Topic: Can the government acquire all bitcoins either by seizure or purchase? (Read 436 times)

This is wrong. Had they really wanted to stop Bitcoin, they would first things first shut down all centralized exchanges and cutoff Bitcoin services from the banking system. That alone would kill Bitcoin's viability for people who don't use deepweb services and similar stuff. But governments didn't do this because they don't care that much about Bitcoin at least as long as its just a store of value that can be taxed when it's liquidated.

I doubt that the government can acquire BTCs especially if the person has the private keys on their wallet.

The government definitely cannot access the whole blockchain and steal all the BTCs even if they have the best of the best computer person out there. It is just impossible on how the blockchain was created as the only person that can access their respective BTCs are the people who have the private keys to it.

One thing, however, that the government can do is to restrict the access on local centralized exchange by providing stringent requirements or even freeze the institution itself.

No they can't and that's what give Bitcoin power as a decentralized currency, the government missed their chances of seizing or buying most of the Bitcoin in circulation as of when Bitcoin was newly launched and started making waves for itself. Back then they could have easily gotten as much Bitcoin for a very low price and continue buying more of the mined Bitcoin coming into circulation but they doubted Bitcoin by thinking it won't be much of a threat to them. They didn't believe Bitcoin would come this far and now it's already too late for them to achieve seizing or buying most of the Bitcoin in circulation.  Using the word most because they can't fully have control over all the Bitcoin in circulation. Lets not forget new coins are been mined daily and introduce into the market and even though the government takes over mining, we'll still have independent miners.


A decent amount of money is been traded on decentralized exchange so not everyone uses centralized exchange and if the government through CEX keep up their recent activity of seizing funds on centralized exchange, it'll make others prefer to use DEX instead of CEX. Those exchange seizing customer coins are building a bad reputation among the community as this is a decentralized community that's supposed to be exempted from the regulations of the government. Alot of DEX are becoming more popular and we might just start seeing high volume as more investors pick them over CEX. During the defi hype we saw DEx competing with CEX for volume and we can't repeat similar scenarios again

@Everyone

HmmMAA is a BSV/CSW cult fanatic that loves spreading misinformation about BTC:

Just because you love BSV censorship, it doesn't mean BTC will "comply":

https://twitter.com/BobSummerwill/status/1577714409618931713

If BTC adopts censorship, it's no longer BTC, it will be something else. People will fork it.

You have to understand how bitcoin works. The word "decentralized" means no person, government, or entity can access your coins unless they have the seed phrases. And one won't give away their seed phrase willingly. Will they? Unless the government forces the owner or use any kind of secret mind reading technology, Lol.
 
Another thing, do you know that thousands of thousands of bitcoins are already gone? Due to losing private keys, hardware fails. And these lost bitcoins can't be accessed without any means. About 10–25% of Bitcoin is lost, according to some sources. So even if the government tried to acquire 100% of the supply, they couldn't. None can purchase something which is already lost. Satoshi still has his bitcoins at his old address. Who knows for what mysterious reason he kept it that way?
 
https://www.cryptovantage.com/news/ask-cryptovantage-how-much-bitcoin-has-been-lost-forever/

Is that so? Then why "Zhong" btc asset were seized by the Government when proven that he is the criminal or the one stole 50k btc on silk road. Obviously he stored it on a non custodial wallet and as per watching this video on Youtube about documentation on how they apprehend him seems pretty clear that they can as long as they have proof that you are the cuplrit on such incident cause they knew they can seized anything unless someone is proven guilty. Or does your statement depend on the case is what you mean.

Source: https://youtu.be/3Nq3ye-QCyM?si=j1UsEqOoSpiAJED_

I only had a glance on the link you provided and it seems the bitcoin seized were that of some sort of paramilitary officials if I'm not wrong and since the government isbin charge of its soldiers  and ex soldiers then I wouldn't really be that difficult to trace or seize their bitcoin holdings as there might be possibilities of them being aware of the holdings and it seems the bitcoin  seized belonged to a group been held in one wallet.
Generally,  due to the decentralized nature of bitcoin,  I don't think it will be possible for the government  to seize or take control of the asset of anyone.

