Comments on: Sinocoin

By: Nick B. Steves

Nick B. Steves — Tue, 11 Jun 2013 03:10:30 +0000

If the Chinese were to make Bitcoin part of their macro-economic management system, they would have to either accept them as payment for stuff, or sell RMB to buy them. I don’t see how they would dominate them… they were late to the game on gold and therefore cannot buy up all the gold. They are late to the game on BTC and therefore will not be able to buy up all the BTC… It has nothing to do with politics… It has to do with the fact that they would quickly destroy the RMB trying to pay for it. This would make everyone ELSE rich, not the Chinese. I do not deny political realities… but they pale in comparison to the laws of physics.

By: admin

admin — Tue, 11 Jun 2013 01:30:09 +0000

“I don’t see any advantage of sinocoin, which would not be better served by doing international trade in bitcoin.”
— technically speaking, that’s sound thinking (SInocoin as a near-perfect Bitcoin clone adds no new identifiable functionality). The problem is political. If the Chinese were to make Bitcoin part of their macro-economic management system, they would dominate it completely, reaping negative political consequences, even if the economics work out OK. It would look like financial imperialism, and manipulation. The BTC price would seem to be set by the PBoC, defeating the whole point of the exercise. Better for them to have something ‘their own’ which they can subject to extreme stress without having to apologize for it, or explain themselves. That leaves a relatively neutral BTC reference price which might be helpful, and allows Sinocoin to reflect Chinese economic realities (absorbing the currency appreciation of a rising power, thus taking upward pressure off the RMB). There are other bits and pieces to all this worth mulling through, of course.

By: James A. Donald

James A. Donald — Tue, 11 Jun 2013 01:07:34 +0000

When bitcoin was furst proposed, I complained that the proposed architecture did not scale.

But then, scalability did not matter until after bitcoin was successful, and the architecture could then be changed.

Now it matters.

Need an architecture in which not everyone needs to know all transactions, but merely a two hundred and fifty six bit hash of various transactions that he is ignoring.

By: James A. Donald

James A. Donald — Tue, 11 Jun 2013 00:57:41 +0000

Mercantilism made more sense, or was at least less obviously crazy, when a country running a surplus was accumulating gold. When, instead, you accumulate US dollars, you run into the problem that when someone owes the bank a million dollars, the bank owns him. When he owes the bank a trillion dollars, he owns the bank. And the US owes China a trillion dollars.

I don’t see any advantage of sinocoin, which would not be better served by doing international trade in bitcoin.

By: admin

admin — Sun, 09 Jun 2013 15:31:54 +0000

The whole ‘open letter’ idea is meant somewhat humorously. Generally in China, though, it’s wise to avoid anything that could be interpreted as pamphleteering (an indication of residual civilization in my opinion).

By: Aaron

Aaron — Sun, 09 Jun 2013 01:46:24 +0000

You know a good deal more about China so no argument here. I was thinking purely in terms of distribution but hadn’t considered that it may be seen as a bit too forward.

By: admin

admin — Sat, 08 Jun 2013 23:00:49 +0000

Very interesting, thanks — these issues clearly need drilling into.
The trouble is, if PBoC technicians re-write the code in any substantial way, the trust factor plummets immediately.

By: Anomaly UK

Anomaly UK — Sat, 08 Jun 2013 14:04:28 +0000

I don’t think that bitcoin has quite been succesful enough on the technical questions that it can be taken as an exact blueprint without modifications.

The pressing issue is the question of transaction volume, which is connected to block size. The bitcoin system is currently running at about 20% of its maximum transaction volume, which is something like 100 transactions per minute.

It is assumed in some quarters that a change will be made to the 512kB block size maximum, but that is contrary to the interests of miners, who will benefit from transaction fees if block space becomes scarce and transactions become expensive. A large increase in maximum transaction volume will make it harder to keep up with the block flow — in order to validate a transaction, you need to either have the complete transaction history available and processed, or trust someone else who has it.

At the very least, the block size question needs to be settled for a new clone.

A similar issue is the use of the powerful and flexible script language for transaction outputs, which is of questionable value.

By: spandrell

spandrell — Sat, 08 Jun 2013 04:31:10 +0000

Chinas has a bilateral agreement with Iceland. Not really an issue.

By: Orlandu84

Orlandu84 — Sat, 08 Jun 2013 02:30:24 +0000

All I meant by “roll out” is a time table. Most people will never understand how mining BTC’s or Sinocoins would work. They would continue to think that the Chinese government was creating Sinocoins when in reality they were being mined just like BTC. I figure that since governments like time tables and predictable outcomes, you might as well plan on them making one from the beginning. Look at it this way. The “roll out” would allow the bureaucrats to determine how much RMB is supposed to be convertible by government controlled banks at any given time. The “roll out” would not actually create Sinocoins (miners would do that based on the code); instead, the “roll out” would declare how many Sinocoins Chinese banks would redeem at any point and for how many RMB. This would establish a currency safety net of sorts as people became accustomed to using Sinocoins. In effect there would be two currency markets: one controlled by government banks (the one ordinary citizens would most trust) and one controlled by people on in the internet (the one most likely to take business away from USD’s online).

Eventually, the two markets would start to diverge in their valuation with the internet one likely to value the Sinocoin more than the government (the internet would demand more RMB per Sinocoin as time went on than the government currency exchange). The Chinese government would then have a choice: continue having two very different exchange rates (one official and one unofficial), drop the official exchange rate, or have the official exchange rate become closer to the unofficial.

Why would the Chinese government ever do that? Well, if the Chinese government is smart it would have been buying Sinocoins from the start and keeping them. In fact, as long as its banks were buying Sinocoins at a lower exchange rate than the internet was (paying fewer RMB per Sinocoin than the going internet exchange rate), then the Chinese government and its banks were making a profit. Once the government has made enough profit off of this dynamic, it can allow the market to determine the exchange rate. More likely, the official exchange rate would always trail the internet exchange rate, but it would narrow as time went on for the same reason as the above – the Chinese government would want to use its new wealth to buy stuff and in order to do that it would need its Sinocoins to be worth as much as possible.