back to article China announces ‘crackdown’ on Bitcoin mining and trading

China has again signalled deep antipathy to cryptocurrency, this time calling for a crackdown on Bitcoin mining. Last Friday the State Council Financial Stability and Development Committee, a body charged with managing risk in China’s financial system, issued a statement detailing its most recent meeting and conclusions about …

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    1. sreynolds

      Re: <Sarcasm>Death to cryptocurrencies!</Sarcasm>

      I was surprised that it ever became so big.Mind you it did make trading it easy as you knew that if you HODL within a few weeks you were likely to recoup short term losses.

    2. GraXXoR

      Re: <Sarcasm>Death to cryptocurrencies!</Sarcasm>

      I fail to see the sarcasm in your post. Seems perfectly reasonable to me. Where do I sign up for DFP and what’s the initial market offering? ;-)

      1. sreynolds

        Re: <Sarcasm>Death to cryptocurrencies!</Sarcasm>

        Hmm, only the true believers would keep on HODLing, thinking that the rollercoaster is still going up a hill There's the sarcasm.

        Apologies if it wasn't too overt.

    3. ShadowSystems

      Re: <Sarcasm>Death to cryptocurrencies!</Sarcasm>

      Ok, after that hailstorm of downvotes, I take it my attempt at humour fell flat. My humble apologies. Please accept my sincerest attempt at atonement.

      *Leaves a large donation at the pub with instructions to get you as soaked in suds & stuffed with snacks as the money will allow*

  2. hedge

    60,000 Nvidia RTX 30-series cards

    Best Offer - EXW Shenzen - only used once

    1. sanmigueelbeer Silver badge
    2. Anonymous Coward
      Anonymous Coward

      Re: 60,000 Nvidia RTX 30-series cards

      "only used once"

      As in, used only for a single uninterrupted period, September 2020 to May 2021?

    3. Bubba Von Braun
      Joke

      Re: 60,000 Nvidia RTX 30-series cards

      Used only once.. Overclocked to breaking point for the period from Sept 2020 to May 2021. 90 minute warranty including unboxing

      BvB

  3. Anonymous Coward
    Anonymous Coward

    Ponzi

    BTC is a hyped Ponzi Scheme which its anonymous creators invented out of thin air. It’s the biggest scam. People have finally woken up to this nonsense.

    1. LovesTha

      Re: Ponzi

      What makes you think people have woken? This crash isn't even notable compared to previous ones (at least not yet)

      1. Anonymous Coward
        Anonymous Coward

        Re: Ponzi

        They don't wake.

        It's like Madoff's Ponzi scheme, it only collapses when the last of the money is spent and the scheme goes from worth billions to worthless, by which time it's too late.

        So an exchange receives X dollars per coin for Y bitcoins buy in.

        The 'value' of Bitcoin triples, and the number of bitcoins mined increases by 30%.

        The exchange has at most X*Y dollars to cover X*3*Y*1.3.

        i.e. less than 26% of the coins can cash out before it collapses, the exchange runs out of money and cannot pay out anymore.

        And they do collapse, because once people realize they cannot cash out of their 'gain' or 'loss', they cut their loss and FLEE. But right up until that point, the conmen can convince the marks they are holding valuable 'assets'.

        Ultimately there is no inherent value in Bitcoins beyond speculation by trading into and out of it. A classic Ponzi scheme.

        1. MCPicoli

          Re: Ponzi

          Your line of thinking is mostly flawed, since you may not simply decide to sell your coins for "X" dollars and it be magically executed, depriving other traders from getting any and collapsing the exchange. Most crypto coins like BTC or ETH are essentially "zero sum" games. You may call crypto any scammy name you want, but a Ponzi it is not.

          In an exchange you buy coins *from other users* and NOT from the exchange, unless the exchange is a "user" of itself as well. For someone to buy some, someone has to sell.

          If suddenly everybody wanted to sell, the price would collapse, since now there are a lot of coins for not so much dollars (from users willing to buy them) but in the end <new price> x <amount of coins> is _exactly_ equal to the amount of dollars available from buyers.

