etherium and gained $450 in three weeks.
    treetops likes this.
  4. complexxL9

    complexxL9 TS Booster Posts: 63   +12

    <your country> billionaires demand this video banned! Follow this link to learn how to make 7600$ weekly - <phishing link>.
    senketsu likes this.
  5. Evernessince

    Evernessince TS Evangelist Posts: 3,315   +2,558

    Given it is China, shutting Crypto Trader's internet off may very well be on the table.
  6. centrino207

    centrino207 TS Booster Posts: 160   +10

    I can see why big banks and countries fear that real currency and country exchange rate is gone and replace by electronic money.

    Countries will lose control over protectionism, tariffs so on.

    The fear that electronic money will open the gates.

    Countries want to have control what can and cannot be imported and where and how many.

    Big banks fear this and put pressure on the goverment to ban this.
  7. yRaz

    yRaz Nigerian Prince Posts: 2,668   +1,921

    They might fear change but only because it makes them irrelevant and it also circumvents government regulation, which they also fear. They tried making their own crypto but it's mostly a failure thus far because the crypto is largely not falling for it. However, a much larger section of the economy is very pro crypto in the US and the banks can't compete with the likes of IBM, Apple and Microsoft.
  8. David from LA

    David from LA TS Rookie

    This is a currency not a product. Countries still have full control over their import/exports. The reason of the ban is to protect their economy as all cryptocurrencies are not backed by anything, whereas typical currencies are backed by a commodity (gold for example) or the government. Theoretically, Bitcoin can drop to a $0 value, as the value it has right now is purely due to speculation of supply and demand. Similar to any other financial instrument, a big drop of the currency will create a big ripple effect in the financial markets. A ban of the currency would help to minimize these negatives, pushing more crypto activities overseas.
  9. yRaz

    yRaz Nigerian Prince Posts: 2,668   +1,921

    Any currency can drop to zero and I have no idea what currencies are backed by gold these days. Fact of the matter is that banks can't steal your money if you have it stored in a secure wallet where as when you deposit it in the bank they are only required to have 1/10th of it as Fiat. It's called fractional reserve banking. Crypto takes the power away from banks and governments. There are something's governments have no right to regulate that, but Fiats and central banks give them that power. Crypto is setting third world country tries free. In socialist nation's it is impossible to regulate. It is making the economies of small nation's explode. Then you have Japan and Australia saying " there is no way to regulate this so go ahead and use it". Then you have China that is so oppressive that crypto could completely destroy them.

    It could go to zero, but it isn't. Alt coins, for the most part are stupid. However, there are things like Litecoin and Moneroe that are VERY popular in real world circumstances. If you is the Euro or dollar then more than likely people want nothing to do with crypto. However, in poor nation's(that make up 3/4s of the worlds population) ebrace crypto because it stops politicians and banks from essentially enslaving the local populations.

    Crypto is far more powerful than the dollar and it's only a matter of time. It's dumb to think it can ever be regulated. They can make it illegal to discourage people from using it, but it will always be impossible to regulate.

    So I say let the banks and governments fear crypto. Let them attempt to regulate and control it. Instead of embracing it they will only let the power slip through there hands faster
  10. David from LA

    David from LA TS Rookie

    Theoretically, a currency like USD can NEVER drop to $0 value; that's the whole point of having a central bank. All monies in the US are backed by the central bank, in which case it doesn't matter if someone steals it, it's insured. The balance sheet reserve you pointed out has nothing to do with this, it's to prevent banks from overleveraging by taking on more risk. You are mixing apples and oranges.

    Having a currency doesn't give power to the government. It's the exact opposite, because the government is in power, it backs the currency it issues, which gives the currency its value.

    Crypto has no fundamentals; the entirety of its value is based on speculation. That's why you are seeing huge flux, which is exactly what mature markets want to avoid. I was at a conference with Charlie Munger, when asked about crypto, he laughed and said it's pure speculation and it will come and go like anything else that has no fundamentals.

    If you are a day trader and want to make a quick buck, this is good. But with something that is not backed by anything and has huge intra-day deltas, you are essentially playing with fire. Life is good as long as it doesn't burn you.
    senketsu likes this.
  11. yRaz

    yRaz Nigerian Prince Posts: 2,668   +1,921

    Well I'm on my phone so I don't feel like making a lengthy argument. The short version is that the largest cryptos have amazing fundamentals because they are being used instead of government issued Fiat. Bitcoin is garbage, but the large alternatives like Litecoin, Ether and Monaroe have been amazing for economic growth in developing economies.

    And despite what governments say, the dollar is still the most popular way to launder money in the world.
  12. David from LA

    David from LA TS Rookie

    Not arguing in any way... and I think the uses of crypto are unique and that's what brings it its value. No disagreement there. Coming back to the article, China wants to regulate it (I agree with China and you disagree with me) because the crypto's unstable nature could cause major ripples in the financial markets. If you have a growing economy that is already unstable (Shanghai had to shut down a number of days last year due to speculative trading) and with very little confidence in financials, you would want to regulate it to give the average citizen more financial security, whereas with crypto, its deltas are doing the exact opposite.

    You are noting all of the positives (which it doesn't matter if I agree or not) but once **** hits the fan because an exchange collapsed, silk road collapsed, fraud, etc., this is when regulation benefits. I am all for capitalism and free market but someone needs to help the little guys to protect their investment. Banning crypto is a great move for China, at this stage of their economy and to help stabilize its markets.

    Albeit not a currency, you can look at what LTCM did in the 90s with quant trading. At its height, everyone wanted a piece of it and its popularity rivals that of crypto today. Due to lack of regulation, when it went down, the US economy took such a big plunge that they had to do a huge bailout.

    With any speculative products, there are huge risks and China simply decided that the benefits do no outweigh the risks. I feel the exact same way and I look at the big picture here, not that today it potentially benefits some small town in Africa.
  13. yRaz

    yRaz Nigerian Prince Posts: 2,668   +1,921

    Once I get home I would like to continue this conversation in private messages. You seem to have a lot of interesting thoughts on the subject and I am also well aware of the down falls of crypto. I think an opinion outside of my own would help my investing in a long run. If you don't mind, I would like to message you later to continue this seeing as a public forum isn't the place for this type of conversation.
    David from LA likes this.
  14. centrino207

    centrino207 TS Booster Posts: 160   +10

    Thing is people thought with the internet that border control will be removed with buying and sales of goods. That turn out wrong.

    Than people thought one world currency that turn out wrong than people thought electronic money that may also turn out wrong.

    Countries will do what they can to pass laws to control the flow of goods and service.

    And China will do what they can to stop you from importing that Hollywood movie or what ever they want to control.
  15. David from LA

    David from LA TS Rookie

    yup for sure sir... I am just bored and don't really want to do real work so I am just writing here haha
    yRaz likes this.
  16. David from LA

    David from LA TS Rookie

    I am not fully following here what the main point is. China restricting creative intangible imports is purely from a maintaining a trade surplus point of view, nothing else. They do have laws that control the flows of goods and services across borders, it's called transfer pricing and it's been recently been beefed up by something called BEPS for cross-border transparency. Also, not sure if correlation means causation..

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