YEDG, 9 AM 8th of Dec. & Change of venue (JK Coffee near Kyungbok palace station)
박주하
Dear YEDGers!
Here is this week's facilitator, Serena.
Those 4 articles are this week's topic. Actually those are in 2. Nelson Mandela and Bitcoin, which are biggest issues thesedays seemingly!
& another thing you should know is change of our venue.
Come to Kyungbok Palace station exit 3, go straight around 50 m, there is a coffee place called "JK coffee"
refer to the map as follows. FYI, you can park ur car near coffee shop just in case!
Then, I look forward to meeting you this week!
Regards,
Serena,
1) Nelson Mandela [Economist]
A giant passes
http://www.economist.com/blogs/baobab/2013/12/nelson-mandela-0
2) Nelson Mandela, former South African president, dies aged 95
http://www.theguardian.com/world/2013/dec/05/nelson-mandela-dies-aged-95-south-africa
3) Bitcoin under pressure
4) China Restricts Banks’ Use of Bitcoin
Nelson Mandela
A giant passes
http://www.economist.com/blogs/baobab/2013/12/nelson-mandela-0
Dec 5th 2013, 22:22 by The Economist
The greatness of Nelson Mandela challenges us all
AMONG Nelson Mandela’s many achievements, two stand out. First, he was the world’s most inspiring example of fortitude, magnanimity and dignity in the face of oppression, serving more than 27 years in prison for his belief that all men and women are created equal. During the brutal years of his imprisonment on Robben Island, thanks to his own patience, humour and capacity for forgiveness, he seemed freer behind bars than the men who kept him there, locked up as they were in their own self-demeaning prejudices. Indeed, his warders were among those who came to admire him most.
Second, and little short of miraculous, was the way in which he engineered and oversaw South Africa’s transformation from a byword for nastiness and narrowness into, at least in intent, a rainbow nation in which people, no matter what their colour, were entitled to be treated with respect. That the country has not always lived up to his standards goes to show how high they were.
Exorcising the curse of colour
As a politician, and as a man, Mr Mandela had his contradictions (see article). He was neither a genius nor, as he often said himself, a saint. Some of his early writings were banal Marxist ramblings, even if the sense of anger with which they were infused was justifiable. But his charisma was evident from his youth. He was a born leader who feared nobody, debased himself before no one and never lost his sense of humour. He was handsome and comfortable in his own skin. In a country in which the myth of racial superiority was enshrined in law, he never for a moment doubted his right, and that of all his compatriots, to equal treatment. Perhaps no less remarkably, once the majority of citizens were able to have their say he never for a moment denied the right of his white compatriots to equality. For all the humiliation he suffered at the hands of white racists before he was released in 1990, he was never animated by feelings of revenge. He was himself utterly without prejudice, which is why he became a symbol of tolerance and justice across the globe.
Perhaps even more important for the future of his country was his ability to think deeply, and to change his mind. When he was set free, many of his fellow members of the African National Congress (ANC) remained dedicated disciples of the dogma promoted by their party’s supporter, the Soviet Union, whose own sudden implosion helped shift the global balance of power that in turn contributed to apartheid’s demise. Many of his comrades were simultaneously members of the ANC and the South African Communist Party who hoped to dismember the capitalist economy and bring its treasure trove of mines and factories into public ownership. Nor was the ANC convinced that a Westminster-style parliamentary democracy—with all the checks and balances of bourgeois institutions, such as an independent judiciary—was worth preserving, perverted as it had been under apartheid.
Mr Mandela had himself harboured such doubts. But immediately before and after his release from prison, he sought out a variety of opinions among those who, unlike himself, had been fortunate enough to roam the world and compare competing systems. He listened and pondered—and decided that it would be better for all his people, especially the poor black majority, if South Africa’s existing economic model were drastically altered but not destroyed, and if a liberal democracy, under a universal franchise, were kept too.
That South Africa did, in the end, move with relatively little bloodshed to become a multiracial free-market democracy was indeed a near-miracle for which the whole world must thank him. The country he leaves behind is a far better custodian of human dignity than the one whose first democratically elected president he became in 1994. A self-confident black middle class is emerging. Democracy is well-entrenched, with regular elections, a vibrant press, generally decent courts and strong institutions. And South Africa still has easily sub-Saharan Africa’s biggest and most sophisticated economy.
