Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

January 08, 2018

Digital Currencies are too volatile. Is there a way to fix that?

By Guest Author - January 05, 2018 (

The common question most people pose when they are confronting the idea of Bitcoin is: “what is its fundamental value?” Lay people don’t know how to approach Bitcoin, and they definitely don’t know how to value it. For many, it simply becomes a bet based on the supposition the price will continue to go up.

In recent weeks, what many believe to be irrational exuberance has bid the price up higher and higher to the point where a market correction seemed necessary. Every asset needs some form of sustainable value support and Bitcoin still hasn’t found one yet.

A potential solution is being put forward

A new idea that has emerged from China is A-SDR. This is an anchoring mechanism that serves to connect digital currencies to the real world. A-SDR consists of Ethereum, Bitcoin and ACC, and its goal is to stabilize the prices of digital currencies by tying them to real-world goods.

The idea of A-SDR came from a recent innovation by the International Monetary Fund (IMF).  The IMF’s goal was to take the world from a dollar-centric system to an SDR-centric monetary system. SDR stands for “Special Drawing Rights,” and the goal is for it to become the standard of circulation and settlement for global currencies.

ACC is the token that fuels the ACChain system and is anchored by holding title to real-world assets. The value of ACC will continue to rise as more digital assets are issued, and its share of A-SDR will continue to increase until it dwarfs those of Ethereum and Bitcoin.

ACC stands for Asset Collection Coin, and it has been created to fill the need which has been felt by all the critics of Bitcoin who see the value in digital monetary innovation but would prefer to hold tangible wealth. By holding title to real-life assets, ACC represents the combination of tangible asset ownership and digital currencies.

Collaborative effort

BTC and ETH are not anchored to real assets, which is where their volatility comes from. Rapid changes in price have made it so they cannot be used as a digital settlement currency globally. ACC will act as the connector of these digital goods to the real world and will have an exchange rate that is continually revised.

Bitcoin and Ether both have their purposes and these will not be eliminated by the coming of ACC. ACChain aims to work with the existing technology rather than competing against it. The A-SDR is a collaborative effort to harness all the good that can be experienced into one cohesive ecosystem, and buying ACC is the best way to get in on that goal right now.

Through anchoring digital gold reserve BTC and ETH with A-SDR, ACC then becomes equipped with four currency functions. These functions are the ability to scale value, means of circulation means of storage and means of payment. Basically, ACC is set to evolve into the standard token for anyone who wants to settle global digital assets. The future is bright for both ACC and A-SDR, but this also helps the performance of Bitcoin.

The future is in tangible assets that can be digitally controlled

Bitcoin is aided by the development of A-SDR because of the support that is provided by ACC. Bitcoin will be able to become a true and generally accepted digital gold, just as ACC will become accepted as the settlement digital coin in global asset trading.

ACChain is the platform which will be used to monetize goods with ACC, and every time a good is monetized, the demand for ACC will go up. This increase in demand will naturally lead to an increase in the price of the good.

When you purchase ACC via the A-SDR fund, you are helping to bootstrap ACChain to a higher profile, as well as making it more and more likely that Bitcoin becomes viewed as a digital gold. We are about to see what happens when you link hard, ownable assets with infinitely divisible digital currencies. With stability as a goal and both Ether and Bitcoin experiencing high volatility, investors are going to find huge appeal in the idea of ACC and the A-SDR funds.

November 23, 2017

Six of the World’s Most Bitcoin-Friendly Neighborhoods

By Kai Sedgwick - November 23, 2017 (

If you’ve tired of trying to red-pill your mom on bitcoin, and your mailman isn’t feeling your frequent pitches on decentralization, perhaps it’s time you relocated elsewhere. A place where your enthusiasm for all things blockchain will be met with enthusiasm rather than nonplussed stares. San Francisco, New York, and London can sit this one out: their level of bitcoin-friendliness is already established. Cast your gaze further afield and you’ll find districts, both urban and suburban, where bitcoiners reign supreme.  

You Came to the Right Neighborhood

Where there’s high speed internet, there’s bitcoin devotees. How else are you supposed to download the entire blockchain and run a masternode? Nomad List ranks global cities by a range of metrics including rent, safety, air quality, and internet speed. While few cities can compete with Kansas and its god-tier 150 mbps, Singapore and Bucharest come pretty close.

