zhangweiwu



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A Chinese look at the situation in China January 03, 2014, 07:55:58 PM

Last edit: January 09, 2014, 02:07:48 PM by zhangweiwu #1 In the previous posts I correctly predicted China government's attitude towards Bitcoin, and the month-long spike of Chinese bitcoin price. I also warned against China-lead crash. I haven't posted anything for about 2 months since, for my hands are full.



I will first list a few outlandish view points of Chinese market popular on this forum.



Myth: Money moves power in China. In the end money decides.

Reality: Power moves money. If you are responsible for something big, there are times you have to make a choice, to choose between profit and loyalty. In the end loyalty is the bright choice, profit is the gloomy choice that begins your downward career. If you make the wrong choice, not only you have to acknowledge failures, but you need to acknowledge it willingly and faithfully, because that behaviour is loyal. I often wonder why many westenrs are readily willing to accept a theory if that theory involves money powered political decisions - which does happen but are not mainstream here. In the bitcoin game, the financial institutes, even the ones not owned by our government, will face the choice and their decision is predictable. If some financial insitutes allows bitcoin to live (like huobi's case), it is because their time of choice hasn't come, not because they chose differently.



Myth: Chinese citizens won't be able to withdraw cash from bitcoin platforms.

Reality: Time and time again I see westerns and western-educated Chinese trying to read the sense out of paper notificcations. The correct method is to understand the ruler's intention, not the ruler's order. Doing what the order says only garantee you are not punished for disobeying that particular order. One of the intention of the ban is to prevent social unrest, the less noisy the better. Banning withdraw is going to create unwanted outcry which defeats the purpose of the 5th Dec ban, further more it unnecessarily creates a confrontation between government and traders (before was trader<-> platforms). Once you see the intenion, you know withdraw will be allowed, if not enforced. Most likely withdraw will be through the banks for better records.



A short culture background info on loyalty vs regulation:



Regulation = if you go aginst the rule, you will be punished. Undersand the intention of the rule. You are rewarded by wining the game following the rule.

Loyalty = I can punsih you any time, from a database of regulations, or without any regulation (like how Apple is punished). Understand the intention of the ruler. I will reward you.

(Edit: In China that I is the party.)



Myth: Motivation is for Chinese government to prevent outflow of CNY.

Reality: If you think along that line, you may misjudge and predict that regulation will replace the ban. Bitcoin creates 3 problems: 1) an example of ignorance of central power; 2) a possibility of social unrest at the market crash; 3) outflow and money lundry. Of these three the last is the least important (it is still important but least) and a more sounding reason. Our government wishes by sheer authority the market can cool down. I think if it is cooled down, it will be allowed to exist, otherwise it will be harshly killed.



Myth: Like Hong Kong, Shanghai Free Trade Zone respects rules

Reality: Hong Kong maintained its system because people defend it as a bottom line: it is not rules that worked, it is people that worked (to defend rules). Our government never liked that HK culture but cannot simply chop it. There is no similiar culture background in Shanghai. Shanghai Free Trade Zone is where various new things are allowed to live longer so that the government can see what kind of fruit it begets, which one benifits, which one isn't, and select what they want; chop off unwanted - like Special Economic Zone we had before. Hong Kong is a free trade zone, Shanghai Free Trade Zone is a controlled experiment. Like all experiment, you the bad seed are allowed to live longer because you are more closely watched. When they feels certain that your bad seed is weed, they won't let it grow.



Now the current situation:



The sentiment after 89' is that if government want to destory an enemy inside China, it will be done (unless it is too abstract to kill, like, an idea). Not everyone agrees, but that's the general sentiment. Since 5th Dec, believing in the power of the government, the market attention dramaticallly moved to alternatives like LiteCoin. Not only they have more potential of growth (so thinks the Chinese investors), but also they are small enough to live longer under the radar. I didn't even look at the data but I believe BTC trade volume shrinked a lot, sentiment cooled down, exactly as government's wish. China crash influnced global market once. However the global market won't always follow. The rest of the world is going to promote and increase value of bitcoin, and traders in China won't sit and watch. Two things may happen in 2014:



1. Firmly believing that the government have control, China maintains low price and become a bitccoin export country, and receive moderate media coverage. Bitcoin is thus allowed to live.

2. The spikes in global market calls again the passion in China. And when our spirite of gambling is lit up, anoher spike in China and warm media coverage in China will lead a harsher ban from the government, probably force bitcoin into black market.



It is possible 2 happens after 1.



P.S. This post is sent through a web proxy in U.S. The author is still living in China. And the telltale timestamp means I couldn't sleep well tonight, hence having time to write a post.





