Topic: Can Bitcoin be regulated? And why it might be a major problem. (Read 1105 times)

What you say is completely true but you should know that any gov will do whatever it takes to have the latest advantage on everything.
If they decide to ban btc you will be an outlaw by using them and than it's your problem not theirs.
Govs always win, unfortunately.

Since the US government auctioned off bitcoins to the public (from Silk Road), I don't really think they can now make them illegal.  That would be very ironic.  They could try to regulate though.

I gave it some thinking and I am not entirely sure about this. I believe that you can either leave Bitcoin (and other Cryptocurrencies) unregulated or you can ban Bitcoin. I will explain why.

When I am regulating something I need to have a sort of control over it. Say I want set a speed on highways to 50. I will make it a law and subsequently I will dispatch a force to make it happen. In a normal society you will have people doing 50 on that regulated highways.

What if I want to regulate Bitcoins. Bitcoin is associated with money laundering. So if we would want to put a stop on that, but we wouldn't want to declare bitcoin illegal how would we do it? The currencies whom are legal tender - fiat currencies usually have a certain limit to stop you from trading in cash in large amounts. They do background checks on how much money you have on your bank account compare these to taxes report your possible income etc. I am saying that to show that they can do it. They can do it, because trusted 3rd party has all the information regarding your financials.

With Bitcoin it's different. No one is supposed to know who owns which bitcoin address. The whole network is build on anonymity. And If you would know a certain link in the chain from that point you could find another users of bitcoin. Theoretically speaking you could connect a person to a certain bitcoin valet. Would you want me to know who you are and how much money you own? In that case it would be more secure to use a classic banking. Therefore no one can know who is behind what address. As there is no place for a "personal check", it inevitably leads to the check somewhere else. But the authority cannot ask you where did you get those bitcoins, because after all you just don't know. Even if you would follow the blockchain. In the end it all comes down to bitcoin exchanges, which is the only place where the authority can do something. But again the possibilities are very limited. But the authority will always have a reasonable doubt to freeze the whole exchange or its accounts and its possession of goods (which would be other cryptos) under the anti-money laundering law. Is it a big step? No someone will start another exchange. But in the end a normal person does not wants to see dirty money flying around unregulated sponsoring terrorists across the globe. So they will just proclaim cryptocurrencies illegal. That again is very hard but it is not that hard to ban exchanges with cryptocurrencies. It is not that hard to declare possession of cryptocurrencies to be illegal under sanction etc.

What am I saying is that with the necessity of anonymity of bitcoin users and also with its transparency you simply cannot create a regulation. So I fear bitcoin might be proclaimed illegal the same way as drugs are, because after all it is still goods to most of the countries.

Now can the community developing bitcoin do something about it?

Regulation is the next step to the government finally accepting us though. Unfortunately, most don't want them to be a part of the government, like myself. I'd rather Bitcoin be where it is right now. If it ever became mainstream, to an extent, that'd be a problem to me.

What am I saying is that with the necessity of anonymity of bitcoin users and also with its transparency you simply cannot create a regulation. So I fear bitcoin might be proclaimed illegal the same way as drugs are, because after all it is still goods to most of the countries.

Now can the community developing bitcoin do something about it?

I don't think it can ever be fully regulated.  Even if they try to put restrictions on it for businesses, people will be able to move bitcoins freely from person to person.

Well, you say it is not that hard to declare possession of cryptocurrencies to be illegal under sanction. But how would governments and other authorities be able to fiscalize it? There would be Constitucional rights at stake here...

Those attempts would not mess it it's principles, though. There's no reason why it should be controlled, because no one really can do it properly.

 
I must admit I do not fully understand the coin blacklisting but I guess I got the main point of it. What I am concerned about is the future of bitcoin. The price is not an issue for me as I own a very little of BTC. The root of concern is that without regulation the bitcoin might be just a price to a dollar - something that does not stand alone. At the moment it is not like the price of something is in BTC its in dollars but its paid by the corresponding amount in BTC. I have no idea what would have to change for bitcoin to stand alone to have its own strength, but I believe that some kind of regulation might be in place. Also think of my questions from this point of view. You have a dog. That dog is aggressive, it bites people. You cannot train that dog. You tried but it does not work dog still bites. What do you do with such dog? Now obviously the owner of the dog would be government and the dog is a bitcoin protocol.

Doesn't make quite sense to me if you think .That's wrong on so many levels.The only possible reason they want to regulate bitcoin is to kill the anonymity and control the service prices.All these new start up big names will definitely be a part of it for their profits sakes no one actually cares what it would do to the community.

Can Bitcoin/bitcoin be regulated?

Exchanges are the only way to enforce controls since they deal directly with banks.
Any attempt to create controls that govern open source hardware/software wallets would not be manageable.
Directly, Bitcoin/bitcoin is harder if not almost impossible to regulate.
Declaring that it will be regulated, does not deem it actually possible.
We are all still waiting for the legal mechanics that actually govern and enforce these "future regulations".


Can Bitcoin/bitcoin be declared outright illegal?

I do not believe so.
Governments are always hesitant to prevent outright obstruction to advances in thought and technology.
Now that the "beast" is "out of the box" only backwards or failing governments/economies will attempt to outlaw it.

Bitcoin will be impossible to fully regulate, as in have every transaction every traced back to as deep as you need, and this is the wet dream of the regulators, thats why they will get rid of cash in the future and make everything digital (and closed source). This is why its very important Bitcoin nodes remains decentralized. As long as we have decentralized nodes they can't do nothing, that's why they try with political attacks like Bitcoin XT and Classic. Also in the future when confidential transactions is implemented it will be even harder to track, let alone when they make coinjoin easy for noobs too.

So what you are actually concerned about is bitcoin's future price growth,
 contingent on exchanges blacklisting coins in accordance with gov regulations?

Look I don't mean to be offensive according to your post count you have spent some time around bitcoin, but you don't see the bigger picture here. What you saying is true - partly.

1. It is not your problem if you buy them at exchange. It's the exchange's problem that they bought them at the first place. That means an exchange did not do the background check, which it cannot do. It is therefore again subject to a reasonable doubt that it was laundering money. If such exchange falls, because of that the price of bitcoin will go down and it will influence you because you are losing money. If this become a habit there wont be much exchanges and it will be hard to obtain bitcoins or to sell them. So it is actually your problem, if you own some BTC and you care whether it has any value.

2. Hard cash purchase - you are completely right. You laundered money, it's illegal you might be prosecuted if found and it is something every government will try to stop, but most probably fail.

3. Gold is not so heavily regulated as fiat currencies, because it work differently. Also to obtain gold you will be identified the other party will have a recipe that you bought it and again it is impossible or illegal to buy for example a $1.000.000,00 worth of gold in cash therefore anonymously. Try selling a 1000 oz of gold without proving where you got them. Its not about the amount in circulation or its inflation but about the title of ownership tied to a person or a company. The bitcoin is build on the ownership being transparent but anonymous.

4. You are right it is not a rocket science its law.