Well, I believe Bitcoin is decentralized for a reason, if not more. I doubt the government would hardly pin point owners of BTC even if they get to trace some, that's if its banned in the particular country I mean.

If it's by purchase I doubt still, that the government can acquire all Bitcoin because Bitcoin doesn't belong to only one single individual, just like the normal fiat currency. They can sure acquire a great share that we can tag them as whales.
El Salvador is a good example of a country that adopted Bitcoin as a legal tender, and it is clearly evident that the government doesn't own all the Bitcoin there, but they rather mine through their volcano powered farms.

The Israeli government and previously confiscated a cryptocurrency that belonged to Palestinian firms associated with the Islamist group Hamas. And the Binance exchange helped him in this, which can block any account at any time and confiscate cryptocurrency, as required by law enforcement agencies - https://www.reuters.com/world/middle-east/israel-seized-binance-crypto-accounts-thwart-islamic-state-document-shows-2023-05-04

No... How TH do you think it's possible for anyone to have full access and control over the resources Which is in your control... It's impossible..
The reasons why the pseudonymity in Bitcoin was made was to limit the easiest means to personal identification... We've also got wallets to store your coin under your full inspection and control.

Sandra 🧑‍🦰

In the thread title you mentioned two possible ways you feel that government may stop the existence of bitcoin.
By seizure:
It is not possible to find everyone's seed phrase and seize their bitcoin. This is because some people are living in one country and their seed phrase is in another country. Again, even if everyone happens to live in a particular country (which is not possible, just trying to have a scenario that one government controls the whole world), the government still won't have the technology to detect where everyone's seed phrase is hidden.

By purchase
The government cannot buy all the bitcoins because there are few who will no be willing to sell to the government no matter how much they offer. Besides, the more the government buys, the higher the price and it will get to a point that the price will be so high that the government won't be able to buy again.

Seizing of hardware wallet is possible only if the government ban bitcoin in the country, bitcoin will be illegal and what is illegal means must not be seen or use by the people. As a result of the ban, the government can request for thorough search of people that are either ex crypto investors of traders and anyone found with such can get a sentence for that, that's the worst I think the government can do but that will be barbaric and inhumane to be honest, what happen to human freedom, how is exactly is bitcoin harmful to people and the government, they need to answer those questions if they want to ban people from using bitcoin.

I think people are not so foolish to go around and be saying to people that they have bitcoin and here is there hardware wallet and seedphrase. The government can seize a hardware wallet and seedphrase and meet nothing in the wallet because a seed phrase without bitcoin in it  and seed phrases with passphrase is two different wallets. As long as seed phrase is back up properly, you have nothing to fear with bitcoin. I hope they are not reading this comments.

It is indeed possible that funds that passes CEX can be seized but not all funds is passing through CEX so the government cannot seize all Bitcoin through that method.  Besides when the government start seizing centralized exchanges' user funds, people will start evading centralized exchanges thus making the idea of government acquiring all BTC through seizing impossible.

Even if the government had the data of people having Bitcoin, these people can easily hide their stash and remove traces of it through the use of mixers and other services that offers the same function.

Mind you that even if the Bitcoin in a particular address is stolen, the government cannot seize it, unless the address is on a centralized platform, if the address is in a non-custodial wallet like Sparrow and you have the recovery phrase, it cannot be seized. The only thing law enforcement can do is to "flag" the address and declare the coins in it "tainted", they would pass this information on to centralized services, and if those coins ever gets to a centralized platform, it would be seized, but if the hacker is shrewd, they would use mixers and decentralized exchanges without kyc and they'll not be caught.

Mate, if your bitcoin is not under their custodial, then they can't acquire or seize your asset from you, now what should be your greatest fear is when you're still there found with using a centralized exchange, remember we do say it that not your keys not your coins, if you're still using a custodial exchange to hold your asset then know that you're not safe, you should make use of a non custodial wallet, when government are seizing people's fund, you will be exempted because you're with your bitcoin under your control and not with centralized institutions.