          And the exchange, as usual, makes a pretty penny from their share of the transactions.

          In that sense, users would lose a lot of money because they bought high and sold very low (close to, but not equal to zero), but would never get nothing from their coins, barring exit scams, "hackers" stealing the wallets, etc. In the worst case of the exchange not having liquity for that coin, nothing blocks transfer to another exchange where there would be a little value left.

          OK, I will concede the case where the coin collapses so hard that it has _zero_ liquidity, then you will lose exactly the value you "invested" and not one cent more.

          However, if you start "investing" in derivatives, futures and other complex "financial instruments" involving crypto, then you may lose your pants. For example, if you bet that the value would go up and borrowed a lot of money to buy crypto now, and the value crashed, you'd be in deep trouble.

          1. katrinab Silver badge
            Meh

            Re: Ponzi

            While the cryptocoins themselves are not necessarily ponzi schemes, they are a different type of problem, a lot of the cyrptocurrency exchanges are ponzi schemes.

            Some of the stablecoins however may well be ponzi schemes. At least their failure to find anyone to audit their accounts doesn't help to allay any fears that they might be.

    2. Anonymous Coward
      Anonymous Coward

      Re: Ponzi

      This.

      Suppose you ran an exchange, converting bitcoins into dollars. People spend their money and buy Bitcoins. But also the number of bitcoins continually increases due to mining.

      So now try to cash out all those bitcoins using the dollars that was paid into that exchange. Of course you cannot, there are insufficient dollars available, you must cash out less than you put in. You must lose your money.

      There is nothing of value inside the bitcoin universe to support those extra coins.

      It could only ever work as long as less money is cashed out than is put in. It has no value to support those extra Bitcoins being mined, they are simply diluting the assets of the currency used to buy into the scheme. It only works as long as more suckers buy into the scheme than cash out.

      It's a Ponzi scheme, with a bit of 'crypto bullshit' added to obfuscate.

      The false belief is that it is inflation proof, yet it inflates. The false belief is that there is a limit supply, yet a new crypto currency comes along every few days. All manner of bullshit to draw in more suckers, but mostly the game is "play to their greed", the classic Ponzi scheme spiel.

      1. Persona Silver badge

        Re: Ponzi

        The exchange is not the source of the bitcoin. People who want to buy bitcoin and people who want to sell meet at the exchange. One pays cash and buys bitcoin and the other sells bitcoin and gets cash. The exchange takes a cut of the cash for its service. If more want to buy than sell there is a shortage and the price goes up to incentivize sellers and dissuade buyers. If however more want to sell the price goes the other way. As there is no physical asset driving the valuation it comes down purely to the buyers and sellers sentiment.

        As such it is in the interest of anyone who holds or mines bitcoins to hype them to create the demand that holds the price up. If no one wants to buy the value would fall to zero so big holders will buy the small amounts needed to keep the price up. This also give people the impression that as long as they hold the price will go back up so they don't sell and the upward price is maintained. What the big holders won't do is buy up everything if the market is crashing. They intend to be out of the market sitting on a big pile of real cash before that happens.

      2. Anonymous Coward
        Anonymous Coward

        Re: Ponzi

        I'm no fan of bitcoin, which is really just a way to enable criminal payments but...

        > "So now try to cash out all those bitcoins using the dollars that was paid into that exchange."

        This isn't how an exchange works (or should work). The exchange matches buyers and sellers for a margin, it never holds the stock.

        The London stock exchange does not hold shares in all those companies.

      3. Peter2 Silver badge

        Re: Ponzi

        Suppose you ran an exchange, converting bitcoins into dollars. People spend their money and buy Bitcoins. But also the number of bitcoins continually increases due to mining.

        So now try to cash out all those bitcoins using the dollars that was paid into that exchange. Of course you cannot, there are insufficient dollars available, you must cash out less than you put in. You must lose your money.

        In my opinion, the major reason Bitcoins are popular is that they are a method of money laundering that allows criminals to extort ransom from people via lockware etc without getting caught by the police tracing the money.

