Topic: For those of you who say governments can't ban bitcoin - page 3. (Read 4646 times)

Actually, you are probably wrong.

If the U.S. Govt can force U.S. companies who want to deal with Bitcoin to honor the output of a chartered taint authority, they could force anyone who has BTC no matter what jurisdiction they happen to be in to register.  Of course people won't have to register, but if they do not the coins they hold will be unusable for many services.

And if someone tries to give me a BTC that I cannot use to buy something at TigerDirect, I will want a discount.  This even if I personally don't plan to buy anything from TigerDirect I'll want a discount because I'll have to take a discount from whoever I try to trade the Bitcoin to.  (This is the mechanism by which devaluation happens.)

As for a court order, I doubt if the goobmint would need one for taint.  They would issue a charter to entities who would taint coins upon request and yank the charter from those who would not.  Since the U.S. Govt has the power to force institutions to honor the output of a tainting authority the charter is make-or-break to an entity such as Mellon/Waters/Guo's 'Coin Validation' service.  They'll have no choice but to play ball.  In fact, such entities would probably not even have a business model unless they can expect to partner with the government who will force customers to their doorstep.

Well, the ability to force registration would only apply to US businesses/residents. So it'd still be very hard to trace coins in the overall system.

And the point of seizure is the same as being able to seize someone's bank account. It'd likely need a court order to do so.

The converse seems much more likely to me.  That is, the ability to seize ones coins produces the ability to force registration.  The difference between seizing and devaluing is minimal if the devaluation is significant, and I think that the impacts of tainting may be more effective in this than most people imagine.

There is no real reason for the government to even wish to seize people's BTC.  They have as much funding as they need under the current system where they basically pull it out of thin air.  The plebs are prone to trade assets away in exchange for peanuts within a few months of obtaining it anyway...and the peanut vendors are the ones who the government caters to.

The thing which is of extreme value to understand who is doing what with what resources.  That is why I expect that there will be a strong and growing interest in correlating individuals to transactions. [edit->] And that will be the driving force behind registration(s).

The US Govt and the US banking system is incredibly unpopular. Look at the crappy congress approval ratings, and how many people are angry about what wall street and the big banks did. But they're very successful. The US Govt is still in power, and the US Banking system still has control over the economy.

Big institutions are already in the bitcoin sphere. What do you call CEX.io who has 1/4 of the network hash power? What do you call bitstamp and the other big exchanges that handle the bulk of trading volume? They have huge influence over the bitcoin economy.


That's not what I was getting at though. Forcing people to register/provide access to their wallets to a govt agency makes it possible for the govt to seize your coins.

To put things in perspective:

The market cap of bitcoin is currently $5.7 billion.
The market cap of Apple is $579 billion.
The monetary base of the USD is estimated to be $3 trillion ($3000 billion)
The M1 of USD is estimated to be $10 trillion.

Currently, bitcoin is a very small thing in the institutional finance world.   I believe things will change.

The natural solution seems to me to be keep Bitcoin away from:

 - Large institutions which can be pressured

 - A large fraction of individual users who simply don't have an never will have the ability to manage their sensitive data.  They have caused the system more damage so far than probably any other factor in my opinion, and I cannot see it getting any better.

At first blush this may seem limiting, but it's a big world so even the relatively small fraction of people who have the native ability to deal with Bitcoin constitute a decent userbase.  By the same argument, there are a lot of niches where Bitcoin works extremely well and will be leveraged.  My hope is that a primary one of these niches will be as backing for a plethora of purpose tuned 'second tier' or 'off-chain' solutions.

I contend that the potential 'market cap' for Bitcoin is enourmous even if 'mainstream' use is cut out, especially since there would evolve plenty of 'mainstream' use by proxy.


If black/red-listing (aka, tainting) can be arranged in a way which is even a little bit credible, I believe that it would open the door for such registration.  This because large institutions (Google/Facebook, Overstock/TigerDirect, etc) can be forced to honor it and it will rapidly create fungibility problems for everybody.  And also, of course, that forced registration would in and of itself change the nature of Bitcoin beyond recognition.

That would probably make both governments and banks both unpopular and unsuccessful.
Big institutions are a no-no in the bitcoin sphere. Something a lot of people doesn't seem to get.

Drugs, alcohol, etc.. people get high or get some kind of pleasure out of it. Again, you can't grind up a bitcoin and snort it to get high. Heroin addicts have a desperate need to inject more heroin into their veins.

And a lot of what the government does is indeed a scare tactic. But it does work. How many people file their taxes honestly because they're afraid of an audit? And legitimate businesses like amazon have to comply with the law. If the government passes a regulation saying that they need to have access to everyone's bitcoin wallets (just like they have access to everyone's bank accounts, and have the ability to seize/freeze assets), individuals who don't comply likely won't have anything happen, but you can bet that major businesses will be complying. Without major businesses accepting it, it can't go mainstream and it'll just be a drug trader currency.

Look at what happened with online poker a decade ago. Government got involved, seized bank accounts, forbid banks from doing business with online gambling sites, etc etc.

They didn't have to go after individuals to cripple something, they go after the big institutions.

So for bitcoin, if they want individuals to comply with laws, they could set up an agency where you have to register your bitcoin addresses with (and possibly give them access to freeze/seize your funds if they deem necessary). If you don't have a valid registration with that agency, banks will not allow you to do any transactions related to bitcoin (eg, wire transfer to an exchange). The government would use the banking system to enforce their laws.

Here's the catch, governments have companies like facebook, google and others working around the clock to provide internet and online gadgets to every nutcase stalking about out there, so that we can all be happy citizens in their brave new surveillance state, and that will make crypto-currencies like bitcoin even stronger than they already are.

The truth is, from a technical viewpoint, they can't touch it.

