Even China can't kill bitcoin

Section:

By Elaine Ou
Bloomberg News
Thursday, February 23, 2017

Every time a government sets out to abolish something people like, the well-liked thing moves to where it can't be stopped. This has happened with prohibition, gambling, the war on drugs, and digital piracy. Now it's happening in China, where the government has been trying to crack down on bitcoin.

As part of an effort to control capital outflows, the Chinese central bank required bitcoin exchanges to suspend withdrawals until they could update their compliance systems. Trading on the exchanges took a big hit, but the bitcoin activity resurfaced on less formal over-the-counter venues, like LocalBitcoins, a site where users post “advertisements” -- as on Craigslist -- to buy or sell bitcoin for local currency.

Blocking LocalBitcoins would be no solution, in part because people can use virtual private networks to access it anyway. Also, plenty of trading happens on lesser-known sites and on micro-messaging services such as WeChat and QQ. The latter already have their own payment systems, allowing users to build chatbots to automate trading activity.

For those who prefer a more familiar trading interface, decentralized exchange software such as Bitsquare can construct an order book based on outstanding offers accumulated from other participants.

China is not alone. Peer-to-peer trading took off in Turkey after the country's only bitcoin exchange ceased to operate, and in Venezuela after the leading exchange had its bank account closed. Russia has some of the most active unofficial bitcoin markets in the world, thanks to the country's longstanding regulatory uncertainty.

Although centralized exchanges provide benefits, such as bringing together large quantities of buyers and sellers and guaranteeing payment, they're not necessary for the currency's existence. Bitcoin users don't own physical coins or even digital ones. They own permanent transaction histories recorded on a global ledger, replicated by participants all around the world. Even if a government shuts down every bitcoin node in its country, a bitcoin user can still transact as long as a single node is accessible overseas. ...

... For the remainder of the commentary:

https://www.bloomberg.com/view/articles/2017-02-24/even-china-can-t-kill...



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... For the remainder of the announcement:

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