- The Dwolla/MtGox BTC <--> $$$ link breaks, perhaps due to pressure from bank regulators in response to Paypal or VC/MC lobbyists.
All of these scenarios would cause a crash in BTC values. I guess you can argue they are unlikely - at least the first two seen quite plausible to me.
True, but if this happens quadruple your mining equipment as fast as you can. Some other jurisdiction will pick it up.
If it is no longer convenient to exchange bitcoins for USD you will see a major portion of the bitcoin economy go away. This is true until the bitcoin network becomes self sufficient (i.e. one can efficiently exchange bitcoins for a significant portion of the things one needs). If a major chunk of the bitcoin economy goes away, the bitcoin economy shrinks and the bitcoins become worth less.
I'll bet you a bitcoin that if the Dwolla/MtGox link goes down, bitcoin exchange rates will drop in pretty much every other currency the following week. If you don't like that bet, propose an alternative bet and put your money where your mouth is
Almost everyone who owns Bitcoins today, will still own them if the US declares it illegal or closes MtGox. They will not want their investment to become worthless, even if they are in the US. They will now effectively have a secret offshore bank account. There will be massive incentive to set up a functional exchange someplace more free, like Switzerland, Lichtenstein, Hong Kong, Singapore, Chile, you name it. Amir Taaki is involved in setting up opensource exchanges to make it easy for countries to get going changing local currency for BTC.
I agree that for a while (a short while) you will not be able to price BTC. After that business will resume, perhaps with the initial exclusion of new clients from the US, but at the same exponential rate as it is now.
Specify the bet a bit more and I'll consider it