China declares cryptocurrency illegal

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Forums › Finance and wealth management › China declares cryptocurrency illegal

Batman

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#289727 25-Sep-2021 13:17

https://www.nzherald.co.nz/business/bitcoin-plunges-after-china-declares-all-cryptocurrency-transactions-illegal/3HQHXJFDEIM2ICMH6PCEH3MUAI/

The price of bitcoin has plunged sharply after a crackdown by China.

China's central bank on Friday said all financial transactions involving cryptocurrencies were illegal.

That sounded the death knell for the digital trade in China after a crackdown on the volatile currencies.

Ge0rge

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#2784128 25-Sep-2021 13:18

Wonder if that will bring GPUs back to a more sensible price?

Edit, read full article - apparently mining is already illegal there. Sigh, guess not.

MadEngineer

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#2784190 25-Sep-2021 15:15

China declares stuff illegal all the time just so some dude in the CCP can tick a box and make it look like he’s doing his job. They’ll have clamp downs for a bit then it’s forgotten.

You're not on Atlantis anymore, Duncan Idaho.

tdgeek

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#2784243 25-Sep-2021 18:35

Enlighten me

Economics 101, Adam Smith et al

Most countries money supply , M1, M2, M3 (The latter is credit IIRC) is backed up by a valued asset such as gold. If I run my 38 PC's, 24/7 and mine Bitcoin, where is the value? Money is an asset, its backed up by an asset, as currency is just an easier way to buy/sell. Adam Smith "guns and butter" is slightly restrictive these days... Money is just an easier trading mechanism than gold bars or potatoes. So how does mining bitcoin create an asset that is tradeable?

Behodar

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#2784245 25-Sep-2021 18:40

If somebody wants it and is prepared to pay money for it, then it's tradeable. Whether it makes sense to trade it is a whole other matter though :)

tdgeek

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#2784257 25-Sep-2021 19:10

Behodar:

If somebody wants it and is prepared to pay money for it, then it's tradeable. Whether it makes sense to trade it is a whole other matter though :)

If I had a lawnmower and you had 38 pumpkins, and we both wanted these goods, thats value. Its "real" value. Now a NZ $20 banknote is a promise by the Reserve Bank to honour that value. Its backed up by real assets, of the Fort Worth type of variety. Bit coin should have stable value, so that when you or I receive an amount of bitcoin its stable. But if Bitcoin was banned globally, what is the asset backing that you and I will receive back? So that our NZ$10,000 wotth of bitcoin is repaid in a similar worth?

Germany printed money in WWII. They used to take a purse of money to buy a basket of goods, then they took a basket of money to buy a purse full of goods.

timmmay

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#2784264 25-Sep-2021 20:21

Please edit thread to say "cryptocurrency". Crypto is quite broad.

freitasm

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#2784270 25-Sep-2021 20:46

Changed.

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Scott3

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#2784287 25-Sep-2021 22:34

tdgeek:

Enlighten me

Economics 101, Adam Smith et al

Most countries money supply , M1, M2, M3 (The latter is credit IIRC) is backed up by a valued asset such as gold. If I run my 38 PC's, 24/7 and mine Bitcoin, where is the value? Money is an asset, its backed up by an asset, as currency is just an easier way to buy/sell. Adam Smith "guns and butter" is slightly restrictive these days... Money is just an easier trading mechanism than gold bars or potatoes. So how does mining bitcoin create an asset that is tradeable?

Very few currencies (none?) currencies run a gold standard these days. That leaves Fiat Money: "Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it." Essentially it is completely worthless, other than because it is widely accepted to have value.

Fiat currencies have all numerous limitation's, one of the larger ones being that the government controlling it prints too much of it, driving high inflation.

Cryptocurrencies generally have schemes set out regarding the issue of new coins, clearing up the risk of way to many new ones being created.

In the early days Cryptocurrencies held massive promise for being used as a means of exchange especially for things poorly served by traditional banking. Sadly the Massive speculation and volatility has somewhat compromised that.

Cripto (not backed by anything) is also inherently worthless, but the fact that people are willing to buy it gives it worth. Sadly it seems much of the value of cripto is based on the greater fool theory. Dosn't matter if what you are buying is worthless as long as you can sell it to somebody else for more in the future.

itxtme

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#2784288 25-Sep-2021 22:37

tdgeek:

Enlighten me

Economics 101, Adam Smith et al

Most countries money supply , M1, M2, M3 (The latter is credit IIRC) is backed up by a valued asset such as gold. If I run my 38 PC's, 24/7 and mine Bitcoin, where is the value? Money is an asset, its backed up by an asset, as currency is just an easier way to buy/sell. Adam Smith "guns and butter" is slightly restrictive these days... Money is just an easier trading mechanism than gold bars or potatoes. So how does mining bitcoin create an asset that is tradeable?

Except NZ doesnt have reserves in Gold, they have mainly foreign currency.. but everyone is printing money... So suddenly a limited supply concept of crypto isnt so dumb?

Dairyxox

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#2784307 26-Sep-2021 08:16

Deja vu - It seems like every few months China does this now...

frankv

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#2784820 27-Sep-2021 12:19

tdgeek:

So how does mining bitcoin create an asset that is tradeable?

It costs about $1000 to mine a $1000 worth of Bitcoin.

MadEngineer

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#2784824 27-Sep-2021 12:24

Put simply, because the mining is your machine doing the crypto work of making the currency work for which you can earn a piece.

You're not on Atlantis anymore, Duncan Idaho.

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#2784825 27-Sep-2021 12:27

tdgeek:

Germany printed money in WWII. They used to take a purse of money to buy a basket of goods, then they took a basket of money to buy a purse full of goods.

That was 1923, not in WWII, and ultimately caused by losing WW1, which they funded by borrowing in the expectation of paying off from the winnings. Of course the punitive Treaty of Versailles conditions made it worse. Hyperinflation to the point where if cost millions for a postage stamp. Banknotes used as wallpaper because they were cheaper than wallpaper.

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#2784839 27-Sep-2021 12:53

frankv:
tdgeek:

So how does mining bitcoin create an asset that is tradeable?

It costs about $1000 to mine a $1000 worth of Bitcoin.

Cost is not always relevant.

It may cost me $2000 to make a shop sign saying "Jerry and Heidi's meat flavoured Ice creams" but that doesn't mean the sign is worth that much.

Batman

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#2784847 27-Sep-2021 13:22

frankv:

tdgeek:

So how does mining bitcoin create an asset that is tradeable?

It costs about $1000 to mine a $1000 worth of Bitcoin.

unless your rental gives you free power