If they only see that those property or personal items has been used for illegal maybe they can but as far as decentralized concern they cannot comfiscate from anyone until proven thats an evil money acquired from hacking or anything bad. Thats too much its an extortion of highest level just because if they wanna do that. They cant argue that bitcoin is illegal since it become a mainstream decentralized system where users are freely using for transaction and finance innovative method and solutions.

it is for this reasons that bitcoiners are admonished to make use of self custody wallets to avoid the government doing what they feel they can do at any time with our money. The assets seized by the Israeli government can only be assets located in centralized exchange wallets. There's no way any one can have access to your funds in a self custodial wallet without your private keys except that the owners of those funds might have given out their private keys to the wallet which those cryptocurrency were seized out of duress.

It is becoming so important with the way things are going with how our governments are responding as regards to people holding cryptocurrency that we need to be secretive and private about our owning of the digital currency so we don't become a target of government or it's agency since bitcoin is a currency they can't have access to controlling it due to its decentralized nature, the government do usually feel threatened that holders of it's in much volume can use it in financing ideologies that's against  the government.

Am also using this as an opportunity to pray for a possible end to the killings of  innocent citizens in this Isreal -Hamas conflict, we can always give peace a chance cohabiting without violence.

There is no chance that Bitcoin will ever be seized by the government under duress until a bitcoin owner gives access to his wallet. But there can be something that is not unusual on an exchange platform. Since the start of the war between Israel and the Palestinians, Israel has made various news reports of the seizure of Hamas crypto accounts. There is much doubt as to how true this actually is. However, it is conceivable that they may temporarily take control of some exchange platforms. But it is not possible for anyone to withdraw bitcoins stored in personal or hardware wallets. I think saying something like that would be considered baseless.

What the government may do is confiscate wallets, but in terms of value, I'm sure the government cannot confiscate them. unless they also get access to their wallet recovery seed. somehow they can force the captured citizens to reveal their wallet seeds.
the biggest pressure may be on exchanges, but if it's not in their country, what can those governments do for their citizens who may have accounts on other countries' exchanges who can still carry out trading activities or even keep their Bitcoins on exchanges, even if it remains just not recommended.

The answer is both yes and no. I won't dive into my answer deeper and just say this simple explanation. First, the reasons why Bitcoin is created because of this reason where no one or a group of people or even government can take control of assets that you have therefore there exists a wallet that is self-custody or you are the one responsible for keeping it safe which is on the side of NO answer meanwhile in YES answer is they can take control of centralized exchange to follow the government's rules and may have control of the exchange. Well, there are different reasons for it and that's just one of it.

It seems you may have forgotten that though Bitcoin is a decentralized digital currency where government, nor central banks can't have control over it, don't forget that with the use of centralized exchanges, it neutralize such effort, hereby granting access to these people to have access to your funds, simply because they own the private key and not you. So what could have happened at times may not be far from what I just said, which is why it's always advisable for people to hodl their funds on a non-custodial wallet, and not exchanges, as exchange could crash anytime just like in the case of FTX.

It is not possible until the user provides the government with the wallet's information before they may access it and do whatever they want with the bitcoins stored inside.


The citizen is subject to the government, thus the government can violently or lawfully order them to give their seed phrase and confiscate their assets if they are found wanting of any crime with it or interrogations leading to the linking of their wallets. That is why it is essential not to store your bitcoins in centralised exchanges, which will allow the government to track you down. They can't do that with decentralised wallets, and you're safer using them than the normal exchange wallet. HD wallet is also an excellent option for always changing your address when initiating  a new transaction.

Theoretically it's possible but in reality it would be difficult to practicalize. The only way government will be able to seize bitcoins belonging to citizens is by tracing the person and force the person to surrender their seedphrase which I don't think the owner will easily give out to government to be able to access the asset. The way government is trying everything possible to get rid of bitcoin in our community is alarming and it's enough reason for us to stop storing our asset in exchanges that government can confiscated any time they wish to. The decentralized nature of bitcoin without central authority has made it possible for us to be in full control of our assets without government interference.

If government claim they're doing this to control the illegal use of bitcoin, I think there should be a diplomatic means to go about it than to seize the assets.