But since Mr Mandela left the presidency in 1999 his beloved country has disappointed under two sorely flawed leaders, Thabo Mbeki and now Jacob Zuma. While the rest of Africa’s economy has perked up, South Africa’s has stumbled. Nigeria’s swelling GDP is closing in on South Africa’s. Corruption and patronage within the ANC have become increasingly flagrant. An authoritarian and populist tendency in ruling circles has become more strident. The racial animosity that Mr Mandela so abhorred is infecting public discourse. The gap between rich and poor has remained stubbornly wide. Barely two-fifths of working-age people have jobs. Only 60% of school-leavers get the most basic high-school graduation certificate. Shockingly for a country so rich in resources, nearly a third of its people still live on less than $2 a day.
Without the protection of Mr Mandela’s saintly aura, the ANC will be more harshly judged. Thanks to its corruption and inefficiency, it already faces competition in some parts of the country from the white-led Democratic Alliance. South Africa would gain if the ANC split, so there were two big black-led parties, one composed of communists and union leaders, the other more liberal and market-friendly.
Man of Africa, hero of the world
The ANC’s failings are not Mr Mandela’s fault. Perhaps he could have been more vociferous in speaking out against Mr Mbeki’s lethal misguidedness on the subject of HIV/AIDS, which cost thousands of lives. Perhaps he should have spoken up more robustly against the corruption around Mr Zuma. In foreign affairs he was too loyal to past friends, such as Fidel Castro. He should have been franker in condemning Robert Mugabe for his ruination of Zimbabwe.
But such shortcomings—and South Africa’s failings since his retirement from active politics—pale into insignificance when set against the magnitude of his overall achievement. It is hard to think of anyone else in the world in recent times with whom every single person, in every corner of the Earth, can somehow identify. He was, quite simply, a wonderful man.
(Photo credit: AFP)
Nelson Mandela, former South African president, dies aged 95
http://www.theguardian.com/world/2013/dec/05/nelson-mandela-dies-aged-95-south-africa
South Africa's first black president died peacefully in company of his family at home in Johannesburg, Jacob Zuma announces
• All the latest reaction to Nelson Mandela's death
• GuardianWitness: what did Mandela mean to you?
David Smith in Johannesburg
The Guardian, Friday 6 December 2013
Nelson Mandela's death was announced on South African TV by current president Jacob Zuma. Photograph: Getty Images
Nelson Mandela, the towering figure of Africa's struggle for freedom and a hero to millions around the world, has died at the age of 95.
South Africa's first black president died in the company of his family at home in Johannesburg after years of declining health that had caused him to withdraw from public life.
The news was announced to the country by the current president, Jacob Zuma, who in a sombre televised address said Mandela had "departed" around 8.50pm local time and was at peace.
"This is the moment of our deepest sorrow," Zuma said. "Our nation has lost its greatest son … What made Nelson Mandela great was precisely what made him human. We saw in him what we seek in ourselves.
"Fellow South Africans, Nelson Mandela brought us together and it is together that we will bid him farewell."
Zuma announced that Mandela would receive a state funeral and ordered that flags fly at half-mast.
Mandela's two youngest daughters were at the premiere of the biopic Mandela: Long Walk to Freedom in London last night. They received the news of their father's death during the screening in Leicester Square and immediately left the cinema.
Barack Obama led tributes from world leaders, referring to Mandela by his clan name – Madiba. The US president said: "Through his fierce dignity and unbending will to sacrifice his own freedom for the freedom of others, Madiba transformed South Africa – and moved all of us.
Link to video: Jacob Zuma: Nelson Mandela 'is now at peace'
"His journey from a prisoner to a president embodied the promise that human beings – and countries – can change for the better. His commitment to transfer power and reconcile with those who jailed him set an example that all humanity should aspire to, whether in the lives of nations or our own personal lives."
David Cameron said: "A great light has gone out in the world" and described Mandela as "a hero of our time".
FW de Klerk – the South African president who freed Mandela, shared the Nobel peace prize with him and paved the way for him to become South Africa's first post-apartheid head of state – said the news was deeply saddening for South Africa and the world.
"He lived reconciliation. He was a great unifier," De Klerk said.
Throughout Thursday night and into Friday morning people gathered in the streets of South Africa to celebrate Mandela's life.
In Soweto people gathered to sing and dance near the house where he once lived. They formed a circle in the middle of Vilakazi Street and sang songs from the anti-apartheid struggle. Some people were draped in South African flags and the green, yellow and black colours of Mandela's party, the African National Congress.
"We have not seen Mandela in the place where he is, in the place where he is kept," they sang, a lyric anti-apartheid protesters had sung during Mandela's long incarceration.