Portsmouth, New Hampshire

With its grand 17th century houses, traditional crafts, and riverside gardens, Portsmouth doesn’t look like a hotbed of cryptocurrency adoption. It turns out that the entire state’s big on bitcoin however,
with doomsday preppers and survivalists seeing New Hampshire’s sprawling wilderness and snow-capped peaks as the perfect place to lay low and stock up on canned goods in readiness for the coming apocalypse.

20,000 members of the libertarian Free State Project have pledged to move to New Hampshire in the coming years. Its HQ is the Free State Bitcoin Shoppe in Portsmouth where your filthy fiat’s no good – it’s crypto only. The state also features a farm which sells its beef for bitcoin and numerous shopkeepers accept the virtual currency with the aid of the Anypay app.

Amsterdam, Netherlands

Just a stone’s throw from Amsterdam’s Sex Museum lies the Bitcoin Embassy, a community hub where bitcoin evangelists gather to worship. Open daily from Tuesday to Saturday, it’s frequented by developers, startups, investors, entrepreneurs, and curious passersby. There’s a Bitcoin Cafe, Box Shop, and Bitcoin Restaurant complete with its own mining rig. The city is also home to the bit4coin exchange and has spawned numerous crypto startups and ICOs.

Douglas, Isle of Man

Overlooking the Irish Sea is Douglas, the quiet capital of Britain’s Isle of Man. Despite having a population of just 26,000, the town’s got its own bitcoin bar, The Thirsty Pigeon, and is home to the island’s only noodle bar – which also happens to take bitcoin. There’s another reason why Douglas is bona fide bitcoin-friendly: the island’s regulatory framework allows cryptocurrency gambling and token sales to flourish. The Isle of Man is home to 25 bitcoin-related startups, causing it to be dubbed Bitcoin Island.

Kreuzberg, Berlin

With its mixture of students, geeks, cyberpunks, and bohemians, Berlin was always going to rank highly on the bitcoin scale. Kreuzberg is Berlin’s bitcoin heartland however, a district that boasts the highest concentration of merchants that accept the digital currency. Room77, the “restaurant at the end of capitalism” perfectly encapsulates the ethos of the city’s most ardent bitcoin believers. As previously reported, it was the site of the first real-world Lightning Network transaction, which was used to purchase – what else? – beer.

Ginza, Tokyo

Japan can lay claim to being the world’s most bitcoin-ready country, with thousands of stores accepting the digital currency and a string of bitcoin ATMs to be found within major metropolises. Ginza, Tokyo’s upscale shopping and dining district, welcomes bitcoin-users seeking to buy or spend the cryptocurrency. There’s a bitcoin ATM in The Snack coffee bar, where you can also pay for your meal in BTC, while a ten-minute walk away lies the popular Numazuko Sushi Bar, where your bitcoin and bitcoin cash are also welcome. Afterwards, pop into Ginza’s Megane Super opticians for a new set of specs and put the bill on bitcoin.

Ngawa, China

The Chinese government hasn’t exactly welcomed bitcoin with open arms, but has yet to issue an all-out ban. If you’re a Chinese resident seeking like-minded souls, Ngawa (Aba) Tibetan and Qiang Autonomous Prefecture should be the next place you lay your hat. You’ll struggle to find anywhere that accepts bitcoin round here – more than 10% of Ngawa’s 70,000 residents are Tibetan monks, who aren’t known for their tech-savviness.

Nevertheless, close by lie many of Sichuan’s crypto mining operations which feed off the province’s cheap hydro power. Chilling in a noisy and dirty mining farm isn’t anyone’s idea of libertarian paradise. Still, if you want to get intimate with bitcoin, heading straight to the source is as close as it gets.

There’s still a long way to go until bitcoin acceptance is the norm and cryptocurrency neighborhoods have sprung up across the globe. For those who seek a place to spend, talk, and revel in all things bitcoin, however, there are scattered outposts where your satoshis are good and your radical views on decentralization are welcome.

Images courtesy of Shutterstock, Free State Bitcoin Shoppe, the Bitcoin Embassy, and Bitsonline.