If they retrieve all the private keys of the wallet they seize then provably that they can acquire the balances there. But if they don't have the keys and only have the hardware or aby device used then provably with that they might struggle to own that bitcoins since for sure they cannot do anything to open that and retrieve what's inside on those wallet. That's why sometimes they hate it since they don't have full control on how people use it and the only thing they can do is to regulate the platform residing on their country but for international transaction using bitcoin they can't do anything on transactions made. But I think people don't need to worry about that news since maybe the government is just monitoring those suspicious people and as stated for normal people investing on bitcoin they are away on anything that can possibly harm them since government would not provably touch them for no reason.

The article states that it is used as a channel to fund these kinds of acts, so if you are not doing anything related to that, you are safe, and of course, since you own your private key ^{assuming it's yours}, they cannot get it unless forced, which is not something, I think, that the government do.

I hope they buy though, so that we have more buyers and HODLers. 

They can just seize but accumulate the number of bitcoin through purchasing?, I don't think so because they don't focus in this matter of budget there a lot of things they need to focus in than this crypto currency they will just a made a move if there's something really happens makes a big deal to the government or country itself, if they will collect number of bitcoin user and probits they must need to create a rule with this to prevent user to use bitcoin or else they will support the bitcoin at all using a centralized platform at this thing they can easily manupulate, fees, transaction and services from the users.

Why all this effort? They can besiege all the mining farms, cut off their electricity, and restrict access to this technology and everything will end. Governments do not tend towards expensive solutions, but rather security solutions, and they can do that, but as long as they can get profits for free from imposing taxes and from tracking all currencies and their sources that It represents a danger, as it is a good opportunity to increase revenues without making any effort, and the currencies that are confiscated can be sold again and used. Bitcoin is not proof of stake, so purchasing all or part of Bitcoin will not make you able to change network protocols

The percentage chance of it happening is now on the low side,  IMO,  they would have no option left at some point than to even adopt it.
If you check, Despite several efforts made by various governments of the world to get rid of Bitcoin, it has been a thing of difficult for them to accomplish. Bitcoin is truly decentralized and that has become a threat to the government as it opposes their old financial (centralized) system of control. Initially, the Government underrated the capability of Bitcoin and thought it was not gonna scale through, only to discover lately that is their biggest threat. They came with CBDC yet people are not buying the idea because of people's awareness of Bitcoin as a solution to today's problem of inflation and the only freedom form of money in the whole world.

It's possible if everyone use centralized exchange and willing to sell their coins, but it's high unlikely when we talk about "every holders" since each person has it's own decision.

Even the government you refer is a rich and developed country, they can't just dump their fiat to buy Bitcoin since the more they buy, the more their fiat become worthless and Bitcoin price will rise. They can print new money, but it will destroy their country.

My reply to the OP is that no , governments will not be able to seize all bitcoins as the supply is distributed globally so each government will try to protect the wealth of it's own citizens . Of course that will not apply for acquired coins through illegal activities .
Now to the part that everyone says "it's decentralised" so no one can control it .
But what decentralised mean ? Let's consider that the network consists by three entities . Developers , block producers and users .
Developers can be "easily" controlled either by force or money . Anonymity on the internet is a no go if three letter agencies decide to go after you .
Block producers are big known entities connected to the internet , so another no go if governments want to force their will . Block reward is based on time and each msec counts , so by trying to hide your identity using "anonymous" routes affect your profitability . In other words known entities have a higher factor of solving the new blocks .
Users are spread all over the world , so there's a very low probability governments will be able to control them . In a totalitarian state things will be worse , but as most countries are based on "democracy" i think this will be fine .
Now , what happens if devs and block producers face a government order to follow specific rules ? Users might decide that it's on their best interest to not continue support the network and leave it for a fork . For that new network to continue exist , a group of developers , will have to be in charge . Probably they will try to hide their identities in a better way and 1% chance they might make it . The problem is , would users trust that team ? 99% of users have no deep knowledge of reading/understanding code so that would cause problems of trust and the slow death of that network ( consider that even monero which supports anonymity was created by a known entity and not some anonymous handle ) . Let's add to this that a large ( vast majority ) portion of hashpower will be forced to apply to the government's rules . Most hashpower is currently located in big mining farms and these farms are entities that are interested to profit . They are not ideological warriors that want to destroy governments will .
In other words , if governments wanted to destroy bitcoin they would do it in a year . Let's not take too light that their absence of actions means that the network is invulnerable . Bitcoin sooner or later will have to comply with the laws of society , or it will face it's extinction .    
    