Several hundred people took part in lively commemorations outside Mandela's final home in the Houghton neighbourhood of Johannesburg. A man blew on a vuvuzela horn and people made impromptu shrines with national flags, candles, flowers and photographs.
Link to video: Street celebrations of Nelson Mandela's life break out in South Africa
Mandela was taken to hospital in June with a recurring lung infection and slipped into a critical condition, but returned home in September where his bedroom was converted into an intensive care unit.
His death sends South Africa deep into mourning and self-reflection, nearly 20 years after he led the country from racial apartheid to inclusive democracy.
But his passing will also be keenly felt by people around the world who revered Mandela as one of history's last great statesmen, and a moral paragon comparable with Mohandas Karamchand Gandhi and Martin Luther King.
It was a transcendent act of forgiveness after spending 27 years in prison, 18 of them on Robben Island, that will assure his place in history. With South Africa facing possible civil war, Mandela sought reconciliation with the white minority to build a new democracy.
He led the African National Congress to victory in the country's first multiracial election in 1994. Unlike other African liberation leaders who cling to power, such as Zimbabwe's Robert Mugabe, he then voluntarily stepped down after one term.
South Africans hold a candle outside the house of former South African president Nelson Mandela following his death in Johannesburg. Photograph: Alexander Joe/Afp/Getty Images
Mandela was awarded the Nobel peace prize in 1993.
At his inauguration a year later, the new president said: "Never, never, and never again shall it be that this beautiful land will again experience the oppression of one by another … the sun shall never set on so glorious a human achievement. Let freedom reign. God bless Africa!"
Born Rolihlahla Dalibhunga in a small village in the Eastern Cape on 18 July 1918, Mandela was given his English name, Nelson, by a teacher at his school.
He joined the ANC in 1943 and became a co-founder of its youth league. In 1952, he started South Africa's first black law firm with his partner, Oliver Tambo.
Mandela was a charming, charismatic figure with a passion for boxing and an eye for women. He once said: "I can't help it if the ladies take note of me. I am not going to protest."
He married his first wife, Evelyn Mase, in 1944. They were divorced in 1957 after having three children. In 1958, he married Winnie Madikizela, who later campaigned to free her husband from jail and became a key figure in the struggle.
When the ANC was banned in 1960, Mandela went underground. After the Sharpeville massacre, in which 69 black protesters were shot dead by police, he took the difficult decision to launch an armed struggle. He was arrested and eventually charged with sabotage and attempting to overthrow the government.
Conducting his own defence in the Rivonia trial in 1964, he said: "I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities.
"It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die."
He escaped the death penalty but was sentenced to life in prison, a huge blow to the ANC that had to regroup to continue the struggle. But unrest grew in townships and international pressure on the apartheid regime slowly tightened.
Finally, in 1990, FW de Klerk lifted the ban on the ANC and Mandela was released from prison amid scenes of jubilation witnessed around the world.
In 1992, Mandela divorced Winnie after she was convicted on charges of kidnapping and accessory to assault.
His presidency rode a wave of tremendous global goodwill but was not without its difficulties. After leaving frontline politics in 1999, he admitted he should have moved sooner against the spread of HIV/Aids in South Africa.
His son died from an Aids-related illness. On his 80th birthday, Mandela married Graça Machel, the widow of the former president of Mozambique. It was his third marriage. In total, he had six children, of whom three daughters survive: Pumla Makaziwe (Maki), Zenani and Zindziswa (Zindzi). He has 17 grandchildren and 14 great-grandchildren.
Archbishop Desmond Tutu, who headed the truth and reconciliation committee after the fall of apartheid, said: "He transcended race and class in his personal actions, through his warmth and through his willingness to listen and to emphasise with others. And he restored others' faith in Africa and Africans."
Mandela was diagnosed with prostate cancer in 2001 and retired from public life to be with his family and enjoy some "quiet reflection". But he remained a beloved and venerated figure, with countless buildings, streets and squares named after him. His every move was scrutinised and his health was a constant source of media speculation.
Mandela continued to make occasional appearances at ANC events and attended the inauguration of the current president, Jacob Zuma. His 91st birthday was marked by the first annual "Mandela Day" in his honour.
He was last seen in public at the final of the 2010 World Cup in Johannesburg, a tournament he had helped bring to South Africa for the first time. Early in 2011, he was taken to hospital in a health scare but he recovered and was visited by Michelle Obama and her daughters a few months later.