        I suspect that most money going into cryptocurrencies is proceeds of crime rather than investors.

    3. katrinab Silver badge
      Meh

      Re: Ponzi

      hyped Ponzi Scheme - Yes

      invented out of thin air - Absolutely yes

      Biggest scam - maybe not yet, but it could go that way

      People have finally woken up to this nonsense - unfortunately not. This is not The Big Crash. The price of bitcoins is still higher than $0.

      1. Anonymous Coward
        Anonymous Coward

        Re: Ponzi

        "invented out of thin air"

        Maybe the air was thin initially. But after a few coal-generated crapcoins, not so much anymore.

    4. a pressbutton

      Re: Ponzi

      You and I and probably most readers do not 'get' BTC

      It is easy to point out that

      - given the price gyrations

      it is not a store of value

      - given the inability to support the same level of transaction flow as a 'real' currency, and that it is not acceptable in a good fraction of the world (china), and that if you try to pay someone BTC in a powercut, unlucky, and that as ~70-80% of mining is in china and therefore open to a 51% attack,

      this is not a currency

      We come from countries where currencies have been pretty dependable for a v.v. long time.

      However if you are from China, or India or Turkey where the currency is not stable, the govt has close controls and at short notice, some types of cash have been redefined as 'not cash anymore',

      you do want something you can anonymously keep and send abroad and pay for stuff that you do not want your govt to know about

      If you are in Europe this generally = drugs and guns - and about 40% of BTC spending - as in buying something that is not another currency - seems to be that.

      In other countries that can be just about anything from spare car parts to artwork to antibiotics - but usually used as a way of evading taxes and other country-specific legalities.

      Is that a good thing?

      It makes me think whoever invented BTC was against the concept of govt and rules and things like everyone driving on the left - or right, but not both

      1. Claptrap314 Silver badge

        Re: Ponzi

        I don't know about Satoshi himself, of course, but the idea of coin got cranking on the cypherpunks mailing list in the late nineties and explicitly was libertarian. Indeed, the term "crypto-libertarian" arose from such thinking.

        And the typical c-l response is that communities will develop their own customs regarding which side of the road to drive on. (I note that phase changes are a thing...)

    5. vtcodger Silver badge

      Re: Ponzi

      Certainly a speculative frenzy, but not really a Ponzi scheme as there is no element of misrepresenting investment "profits" which is what Charles Ponzi and Bernie Madoff did. Madoff incidentally caught a 150 year jail sentence for his antics. Ripping off the oligarchs can carry a bit of risk.

      More a "Blue Sky" thing as in selling securities backed only by "the wide blue sky of Kansas". That's been illegal in most jurisdictions in the US and many elsewhere for a century or more.

      Cryptocurrency currently seems currently to have a net "value" of around 2% of the world's annual GDP. In order for its value to increase, it needs to gain even an even bigger share. If its "value" were to disappear back into the nothingness from whence it came, people will surely notice. Some folks will be harmed. Many just bruised a bit. But some will be severely damaged.

      Can "assets" worth 2% or more of the world's GDP simply vanish more or less overnight? Unhappily, the answer is probably yes. Can the world take that in stride? Probably. But what if it grows to 20% or 120% then collapses?

      Some folks -- including the Chinese apparently -- view cryptocurrency as a threat to the world's future financial stability. And they may well have a point. It's perhaps a bit ironic that it's the Chinese rather than the EU or the self-professed leader of humanity, the US, that seems to be taking the lead here.

      1. John Brown (no body) Silver badge

        Re: Ponzi

        "or the self-professed leader of humanity, the US, that seems to be taking the lead here."

        That's because US style capitalism is currently based purely on greed and power. It's the American Dream.

        Sadly, the American Dream that everyone can "make good" just by working hard has morphed into Darwinian Survival of the Fittest. Just working hard is by no means enough any more. You need money and power to "live the dream".

        1. Chris G Silver badge

          Re: Ponzi

          @John Brown

          The American Dream™ is more of a carrot nowadays and many of those who have achieved the dream already are holding the stick and they keep making it longer.