Kai Sedgwick

Kai's been assembling words for a living since 2009 and involved with bitcoin since 2013. He's previously written white papers for blockchain companies and is especially interested in P2P exchanges and DNMs.

November 19, 2017

NEO surges to $44 with vague Tweet hyping an upcoming announcement

NEO has surged by over 50%, trading at $44 after a tweet by a council member made vague claims about an upcoming announcement.

By Hunain Naseer - November 18, 2017 (

NEO went through the roof overnight, recording gains of more than 50% and is currently trading at $44, up from around $28 just yesterday. The surge seems to be related to a vague tweet from Malcolm Lerider, a member of the NEO Council.

The message, which is in Mandarin, has been roughly translated to mean:

"Moving forward, never stopping, when you have read this, you are one with neo, let's change the world together 3 days to an announcement 3 lifetimes of blessing"

Though not very clear, the message has fueled bullish sentiment in the community as trading volume went from just under $41 million on Thursday, to over $252 million on Friday, and is currently over $400 million. NEO’s market cap has also gained around $1 billion over the last 24 hours.

There is a lot of speculation around an upcoming announcement to do with China’s ban on ICOs, and some in the community believe NEO may reveal a partnership of sorts, becoming the go-to token for new ICOs seeking to raise capital in the country.

Additionally, Monday also marks the release date of the NEX whitepaper, (NEX is an upcoming decentralized crypto exchange), which would detail how the decentralized exchange will work, and may even be accompanied by a much-awaited announcement about its ICO, which is expected to utilize the token sale legal framework developed by the NEO Council.

According to an official announcement by the City of Zion (CoZ) last month:

“NEX platform is built on a completely new protocol developed within the NEO ecosystem, utilising the best features NEO platform has to offer. NEX will consist of a reference exchange application, which will make it easy for developers building exchanges and payment services, to integrate with the NEX protocol.”

It remains to be seen what big announcement comes out on Monday, and at this point, it’s anybody’s guess. However, if this turns out to be false hype, it will damage NEO’s reputation and buyers entering the market at this stage may regret it.

If there is a major positive announcement regarding NEO’s integration into the China-ICO story, we may see prices rising even higher and easily surpassing NEO’s previous all-time-high.

November 14, 2017

Chinese hydroelectric crackdown could herald the demise of cheap Bitcoin Mining

By Kai Sedgwick - November 14, 2017 (

Chinese bitcoin miners are the latest tranche of the country’s cryptocurrency community to be hit by restrictions. This time it’s not the government but a subsidiary of the State Grid Corporation that has issued the decree, in a move which calls into question the country’s ability to sustain bitcoin mining operations. At present, both the bitcoin and bitcoin cash networks are heavily dependant upon the efforts of Chinese miners, who hold over 80% of the hashrate distribution

A Major Miner Incident

The notice posted by Sichuan
Electric Power Company
The cryptocurrency space has grown accustomed to the words “Chinese crackdown” being appended to one another. This year they’ve already been applied to ICOs and exchanges within the country, and it is no secret that the government isn’t enamored with mining either. According to Beijing’s Caijing magazine, hydropower stations have been ordered to cease all supply of electricity to customers involved in bitcoin mining.

Bitcoin mining has long been beyond the preserve of hobbyists, meaning that the only entities affected by the utility company crackdown will be operators of large mining farms. Sichuan Electric Power Company, a national supplier based in Chengdu in the southwest, has issued an edict declaring that it is henceforth illegal to supply electricity for bitcoin mining operations. Hydropower stations found to be flouting this order will be subject to “punishment”.

The End of Cheap Power?

Sichuan province is China’s bitcoin mining heartland. It is here that warehouses filled with row upon row of ASIC miners, mainly powered by cheap hydroelectric, can be found. The province is prized for its mountainous regions and vast flowing rivers and tributaries that have given rise to hydroelectric dams large and small.

During times of peak electricity generation, hydro plants have been left with a surplus. Up until recently, that excess water had gone to waste. Bitcoin mining provided a solution to that wastage, enabling hydro stations to make money and providing miners with cheap electricity. It was a symbiotic relationship that worked for both parties until now.