In January 2012, he was notably missing from the ANC's centenary celebrations due to his frail condition. With other giants of the movement such as Tambo and Walter Sisulu having gone before Mandela, the defining chapter of Africa's oldest liberation movement is now closed.
Bitcoin
Bitcoin under pressure
Virtual currency: It is mathematically elegant, increasingly popular and highly controversial. Bitcoin’s success is putting it under growing strain
Nov 30th 2013 | From the print edition
ALL currencies involve some measure of consensual hallucination, but Bitcoin, a virtual monetary system, involves more than most. It is a peer-to-peer currency with no central bank, based on digital tokens with no intrinsic value. Rather than relying on confidence in a central authority, it depends instead on a distributed system of trust, based on a transaction ledger which is cryptographically verified and jointly maintained by the currency’s users.
Transactions can occur directly between the system’s participants at almost zero cost, without the need for a trusted third party or any other intermediary, and are irreversible once committed to a permanent and fully public record. Bitcoin’s mathematically elegant design ensures that the money supply can increase only at a fixed rate that slows over time and then stops altogether. Anonymity, while not assured, is possible with the right precautions and tools. No wonder Bitcoin is so appealing to geeks, libertarians, drug dealers, speculators and gold bugs.
Bitcoin began in 2008, at the height of the financial crisis, with a paper published under the pseudonym Satoshi Nakamoto. The technical design outlined in the paper was implemented in open-source software the following year. It came to widespread prominence in 2012 and has been in the headlines ever since.
Investors are backing Bitcoin-related startups, the German finance ministry has recognised it as a “unit of account” and senior officials told an American Senate committee on November 18th that virtual currencies had legitimate uses. But there have also been many cases of Bitcoin theft. Exchanges that convert Bitcoin to other currencies have collapsed or closed. Silk Road, an online forum where illicit goods and services are traded for Bitcoin, was shut down by America’s Federal Bureau of Investigation in October but has since reopened. The Bitcoin price has fluctuated wildly, hitting $230 in April 2013, falling below $70 in July, and then exceeding $600 in November, prompting talk of a bubble.
The system is now straining at the seams. Its computational underpinnings have collectively reached 100 times the performance of the world’s top 500 supercomputers combined: more than 50,000 petaflops. Bitcoin’s success has revealed three weaknesses in particular. It is not as secure and anonymous as it seems; the “mining” system that both increases the Bitcoin supply and ensures the integrity of the currency has led to an unsustainable computational arms-race; and the distributed-ledger system is becoming unwieldy. Will Bitcoin’s self-correcting mechanisms, and the enlightened self-interest of its users, be able to address these weaknesses and keep Bitcoin on the rails?
Bitcoin uses a technique called public-key cryptography, which relies on creating an interlocking pair of encryption keys: a public key that can be freely distributed, and a private one that must be kept secret at all costs. The public key is treated as an address to which value may be sent, akin to an account number. Each transaction involves the paying party signing over a portion or all of the value in one of these addresses by using his private key to perform an operation, called “signing”, on the contents of the transfer, which includes the recipient’s address. Anyone can use the sender’s public key to verify that the sender’s private key signed the transaction. All transactions are appended to a public ledger, called the block chain.
Public keys are ostensibly anonymous, because they are created randomly by software under the control of each user, without central co-ordination. But it turns out that the flow of money from specific addresses can be tracked quite easily. In a paper presented in October, academics from the University of California, San Diego, and George Mason University engaged in a series of ordinary transactions to collect commonly used addresses for Bitcoin wallet services, gambling sites, currency exchanges and other parties.
Follow the money
The researchers exploited a current weakness in most Bitcoin personal and server software, which generates single-use addresses to store change from transactions. This allowed them to follow the movement of Bitcoins across hundreds of transactions from large sums accumulated at single addresses, including ones suspected of being controlled by Silk Road and stolen funds from exchanges. One of the authors, Sarah Meiklejohn, says that the same technique could easily be used to provide the basis of warrants to serve against exchanges or other parties. Law-enforcement agencies would regard this as a good thing, but to advocates of a completely secure and anonymous online currency, it represents a worrying flaw. Ms Meiklejohn says most current implementations of the Bitcoin protocol fall short of the level of anonymity that is theoretically possible, and that her group’s efforts represent just the tip of the iceberg of what could be deduced from analysis of the public block chain.