  4. GraXXoR

    Woot

    Oh no. That means the price of RTX 3000 series cards will go up...

    ... in BTC.

  5. Neil Barnes Silver badge

    Hmm.

    I had wondered how long that would take.

    Remind me again about the advantages of a Ponzi scheme that uses massive amounts of power?

  6. JimmyPage
    Stop

    BitCoin != "all crypo currencies"

    #justsayin'

    1. katrinab Silver badge
      Flame

      Re: BitCoin != "all crypo currencies"

      Indeed. There is that other one that is driving up the price of hard drives and ssds.

  7. Anonymous Coward
    Anonymous Coward

    China bans crypto AGAIN

    What is this, the 20th time?

    Anyway good luck with sticking your fingers in your ears and ignoring progress. It worked well last time.

  8. Binraider Bronze badge

    System to be avoided - soon to be replaced by system to be banned? Giving fair warning to Chinese game-players to exit before the real crash.

    And as an outsider, if you didn't sell at the peaks of 40+k just as this was kicking off you probably shouldn't be investing... Or should watch what you are doing more closely.

    Cryptotransaction capabilities absolutely have a purpose, but BTC is a relatively poor implementation. It was the first of course; and serves as a useful developmental step towards a more permanent system.

    Ponzi trading around crypto is, well, what it is. Gamble only if you know what you are getting into and are prepared to lose.

  9. Winkypop Silver badge

    It’s just Jack and the beanstalk

    Without Jack, the beans and the rest…

    1. Anonymous Coward
      Anonymous Coward

      Re: It’s just Jack and the beanstalk

      Having had to read the story out loud recently - that Jack guy was a major jerk.

      Property trespassing, burglary, theft, not to mention the economic impact of introducing an unlimited source of currency on the market at a time everybody used the gold standard.

      And to mask that, slander of his victim, by alleging he was a children-eating ogre, for which we conveniently only have Jack's word...

  10. I code for the bacon

    "...building early warning systems to detect financial risks..."

    OK. Good luck with that! ... Cos' Here in the West we haven't been really successful in it...

  11. Xamol

    IMHO, buying Bitcoin is purely a gamble. No inherent value means that market sentiment is the only price driver. When China or Musk make public comments, the price reacts violently. Gamble right (or be in the know) and you make money, quite possibly lots of it. Otherwise, you should accept that you gambled and you lost (and if you're not in the know, it's akin to betting against the house).

    Go for an asset backed cryptocurrency and you're more of an investor but still high risk because those cryptocurrencies are still pretty niche and volatile.

    Regulation will probably decide the final fate of cryptocurrencies but if they're regulated and brought more into the mainstream, that's going to change them completely and there'll be a very big sell off as the criminal element heads for the exit.

    1. doublelayer Silver badge

      "Go for an asset backed cryptocurrency and you're more of an investor but still high risk because those cryptocurrencies are still pretty niche and volatile."

      If you want to invest in an asset, buy a fund that reflects that asset. They're regulated and have to verify they actually have that asset. Crypto doesn't add any benefits there. Crypto only has benefits in theory as a method of exchange, and an asset-backed one usually lacks that fluidity without doing much about the volatility problem.

  12. Version 1.0 Silver badge
    Unhappy

    Now that that damn thing is "done"...

    ... will there be a new "Trade Deal" and Bitmain will move its manufacturing to the UK?

  13. martinusher Silver badge

    About Time

    Bitcoin hadn't appeared on the central government's radar until recently when one interior province banned it because it was using too much power, power that was provided by coal fired power stations. Mining then moved to another where power was cheap due to hydroelectricity. This may have attracted the attention of the central government (China, like other large countries, has regional governments plus a central/federal government so policies can differ from region to region and things can happen without the central government being aware of them or controlling them.) Once it did appear on the central government's radar it was likely to either heavily regulated or shut down since its essentially parasitic, it provides no clear value to a community but parasites off that community's resources, in this case cheap electricity and decent internet access.