Excellent analogy.

Keep in mind this isn't gold.  Bitcoin relies on the internet which the USA currently controls.

They could force ISP's to block or throttle it to a crawl or they could simply use their resources to fork it if they wanted to destroy it.  I think it'd be very simple for any major government to pull off a 51% heist.

Considering recent news about what the government HAS done I find it impossible to believe they couldnt shut it down.

With that said, they took a stance and doesnt look like they'll ban it.  Hard to ban something they can tax

LOL have you ever seen "governments" work together? Last time I heard about such cooperation was during WWII.

The paranoia libertarians who sit around and imagine horrible things that could happen in their minds 24/7 are more of a threat to virtual currency then anything.  "You know what could happen if I leave the house today?  I could get run over by a car, I could get sick from someone coughing on me, I could get shot by a stranger.  OMG I'd better never leave the house."  Could any of the above happen?  Of course.  Is any of the above likely to happen?  I highly doubt it.  About the same odds of my leaving the house scenarios.  Without main stream adoption, virtual will never go up in price.  Paranoid fringe people scare mainstream people.  Not me but Im not mainstream.

All true.  The main problem with that is that distributed crypto-currencies are quite new and under rapid evolution.  They will probably adapt rather quickly to whatever pressures one puts on them.  It seemed like a great idea to treat everything with antibiotic compounds for a while.  Whaddayaknow, but suddenly there were a lot of resistant bacteria strains popping up at an alarming rate.

If 'the powers that be' are smart they would treat this issue with kid gloves and significant caution and thoughtfulness at this juncture.  Whether that is what is happening in certain countries now or not I have no idea.  I think it would be a mistake to consider the leaderships to be mentally challenged whether it happens to be the case or not.

does not matter

this was the same approach to file sharing (napster, megaupload), how did that turn out



the purpose of bitcoin is to provide people with their own money not controlled by banks or finance for their own personal gains out of our money.

if bitcoin is illegal something else will arise, or people will be smart enough to dodge legislation

if that is then illegal something else will arise

and so on and so on

to completely make bitcoin illegal, every country will have to unite (never gonna happen)

example. I buy bitcoin in USD on swiss exchange as bitcoin is legal, exchange back to USD on swiss exchange rinse and repeat

Just to be clear, you state suppositions, none of this has happened.


The last move by the IRS gives preferential tax treatment for long term capital gains,  but not good for miners that mined at a high BTC price and sold at a lower price.  In essence, they did not realize they were speculating between mining and realizing the profit.


This is silly.  You are supposing that a merchant has the technology to accept bitcoin, but is unable to keep track of bitcoin sales and access historical price data.  They have apps for that.


This was a centralized money system run by people with strong anti-government views.   I'm not saying it was right to prosecute them, but they made themselves a target.


This is a supposition with no evidence that it's going to happen.   Currently, the IRS has been starved of money by conservative forces in the government, which prevents them from collecting a lot of taxes (even though stronger enforcement would bring in more revenue than would be spent on enforcement.)   According to IRS statistics, the chance that a person making 50K-70K a year has a 0.7% chance of a tax return (or a non-existent tax return with reported W2 or 1099 income) being examined.   Over 5 years, that's about a 3.1% chance of getting caught.


In regards to illegal activities, many jurisdictions (as a revenue generating procedure) will seize large amounts of cash from travelers on interstate highways as suspected drug money.  This is nothing new, and nothing inherent to bitcoin.

In reality, the majority of merchants will convert immediately to fiat and not speculate on bitcoin.  The government is more likely to give merchants a Cyprus-style haircut through their bank accounts than to demand direct access to any bitcoins they hold.   Cyprus haircuts would be very unpopular, and in the United States, the history has been to support sick financial institutions by selling T-bills to prop them up (taxing dollar holders in a non-obvious way)

Supporting legitimate business using bitcoin is the way to go, to reduce the stigma of illegal activity, which makes it harder for the government to use the "illegal activities" excuse to crackdown on bitcoin.


Even if the government totally cracked down on bitcoin, there would still be a bitcoin economy -- street level bitcoin dealers that traded bitcoins for cash to users that gambled and bought drugs through the internet.  

I see the future of bitcoin as positive, as legitimate money is being invested in bitcoin services and merchants.  It will reach a tipping point where it becomes a significant portion of the legitimate economy, where a crackdown would cause harm to the country as a whole.

just like they got rid of the alcohol distilleries of the last century (prohibition era). hmmmmmmm, yet people found a way to still get drunk

weed, cocaine, heroine is illegal. yet people find a way to get stoned

being naked in public is illegal. yet people still find a way to go skinny dipping, visit naturist resorts or nude/topless beaches.

a government ban never means game over

I think Liberty Dollar is a poor example for two reasons.  One, it was made to look very similar to US coin and two, it was centralized so it was very easy to kick down a door and shut it down.  Neither applicable to Bitcoin.

If they can't kill it with law (as you have already conceded), they can't effectively tax it with law, either.

Neither of these two methods will be effective is because they are unenforceable for the same reason copyright law is unenforceable.

It is a problem of scale. 150 million Americans today illegally download movies, music, and other culture. You cannot win a battle against that many law-breakers, without draconian, liberty and creativity-suffocating bullshit legislation that will make everyone despise you, and will slowly but surely erode your legitimacy.

Bitcoin doesn't have 150 million Americans using it today. But it will, and when it does, it's game over for any government that behaves like a parasite.



P.S.

Again, this applies to legitimate business, and people who don't want problems with the law, which are the majority.

Obviously criminals don't give a shit about following regulations.

What I'm saying is, the government can easily block it from becoming mainstream. Some people here have this idea that bitcoin can compete with the central banking system. The reality of it is, the major governments of the world won't let that happen.