The Bitcoin system offers a reward to volunteer users, known as “miners”, who bundle up new transactions into blocks and add them on to the end of the chain. The reward is currently 25 Bitcoins (about $15,000 at this writing). Miners pull active transactions waiting to be recorded from the peer-to-peer network and perform the complex calculations to create the new block, building on the cryptographic foundation of the previous block. Comparison of the results produced by different miners provides independent verification. About every 10 minutes, one lucky miner who has generated the next block is granted the 25-Bitcoin reward, and the new block is appended to the chain. The process then starts again.
Mine craft
The Bitcoin system is designed to cope with the fact that improvements in computer hardware make it cheaper and faster to perform the mathematical operations, known as hashes, involved in mining. Every 2,016 blocks, or roughly every two weeks, the system calculates how long it would take for blocks to be created at precisely 10-minute intervals, and resets a difficulty factor in the calculation accordingly. As equipment gets faster, in short, mining gets harder. But faster equipment is constantly coming online, reducing the potential rewards for other miners unless they, too, buy more kit. Miners have formed groups that pool processing power and parcel out the ensuing rewards. Once done with ordinary computers, mining shifted to graphics-processing units, which can perform some calculations more efficiently. Miners then moved on to flexible chips that can be configured for particular tasks, called field-programmable gate arrays. In the past year, bespoke chips called ASICs (application-specific integrated circuits) have appeared on the scene.
Your correspondent visited a miner who operates a rack of mining hardware in his modest apartment. He had purchased his ASIC-based hardware a few months earlier, and it had arrived weeks late, causing him to miss out on a bonanza, because after arrival, the kit generated Bitcoins so quickly that it paid for itself within three days. But the edge that ASICs provide is quickly eroding. Between July, when the gear arrived, and mid-November, the computational capacity of the Bitcoin network increased 25-fold, from 200 trillion to 5 quadrillion hashes per second. This was due in part to the arrival in September of a newer generation of more efficient ASICs. Hashing capacity has increased so rapidly in 2013 that the practice of hijacking thousands of PCs and using them for mining is no longer worth the effort. The average time between blocks has fallen to between five and eight minutes.
The general consensus, says Mike Hearn, one of the volunteers who maintain the Bitcoin software, is that with this new generation of ASICs, mining will have approached a point where only those with access to free or cheap electricity will continue operations, and even they will produce a relatively marginal return on investment, rather than the huge multiples (when exchanged into traditional currency) possible even earlier this year. Mining has become increasingly commercial and professional, he says. Server farms with endless racks of ASIC cards have already sprung up. But as part of Bitcoin’s design, the reward for mining a block halves every 210,000 blocks, or roughly every four years. Sometime in 2017, at the current rate, it will drop to 12.5 Bitcoins. If the returns from mining decline, who will verify the integrity of the block chain?
To head off this problem, a market-based mechanism is in the works which will raise the current voluntary fees paid by users (around five cents per transaction) in return for verification. “Nodes in the peer-to-peer network will try to estimate the minimum fee needed to get the transaction confirmed,” says Mr Hearn.
Bitcoin’s growing popularity is having other ripple effects. Every participant in the system must keep a copy of the block chain, which now exceeds 11 gigabytes in size and continues to grow steadily. This alone deters casual use. Bitcoin’s designer proposed a method of pruning the chain to include only unspent amounts, but it has not been implemented.
As the rate of transactions increases, squeezing all financial activity into the preset size limit for each block has started to become problematic. The protocol may need to be tweaked to allow more transactions per block, among other changes. A further problem relates to the volunteer machines, or nodes, that allow Bitcoin to function. These nodes relay transactions and transmit updates to the block chain. But, says Matthew Green, a security researcher at Johns Hopkins University, the ecosystem provides no compensation for maintaining these nodes—only for mining. The rising cost of operating nodes could jeopardise Bitcoin’s ability to scale.
“The volunteer programmers who work on Bitcoin’s software have no special authority in the system.”
The original paper that sparked the creation of Bitcoin has since been supplemented by layers of agreed-upon protocol, updated regularly by the system’s participants. The protocol, like the currency, is a fiction they accept as real, because rejection by a large proportion of users—be they banks, exchanges, speculators or miners—could cause the whole system to collapse. Mr Hearn notes that he and other programmers who work on Bitcoin’s software have no special authority in the system. Instead, proposals are floated, implemented in software, and must then be taken up by 80% of nodes before becoming permanent—at which point blocks from other nodes are rejected. “The rules of the system are not set in stone,” he says. The adoption of improvements is up to the community. Bitcoin is thus both flexible and fragile.