    Bitcoin has been described as a Ponzi scheme. People often forget that the original Ponzi scheme was a bona fide way to make money off international reply coupons, exploiting the difference in international postage rates between countries. The problem with it is that there was only a small market for these coupons but the market itself rapidly became an out of control vehicle for speculation. Bitcoin's done the same thing -- as soon as people stopped using it for transactions and started using it for 'investment' it became an object of pure speculation, something that has no social purpose except to con people out of money.

  14. Claptrap314 Silver badge

    Grand strategic blunder by Christopher Robin's friends?

    If the above assertions that >50% of mining has been going in China is correct (and it certainly makes sense--the lack of environmental regulation in China is legendary, and they have a large existing domestic market for video cards), then taking control of the miners was a much stronger play, as it give one control over the blockchain. OTOH, government-dominated economies have regular failures which prevent them from effectively managing almost any resource. Still, if any single entity manages to get >50% of the miners, they then own the blockchain & can time severe havoc with the currency.

  15. Najt

    Nobody buys a bitcoin. Or so they say...

    Judging by all the negativity here, nobody holdy any of bitcoin ?

    And yet somehow there are still millions of people tradind with it. Weird.

    And there were no crime and criminals before BTC, since there were no way to pay for the crime. Oh wait ...

    1. Najt

      Re: Nobody buys a bitcoin. Or so they say...

      Two downvotes, how expected :)

      Yes, I'm trading with BTC and other tokens. Yes, I made money with it.

      I'm not advocating it as the best thing since a slice bread. But it is no worse then all financial instruments made out of thin air by banks and hedge funds to make make extra cash for then on the expense of whole world.

  16. Bitsminer Bronze badge

    coin-cidence?

    A month ago the spam for "China-coin" was plugging up my inbox.

    The PRC wants to hold the monopoly on digital currency, much like the US government governs (tracks) all trades in US currency. A PRC-government controlled crypto-currency gives them a lot of power similar to many actions the US takes against banks, companies, etc worldwide whenever they cross the (or, a) line.

  17. Potemkine! Silver badge

    Banning mining in China means less coal burnt. That's a very good thing, even if China still continues to burn more and more of it.

  18. Anonymous Coward
    Anonymous Coward

    I'm confused.

    If a country issues currency, it used to have some sort of physical asset to underpin that currency - normally gold, but it could also be oil or anything else that other people needed and would trade; currency was a more convenient way to move this wealth than physically lugging a ton of gold or 10,000 barrels of oil from place to place - my employer gives me currency that says I have "earned" a specific amount of gold or whatever, I use that to pay the supermarket where I buy my food, they pay the farmer, the farmer pays his suppliers, the currency goes around and around until someone transfers it overseas, or whatever - at some point, someone will call in the "debt" and a tangible asset must be handed over or there may be tears. (Always assuming some politician doesn't sell off all your gold on the cheap to prop up his failing policies, but that's another story...)

    If my supermarket said "Actually Mr AC we don't like those tatty bits of paper you're trying to pay us with" I could, theoretically, go to my bank and swap my tatty bank notes for crisp new ones - we are supposed to be above carting around sacks of gold unless you're a 404 Scammer. If, on the other hand, the supermarket were to say "Sorry Mr AC we don't accept British pounds any more, we want paying in US Dollars" then I need to find an Exchange willing to swap my GBP for USD. If the US holds one ounce of gold for every dollar in circulation and the UK government holds one ounce for every pound then it's a straight one-to-one swap. If the US has 1 ounce but UK .gov has only 1/10th of an ounce then the exchange rate would be 1USD costs me 10GBP (plus the Exchange's commission, etc). If the UK has no gold then the Exchange decides if the UK has sufficient collateral to make it worth swapping my GBP, and at what exchange rate.

    With cryptocurrencies, what assets back up the "value" of the money? If anyone with a computer can "mine" Bitcoin or whatever other cryptocurrency you choose, it has no limit on its availability and it's value will, sooner or later, hit as near to zero as makes no odds.

    What has me confused is, what is the difference between crypto-currency and the Emperor's New Clothes?

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