In accordance with the keyword "not your keys, not your assets". The government does not have control over every wallet where Bitcoin is stored, without a private key the government will never be able to touch the assets stored in that wallet. It is difficult for the government to trace the whereabouts of the wallet owner as long as there is no personal identity listed on each wallet in which transactions are carried out. As long as you know how to use the wallet safely, there is no loophole for the government to trace who owns the wallet.

I read the article you shared, and I'm a bit confused about whether the Bitcoin has already been seized and is in the possession of the Israeli government. According to the dictionary definition, 'seize' means 'to take hold of suddenly and forcibly,' which implies that the government has taken control of it, either by identifying the user of the wallet and compelling them to provide the key to access the wallet or by identifying it as an exchange wallet. The article wasn't very clear on this matter, leaving us to guess.

The thing is, they can't seize these assets if they don't know who the owner of the wallet is. Regarding financing terrorist activities, I'm certain that the sender and the receiver are well aware that transactions passing through a third-party wallet, regulated by a government, can be traced because they have the power to investigate such transactions. So, honestly, I'm still a bit confused because, if they had seized it, they would have reported a specific amount of Bitcoin seized.

This statement from the article is quite confusing.


To whom they issued the seize order?

It's not gold bonds where they forcefully take it from you as they can't keep track records for all of them while many have been lost.They can put ban or restrictions on it but if you say about seizures then they can't do anything in that case.

I was just wondering something like that. As others mentioned, it is clear that it is technically impossible to access all the (remaining) Bitcoins. But another question has to do with the affordability (even if the price didn't go nuts like you mentioned with the 1M example).

I thought that the market cap was closer to gold's, but I've just checked it and it is 26 times smaller. It is much closer to silver's (only 2.5 times smaller: wait for the bull run). With a capitalisation of 500B, more or less Israel's GDP, it would be expensive, but still affordable, for the main economic powers (it would be, for example, 1.5 times the amount allocated to the EU's Next Generation program). But I don't think that it would be politically justifiable, in any case.

Many people, like the OP, do not understand the effect of a huge demand that would like to buy everything. I will leave aside the question of confiscation, which I understand has already been correctly answered.

If some government wanted to buy all the bitcoins in the world, the price would go into the stratosphere. Surely the first ones it bought would be bought at the levels it is now but demand would so outstrip supply that the price rise is even hard to calculate, but I think the dream $1,000,000 per bitcoin would come pretty quickly, and there would always be people who would not sell their bitcoins, who have them in their HW for HODLing in the very long term.

It is similar to when a billionaire has a billion dollars worth of shares in a company. If he wanted to sell them all at once, he would cause the stock to fall so much that he would end up getting much less, if anything, because he could even bankrupt it with that move.

One way to recover a wallet is only by using a phrase, the government will never be able to access the targeted wallet as long as it doesn't have a phrase, unless they take the individual hostage and then ask for the password by force. Assets stored in a Wallet are not the same as Fiat money stored in a Bank, the government can easily take over a bank account but cannot enter a Bitcoin wallet as long as it doesn't have a phrase. Asset security will always be maintained as long as you can control the key, it is also not easy for the government to identify who owns the wallet as long as it is not connected to KYC.

The million-dollar question is that, how realistic this scenario can happen? Do you think that this can happen? Do you think that everyone will really sell their Bitcoin to the government?

Technically speaking, yes they can sell it to the government, but realistically speaking, no it is almost impossible knowing that not all Bitcoin holders are willing to sell their Bitcoin especially with the government. This kind of scenario are kind of impossible to happen - unless people around the world will really sell, but what are the chances of it to happen? 0%.

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The government can't acquire something that they didn't create at first place, and that is Bitcoins, so it's impossible. I can't imagine these authorities interviewing every single person around the world asking if they are holding Bitcoins, and if they are, they will sell it to them. Kind of funny TBH.

They wasted golden time to stop it when Bitcoin network has very low hash rate and weak but now after 14 years, with its very decentralized and powerful network, how will governments succeed to break it down?