Shut It Down

The decree issued by Sichuan Electric Power Company doesn’t outlaw bitcoin mining, it should be noted. What it does do is signal an end to direct deals being cut between hydro plants and mining farms. If hydroelectric plants heed the warning, it could herald an end to cheap bitcoin mining in China. Without a steady supply of cheap power, mining profits may dwindle until eventually it is no longer profitable to keep rigs running. The crackdown shouldn’t affect larger mining operations such as Bitmain, who already have a deal in place to acquire electricity at competitive rates. For smaller mining operations which make the most of Sichuan’s rainy season, however, it could be game over.

Current hashrate distribution. Notable Chinese pools include, Antpool, BW, and ViaBTC

With winter approaching, a time when many hydroelectric plants power down, Sichuan’s mining farms would have been gearing up for a switch to more expensive sources of power in any case. The latest proclamation from Sichuan Electric Power Company won’t herald the end of Chinese mining, but it may hasten its retreat to pastures newly equipped with cheap power sources and zero state-level intervention.

There has been speculation for some time that given the legislative uncertainty surrounding bitcoin mining in China, the major pools may jump ship and take their operations overseas. Uprooting a major mining farm is no mean feat however and is an inconvenience and expense that miners could do without. With the mining climate becoming increasingly unfavorable in China, the door is open for another region to emerge as the new frontier in bitcoin mining. The smart money is on Russia to heed that call and take the reins.

Images courtesy of Shutterstock.

November 12, 2017

40 foreign companies ask to allow Bitcoin production in Russia

By Olga Novikova - November 12, 2017 (

Many companies in China and the European Union asked the Russian authorities to give permission for Bitcoin mining in the country.

In Russia, at the moment, the production of crypto currency has become quite a common occupation, but there are still large energy capacities that will suffice for foreign mining companies.

The Russian Association of Crypto-Currency and Blockchain (RACIB) has received 40 applications from various companies and individuals for the placement of mining equipment in the country for Bitcoin mining. The president of the association, Yuri Pripachkin, said: "In Russia, there are hundreds of companies in our country and enough resources to accommodate other companies."

RACIB is an association formed in August, created to unite the owners of Blockchain and miners, as well as investors of crypto-currencies. On its formation, adviser to the President of the Russian Federation Herman Klimenko.

Pripachkin commented on crypto-currency production in Russia: "In fact, this is a completely new market for companies. But it is necessary to make the platform at the legislative level and work out possible tax options for foreign investors. "
According to the director of the association Arseniy Sheltsin, "The organization created a committee of participants in the mining market with the participation of representatives of Slovakia and China". Pripachkin believes that Russia can become the world capital of the mining markets.

November 10, 2017

Bitcoin reaches end of an era - Expert Blog

By Rhett Creighton - November 10, 2017 (

Expert Blog is Cointelegraph’s new series of articles by crypto industry leaders. It covers everything from Blockchain technology and cryptocurrencies to ICO regulation and investment analysis. If you want to become our guest author and get published on Cointelegraph, please send us an email at

Calling off 2MB blocks marks the end of a 3-year effort between different political groups inside Bitcoin trying to come to a compromise. Core developers may feel like they have won the battle, but a silent majority will leave quietly, selling their coins and driving down price over time.

At the same time, it marks the beginning of a new age in human history. One where individuals have a freedom of choice, and a freedom of exit.

”New York Agreement” called off

I was fully expecting Nov 16th to be an apocalypse for Bitcoin. Over 80% of miners were signaling support for 2MB blocks, and several hundred of the largest Bitcoin exchanges and companies had signed an agreement to support the block size increase. Despite businesses planning for 2MB blocks, much of the Bitcoin user community and core development team was prepared to reject the software change, which would split the Bitcoin network in a most disruptive way.

The split would have been a disaster for Bitcoin. However, the price of Bitcoin has been reaching new all-time-highs because uninformed investors have been conditioned to think that a fork in Bitcoin means that you get free coins. That was the case with Bitcoin Cash, but the chain split planned for Nov 16th would have been very different.

Under the SegWit2x split scenario, I don’t think it would have been possible for anyone to agree which was the “real” Bitcoin chain anymore. Large companies like Coinbase had agreed to support both chains. The 2MB chain planned to launch with no replay protection for users, which would have caused massive confusion and loss of funds. As the first clean fork of Bitcoin, with a clear plan and goal of being business-friendly, I expected Bitcoin Cash to be a big winner. The price of Bitcoin Cash has gone up nearly 100% in the past two weeks with many investors speculating on a “Cashening.”