So far, it has kept going. But can it withstand the pressure as it becomes more popular? “It’s got this kind of watch-like feel to it,” says Mr Hearn. It keeps on ticking, but “a mechanical watch is fragile and can be smashed.” Perhaps Bitcoin, like the internet, will smoothly evolve from a quirky experiment to a trusted utility. But it could also go the way of Napster, the trailblazing music-sharing system that pioneered a new category, but was superseded by superior implementations that overcame its technical and commercial flaws.
From the print edition: Technology Quarterly
China Restricts Banks’ Use of Bitcoin
China Restricts Banks’ Use of Bitcoin
By GERRY MULLANY
Published: December 5, 2013
HONG KONG —
China moved on Thursday to restrict its banks from using Bitcoin as currency, citing concerns about money laundering and a threat to financial stability.
Enlarge This Image
Stephen Lam/Reuters
A sign in the window of a San Francisco restaurant that accepts Bitcoin. Chinese authorities have restricted the use of the currency.
Multimedia
David Gillen: Bitcoin Believers
Timeline
An Abridged History of Bitcoin
Related
DealBook: For Bitcoin, a Setback in China and an Endorsement on Wall Street (December 5, 2013)
The action comes as monetary authorities around the world have begun to confront the issue of Bitcoin, a virtual currency whose value has soared in recent months as interest in it has spread. Part of its rise has been driven by intense demand for the virtual currency in China.
The notice curtailing financial institutions’ involvement with Bitcoin was issued by the People’s Bank of China and four other ministries and agencies, and the directive said the step was needed to “protect the status of the renminbi as the statutory currency, prevent risks of money laundering and protect financial stability.”
The notice said that Bitcoin was “not a currency in the real meaning of the word” but was rather a “virtual commodity that does not share the same legal status of a currency. Nor can, or should, it be circulated or used in the marketplace as a currency.”
Last month, in a sign of Bitcoin’s growing acceptance, American regulatory officials told a Senate hearing that financial networks like Bitcoin offered tangible benefits for the financial system. But they warned of the potential for money laundering and other criminal activity associated with such networks.
The remarks by United States officials, along with wider acceptance of the virtual currency by merchants, had helped propel the value of the virtual currency beyond $1,100, leaving its total worldwide value at more than $11 billion. It dropped more than $100 on Thursday, according to the Mt.Gox exchange, which handles Bitcoin trading online, to $1,100 from $1,217.
Bitcoin was established in 2009 by an anonymous programmer or collective known as Satoshi Nakamoto. Part of the value of the currency is attributable to its limited supply. A maximum of 21 million units can be created, leading investors to bid up the price as demand grows.
But with the growing acceptance of the virtual currency has come increasing concerns about its potential use in illicit transactions. In October, the American authorities arrested Ross Ulbricht, the alleged founder of the online marketplace Silk Road, after claiming that the site was being used to buy and sell drugs, weapons and pornography. Bitcoin was the primary form of payment on Silk Road, where people could make purchases anonymously.
The Chinese move came after officials in Beijing had expressed some support for the legitimacy of Bitcoin. Yi Gang, the deputy governor of the People’s Bank of China and the director of the State Administration of Foreign Exchange, said in November that although the virtual currency might not find favor with China’s central bank, people should be free to participate in the Bitcoin market.
That sentiment was echoed in the announcement Thursday.
“Ordinary members of the public have the freedom to participate in Bitcoin transactions as a kind of commodity trading activity on the Internet, provided they assume the risks themselves,” the statement said.
In China, Bitcoin was starting to gain favor even among merchants. In the Chaoyang district in Beijing, a restaurant started accepting Bitcoins for payment in defiance of earlier regulation stating that virtual currencies could not be used to purchase real-life goods or services.
But in its statement Thursday, the Chinese central bank raised questions about whether Bitcoin could ever gain true legitimacy as legal tender: “In essence, Bitcoin is a kind of special virtual commodity, and does not have the same legal status as a currency.”
“Currently, the public lacks sufficient understanding of Bitcoin, and some individuals have been caught up by faddishness or a speculative mentality in holding, using and trading in Bitcoins,” the statement said.
The explanation said that Bitcoins possess “quite high speculative risks,” because of the relatively small market and 24-hour trading, with no curbs on market declines. It said: “The price can be easily controlled by speculators, creating severe turbulence and huge risks. Ordinary investors who blindly follow the crowd can easily suffer major losses.”
Chris Buckley contributed reporting from Hong Kong, and Adam Century contributed from Beijing.