It's impossible.

They can not seize your coins if they won't arrest you and get your private keys. Those seized coins are from criminals who made crimes and were arrested by governments in their nations. If you don't make crimes, don't get arrested, your coins will be always yours, no seizure.

Governments can not buy all coins in circulating supply if not all bitcoiners sell their coins to governments. Do you think it is realistic for governments to buy all of coins in circulation?

CBDCs aren't even a competitor to bitcoin.


Think about it yourself — how theoretically viable is it for the authorities to literally go from house to house and search every single person's home for a hardware wallet or a bitcoin wallet installed on every single person's computer?

I am sure that they know and they have the idea that these are the only ways that they can take someone's Bitcoin. They have the power to do that if they're in the government to just confiscate and take away people's phrases and seeds in a forced manner. And they're also aware that many won't obey that rule because someone can remain lowkey and low profile that it seems that he's an idiot and doesn't understand a thing or two about Bitcoin. That's why it's unlikely that they can seize all people's Bitcoin if they ever get to have an order to seize all people's Bitcoin. I guess that these topics are popping up due to the war and all of the news that has come out. But remember folks, you can play dead and know nothing about Bitcoin if someone asks you and this is the importance of remaining anonymous don't talk a lot in public that you know that much about cryptocurrencies. Yes, we're advocates and educate people about Bitcoin but we should do it in a proper venue because who knows if someone is watching out like the FEDs and has got plans like these topics that have been brought up.

It is possible for a government to confiscate bitcoins but it is never possible to confiscate all bitcoins. It is never possible for the government to know the amount of Bitcoin held by the citizens of a country and the security code or password or phase of each of their wallets. However, a country's government can confiscate all bitcoins held by a particular organization or individual. As the American government seized all the bitcoins confiscated from the Silk Road.

The Israeli government only arrested the person responsible for Hizzbullah's crypto wallet but they couldn't stop all the bitcoins or cryptocurrencies that came in as a form of donation for the war fund, bitcoin is a decentralized asset, no government in the world controls it, bitcoin is not like altcoins whose amount and value can be easily manipulated, there is no need to be afraid to transact and donate via cryptocurrency.

Yes this can happen if everyone holding Bitcoin decide that they would sell to the government then that is the only way the government can acquire all the whole Bitcoin
Bitcoin is decentralized so the government can order people to give them their Bitcoin that why some people choose crypto-currency over the traditional financial where the government can freeze someone account which is super unfair.

I read this news, and it was biased too, as when a war starts, many news outlets, take sides, (the reason could be anything) but when the news outlets take sides, they only show or write the side of their story and ignore the others. In this situation, we should read those news, which are not biased and are neutral. And, the topic you started, must be out of curiosity about how Israel seizes the cryptocurrency, please keep in mind that, they seize the cryptocurrency of some wallet or some platform. They just can't seize the assets of a person. And they are not the only ones to seize the assets, back in time, when bankruptcies and scams occurred, the US and many other countries also seized many funds. Examples are the silk road etc.
You are right, those governments don't want BTC to grow, but they are not going to seize all the funds and I don't think they can do it, because they don't own the blockchain, because Blockchain is distributed in all over the world, it is not some central or distributed servers which can be controlled by mother server.

We are talking about BTC blockchain, which is secure from any single entity's control. And They might have thought to seize the funds but they can only do that, by going home to home, person to person, and checking each and everyone, for their seed phrases and searching out the whole house, etc. etc. whatever method they will use, but a person can, of course, trick them and save the seed phrases, even by remembering them. I hope you are getting my point. And a government cannot just seize the assets of there locals. I didn't heard of any event like this.

Bitcoins that are in addresses on centralized platforms can be seized, it has been said on this forum for a very long time that if it is not your keys, it isn't your coins, the government can issue an order for your Bitcoins to be seized if you have it under a centralized control. If your coins are in a non-custodial wallet, they cannot be seized. As for the government purchasing all Bitcoins, well, someone has to sell it to them, and if you are willing to sell your coins, there's definitely going to be a buyer and it can be anybody or any institution.