Bitcoin will lose market share

Joseph Poon, inventor of Bitcoin’s still-in-development lightning network, said recently:

“When a party starts to suck, you leave. You can try to fix it, but the cleanest solution is to just get out… A lot of Blockchain is increasing the freedom for individuals, and part of that is having the flexibility to leave, and to make the choices that you want to, at any point in time.”

 Two large factions of the Bitcoin ecosystem reached an impasse. For individuals and corporations who no longer find the transaction fees and scalability acceptable in Bitcoin, the simplest solution is to leave. Those individuals will dump their $7,500 (down to $6,600 at press time) Bitcoin on first time buyers as they slowly get out.

“Dumb Money” pouring into Bitcoin

People are exuberant about the price of Bitcoin increasing to nearly 7x the price it was at the beginning of the year. Real-life meetups are full of new faces and first-time investors. The Bitcoin subreddit is full of people cheering each other on about buying their first 0.1 BTC and expecting a 10x annual ROI.

One of the bullish pieces of news driving the mania is that the CME Group plans to add Bitcoin futures this year, potentially making Bitcoin available to billions of dollars worth of new investors. However, Wall Street hedge fund investors are not suckers. Even if a hedge fund wants to buy into Bitcoin, they might try to short it first to drive the price down and shake out weak holders. If they can cause a few billion in losses from the people who bought the top by shorting it all the way down to $3000 (where it was a few months ago), they will.

Blockchains: New kind of entity

Blockchains are a new kind of entity, much in the same way that corporations with shareholders were a new kind of entity invented 400 years ago. Today, corporations are able to lobby Congress and have many of the same rights as humans. We will see Blockchains also gain access to these rights in the near future.

I fully expect the market cap of all crypto tokens to increase exponentially over the next few years, but this is not a winner-take-all scenario. Today, mainstream media financial advisors are touting Bitcoin as “the new gold,” but it can’t ever be that. To get a sense of how it’s different, imagine a universe where anyone could create a new kind of metal with essentially the same properties of gold.

Expecting Bitcoin to have the majority market share of Blockchains in the future is about as ridiculous as expecting the East India Company to be more valuable than all other corporations combined today.

Demand for Bitcoin and rise of crypto-ruble

Through much of 2014–2015, the price of Bitcoin declined. However, in 2016–2017, we started to see some larger demand for Bitcoin driven by ransomware, Ponzi schemes like “MMM,” Chinese citizens evading capital controls, and a means of transferring value into other Blockchain tokens (“ICOs”).

Russia has recently announced that they are looking into developing their own “crypto-ruble.” The crypto-ruble will feature a 13% tax into and out of paper fiat if the redeemer is unable to provide documentation of the transaction history.

Because Russia will be much more centralized and efficient than Bitcoin at processing transactions, I expect the crypto-ruble to be an attractive alternative to Bitcoin for ransomware, people escaping hyper-inflation, and Chinese citizens circumventing capital controls (especially in the event of a Bitcoin bear market).

The Chinese government shut down the BTCC exchange last month with rumors that they may pursue a crypto-yuan as well. It’s clear that some very big players are ready to enter this market, and they aren’t interested in sharing their money with Mr. Nakamoto.

Disclaimer: The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.

Rhett Creighton
helped create the Zclassic and Zen forks of Zcash (Over $50M market cap) and more recently, Whalecoin. He contributed to the Bitcoin Core test suite and is an MIT alum.

October 30, 2017

Is China planning to resume Bitcoin and cryptocurrency trading soon?

By Joseph Young - October 30, 2017 (

CNLedger, a trusted news source within the Chinese cryptocurrency industry, has revealed that OKEX will soon launch peer-to-peer (P2P) over-the-counter (OTC) bitcoin-to-fiat trading platform.

“More OkEx (and likely, Huobi-Pro) will soon launch P2P bitcoin tradings with various fiat currency support,” CNLedger reported. “We believe they’ll support CNY and some others like USD, JPY. They are registered outside China, and are operating independent of OKCoin. They’re not as convenient as exchanges and are less safe (many scammers). But it’s still much better than nothing.”

Aren’t OKEX and Huobi-Pro Now Based in Hong Kong?

OKEX is headquartered in Causeway Bay, Hong Kong, and so are companies including BTCC and Huobi-Pro, which previously operated bitcoin and cryptocurrency trading platforms in China. But, as CNLedger noted, these companies plan to launch P2P OTC markets in Hong Kong, which would allow investors to trade the Chinese yuan (CNY) for bitcoin and other cryptocurrencies.

Without approval from the Chinese government, it would be difficult to process CNY trades and serve Chinese clients, investors, and traders. Hence, if OKEX and Huobi-Pro launch cryptocurrency OTC markets in the upcoming weeks with CNY-to-bitcoin, it would likely be with permission from the Chinese government and the People’s Bank of China (PBoC).

As of current, the majority of trades within the China are processed through unregulated OTC markets such as LocalBitcoins. For Chinese authorities, it would be more beneficial to have regulated Hong Kong companies like OKEX to process trades rather than platforms with no network administrators and intermediaries.

Earlier this month, several state-owned news publications including Xinhua revealed that the Chinese government is concerned with bitcoin and cryptocurrencies being used by underground economies. Xinhua specifically noted that the Chinese government will soon impose “record-keeping, licensing, and Anti-Money Laundering (AML) process,” which is, in essence, are regulatory frameworks for the cryptocurrency market.

“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. ‘We shall adopt zero-tolerance policies towards crimes hidden underneath’ and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions,” reported CNLedger.

As Japan and South Korea have done in the past few months, it is likely that the Chinese government will introduce and enforce a more strict licensing program for cryptocurrency exchanges, and eventually, resume cryptocurrency trading.

Will Re-election of Chinese President Xi Jinping Fuel Cryptocurrency Trading Resumption

The re-election of Chinese President Xi Jinping, which is expected to fuel the resumption of cryptocurrency trading, is set to occur later this year. Analysts such as Jon Creasy, a bitcoin researcher, emphasized that the reelection of President Xi could very likely lead to the resumption of bitcoin and cryptocurrency exchanges.

Creasy wrote:

“My prediction is this: as soon as President Xi Jinping is reelected — and he will be — conservative, free(er)-trade legislation will be put in place, and Bitcoin exchanges will be reinstated. In fact, I wouldn’t be surprised to see the Chinese government encouraging certain exchanges and cryptocurrencies, once this legislation hits. Historically speaking, President Xi Jinping has been one of the largest advocates of free markets China has seen in quite some time, and I expect this trend to continue.”

Featured image from Shutterstock.

October 21, 2017

Chinese miners sell hardware amidst regulatory uncertainties

By Samuel Haig - October 21, 2017 (

It has been reported that an increasing number of Chinese bitcoin miners are liquidating their hardware via second-hand trading platforms. Many of the miners are selling their equipment due to fears that China’s cryptocurrency crackdown may be intensified to target miners.

Many Listings for Undervalued Mining Hardware Have Emerged Following the Chinese Central Government’s Crackdown on Cryptocurrency Exchanges

One miner based in Wuhan is liquidating 50 motherboards at below market value via the Alibaba owned second-hand trading platform Xianyu. The listing stated the “boards were manufactured this June”, and have only been used “for two months”.

A Chinese miner has told reporters that he is selling his equipment in due to the looming threat Beijing may seek to further its crackdown on cryptocurrencies. The miner stated that he doesn’t “care about [the] bitcoin price anymore. There are too many regulat[ory] uncertainties. You know the government always adopts an interventionist approach in its economy. What if the authority one day suddenly announces that it’s illegal to hold coins? Now I just want to sell out all of my miners and ASICs. No more roller coasters in my life.”

Concerns pertaining to the threat of a Chinese crackdown on bitcoin mining are influencing the operations of industrial as well as retail mining entities. An anonymous source has alleged that Bitmain is transferring their mining operations overseas as a precautionary measure designed to evade any future regulatory hurdles that may arise in China.

Not Everyone in China Is Preparing for Regulators to Target Miners

A computer hardware retailer, Mr. Fu, told reporters that he is planning on stocking large quantities of GPUs and ASICs, expressing his expectation that the mining industry will continue to grow in future.