You have often heard the saying not your keys not your coins. This means that if don't have the keys to your asset then you don't have control of your coins. Without the private keys of your wallet you cant access your Bitcoins without seeking permission form a third party that might eventually deny you your request. But if you have full possession of your keys the only mean someone could take them form you is by physically ripping you off of it, as long as you have not done any mistake top save it digitally or share it to someone (a friend, family or someone who you claim to love.)

When you store your Bitcoin in a wallet you are in full control of, there is no way the government can intimated you or there is no law written that stand that you have to open your phone or laptop and share you keys to the government. That is trespassing personal property. However if you store your Bitcoin in a company, exchange the government can exert pressure on them to gain f=control over the cryptocurrency  owned by the government citizens.
One faithful morning you could wake up and everything you worked hard for its gone.

This question of yours can be answered in a yes and no response.

YES being the fact that the government can take over bitcoin assets through centralized third party exchange if such case emanates. Since you have your bitcoin with the exchange, it does not belong to you because you have no access to the seed or key phrase holding the asset. So you can not in any way say you own it and if the government decides to act funny, all the assets with that exchange is gone as long as there is a tag attached to the exchange or your account with them.  

NO being the fact that in this situation you have control over your bitcoin asset and no one knows who owns the wallet address and no one can trace to see where or see the end of it all to know between the parties that did the transaction to act by taking over the asset. You own your keys and you have your asset under your watch so how does the government know who owns the wallet when there is no link to trace and know the owner of such wallet.

In all, there is possibility that your question is very much accurate because third parties are porous and are the arm of government in crypto so the government through them can do whatever they want since they have access to kyc of every account holder with them.

And what if I lost all my bitcoins in a boating accident? How will they be able to retrieve those? 

So far as the fund is passing through CEX, it is possible to seize them. To cash out cryptocurrency, you need KYC through which the identity of the user is known. It is just a matter of running background check on the user to check their activities and affiliations. 

As soon as the details about the user are gotten,  Isreal through the West will act through the exchanges since they control the global system, no body want to be in their bad book.

The possibility of the government to acquire all Bitcoin by seizure or purchase is impossible.  There are already inaccessible wallet address that holds Bitcoin due to lost keys.  Aside from this, there will always a Bitcoin holder that will continue to hodl Bitcoin.  Aside from that, the government will only seize Bitcoin if it is used for illegal means and/or use to support terrorists and the government will not seize the Bitcoin used in legit companies.

The government can only freeze bitcoin stored on centralized exchanges because most of them are under there regulations. But bitcoins stored on wallet cannot be seized or the account frozen, the only possible way is to trace the person and force the person to submit their wallet seed phrase or private keys. Apart from this two the decentralized nature of bitcoin can never allow any third party to have access to your wallet without the seed or keys.

So the only way is through tracing you and you can also minimize the risk of been Traced by using an HD wallet that generates new addresses for every new transaction. And you need to make sure to use the new address to receive new transactions, as such you can’t have all transactions linked to you. The other way is the use of bitcoin mixers. This two create almost total anonymity that can be a bit hard for the government to trace you

No, they can't; the government can't seize what they don't have access to unless they hold the citizen, and they are the ones who gave the key phrase to the government.
 
Do you know why people are advised to make use of a self-custodial wallet, aside from security and privacy reasons? As a result of this, they don't have any way to take over what they can't access. Even without a hardware wallet, self-custodial mobile and window wallets alone can't be taken control of without the owner giving access to the wallet.
 
Even if they succeed in arresting bitcoin owners, if they in any way identify any of its citizens who own it, they can't still forcefully take control over the wallet unless there is some advanced technology that they plan to use in doing that, and I still don't see any possibility in that.

This headline from the news is what has been making me think, Israel seizes cryptocurrency said to be used to finance Hezbollah and Iran's Revolutionary Guard.

The government has struggled hard to make sure that bitcoin does not develop and grow, they have made several policies and even created their own CBDC as a competition all to suffocate bitcoins growth. It is not impossible that they have not thought about seizing all the bitcoins so they can just hold it until we forget about bitcoins. So I am thinking, apart from physically confiscating hardware wallets and apprehending bitcoin holders to submit their seed phrase, is it possible that the government can seize bitcoins belonging to citizens even though it is a decentralized system?