Chinese media outlet Caixin recently published an article that refutes the concerns pertaining to the Chinese government extending its cryptocurrency crackdown to target mining. The publication asserts that an anonymous source who is “close to regulators” have claimed the fears regarding a government attack on miners is “false.”

According to Caixin, an operator of a mining has stressed the benefits reaped by bitcoin mining to the Chinese economy as a deterrent against excessive regulatory interference. The source is cited as depicting bitcoin mining as a nascent boom export industry, stating that “domestic [miners]… mostly export to foreign countries, earn[ing] foreign [currency” that has “to come back into the yuan.”

Images courtesy of Shutterstock

October 20, 2017

The next generation of currency wars - Private vs. State-backed Crypto

By Tho Bishop - October 20, 2017 (

Recently Russia announced that it will be unleashing a CryptoRuble, just a week after Vladimir Putin strongly criticized Bitcoin and other private cryptocurrencies.  When announcing the move, Minister of Communications Nikolay Nikiforov acknowledged that it was in part inspired by the aim of getting ahead of other governments:

"I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after two months our neighbors in the EurAsEC will".

In doing so, Russia is following the lead of another country that too has become hostile to private crypto, China. Last July the People’s Bank of China became the first central bank to announce it had developed a crypto-prototype that it plans to offer alongside the traditional renminbi.

That the first forays into state-backed cryptocurrency comes from two countries with a history of restricting a free and open internet is not surprising. While Bitcoin originated as a way to opt out of government control of money supply, increasingly governments see the underlying technology as a way to increase their control of the economy.

"For example, if the government plans to subsidize certain farms, say some corn farms, to support this sector of agriculture, they can directly add a certain amount of money to the wallets of some farms, for instance 100 million dollars and program this money to be sent to certain fertilizer merchants at a certain time, and that each can only spend maximum of 10 million dollars per year, and in this way, they can make sure that the farmers won’t squander the windfalls, and that this money won’t flow to other sectors, for instance, the stock market or real estate market.

Even though this kind of monetary policy is bound to fail, from the perspective of government officials, CBDC provides them a better tool. For them, with the help of the CBDC, they can plan and manage the economy better".

Not to be left behind, the IMF – who some analysts, such as Jim Rickards, believe is prepared to step up to replace the US dollar as the next global reserve currency – recently opened the door to issuing their own cryptocurrency in the future. While some crypto-advocates have naively celebrated recent comments by Christine Lagarde on the future potential of digital currency, such praise simply reflects the increasing awareness of technocrats that the finance is changing and they must be prepared for it. Considering central banks around the world have continued to advance their war on cash, it is not surprising to see Lagarde and others come adapt to the concept so quickly.

Exchange Regulation

The usefulness of state-controlled crypto is why we should expect increased scrutiny and regulation on private cryptocurrency exchanges.

It's been reported that the Chinese government, which shutdown private crypto-exchanges in September, is looking into reopening exchanges with increased regulation. Russia, too, is working on exchange regulation, rather than an outright ban.  This apparent change in direction may be the consequence of China’s exchange ban resulting in an increased use of peer-to-peer platforms in the face of the government crackdown. 

For the same reason that government prefers regulated bank accounts to cash and safes, state officials may recognize the benefit to propping up licensed exchanges. Already we have seen numerous cryptoexchanges be willing to collect and hand-over sensitive customer information in exchange for government-issued licenses. Much like banks, these exchanges are increasingly being enlisted as tax collectors for government.

Calm Before the Storm?

While this loss of privacy may outrage Bitcoin’s initial supporters, it’s understandable why many current holders may be perfectly happy with these developments. After all, while much of Bitcoin’s initial appeal was its usefulness in black markets, a major reason for its astronomical rise in value is its increasing appeal among average customers who were never all that concerned with financial services regulation. Not only has it helped its appeal as an investment, but also its daily use. Japan, for example, saw a major surge in retailers accepting Bitcoin once a firm regulatory framework was implemented.

It is worth wondering whether this harmony between government and consumers will continue, however, once state-controlled crypto truly ramps up.

After all, we’ve already seen government rely upon traditional boogeymen of terrorists, drug dealers, and other criminals as justification for their increased control. The increasing use of Bitcoin by hackers and extortionists provides a modern-day twist to these age-old scare tactics. Is it all that difficult to foresee a scenario where governments attempt to freeze all regulated exchanges in the aftermath of some terrorist attack or other scenario? Or go one step further, and legally mandate replacing a privately-held asset for a government-issued currency?

The example of China demonstrates the inherently decentralized nature of Bitcoin will likely always ensure a degree of functionality beyond the reach of government. At the same time however, the increased popular appeal of crypto-currency also means increasing reliance on third-party services, and fewer individuals securing their investments in private wallets.  Since the most popular – and thus most lucrative – exchanges and other services have an inherent incentive to maintain a good relationship with legal authorities, it is easy to see how this easily plays to the benefit of government officials.

Already within the industry debate is raging between those who prioritize “efficiency” and mainstream appeal – even at the expense of crypto's decentralized-origins. Luckily, Bitcoin’s original Austro-libertarian ethos means that we are likely to see major industry influence pushing back on state-control.

A Preemptive Strike for Monetary Freedom 

In the meantime, this is yet another reason why what little political capital libertarians on monetary policy have should not be wasted pursuing moderate reforms such as forcing the Fed to embrace rules-based monetary policy. There is no hope to ever transform the Federal Reserve into a useful – or even non-harmful – institution. That hope does exist, however, in crypto.

As future monetary policy is soon to become a major topic of conversation as President Trump rolls out his Federal Reserve nominations, it would be a major loss for the cause to not see Senator Rand Paul and other Fed-sceptics use the opportunity to push discussion about the need for competition in currencies. Further, the recent surge in states that have legalized the use of gold and silver for the payment of debt means there has never been a stronger political case for the elimination of legal tender laws and the taxes imposed on alternative currencies like Ron Paul proposed when in Congress. Such a move now could help set the stage for America being a true safe haven for private crypto in the future. 

Doing so may give the cryptocurrency industry the freedom to give us a fighting chance to truly end the Fed, and their clones around the world.

Tho directs the Mises Institute's social media marketing (e.g., twitter, facebook, instagram), and can assist with questions from the press. 

October 13, 2017

At a government-backed Chinese conference, Bitcoin is called a “disaster”

By Alex Gao - October 13, 2017 (

On October 12, in Beijing, the First Workshop on Standards for Digital Fiat Currency (DFC) for Universal Finance Access was held by International Telecommunication Union (ITU) and the Institute of World Economics and Politics at the Chinese Academy of Social Sciences (CASS). Also involved were the People’s Bank of China (PBoC), the Institute of Digital Money, the Chinese Academy of Information and Communications Technology and the Digital Fiat Currency Institute.

The workshop organizers invited professionals, officers, and entrepreneurs from more than 40 countries to discuss the future of digital currency. The topics of the workshop included the regulation the problems inherent in digital currency. Chinese scholars showed their interest in the idea of state-issued digital currency and steadfastly refused to recognize the value of a public cryptocurrency such as Bitcoin.

Yao Qian, the Director of the Digital Currency Research Institute of the People's Bank of China, is the representative of the Chinese scholars. In his speech, he pointed out the importance of the state’s endorsement of digital currency and questioned the value of Bitcoin. He believes that a public cryptocurrency like Bitcoin lacks inherent value, which makes it unreliable.

“The value of a cryptocurrency like Bitcoin primarily comes from the speculation of the market. It will be a disaster if countries recognize Bitcoin as a real currency. The lack of a value anchoring inherently determines that Bitcoin can never be a real currency.”

Besides Yao, Bilel Jamoussi (officer of ITU), Njuguna Ndung‘u (former Governor of the Central Bank of Kenya) and Muhammad Arif Sargana (Director at Pakistan Telecommunication Authority) all delivered speeches. Some scholars believe that by issuing the state-owned digital currency, countries could stabilize domestic fiat currency and secure countries’ financial status.

During the past few months, the Chinese government has been harsh toward cryptocurrency. Its shut down of ICOs and closure of Bitcoin exchanges temporarily caused a dramatic decrease in Bitcoin’s value. Now that China has started to organize a discussion about the potential of state-issued digital currency, one wonders if China plans on issuing its own fiat-backed cryptocurrency.