Why Isn't Bitcoin Banned Everywhere?(hackernoon.com)
hackernoon.com
Why Isn't Bitcoin Banned Everywhere?
https://hackernoon.com/why-isnt-bitcoin-banned-everywhere-32a2caec90
130 comments
Yeah I don't know how anyone with a cursory knowledge about how it works would think that it's about privacy. Especially when there are alternatives (such as Monero) that do explicitly try to solve that problem.
Have you ever known someone who got involved in some MLM scheme and didn’t want to admit that they a) didn’t check the sales pitch and b) have no way to make more money than they put in unless they convince you to buy something? Bitcoin is the tech version of that.
This is also true for gold, silver and any other currency.
The value only exists because someone else is willing to exchange it for goods or services.
The value only exists because someone else is willing to exchange it for goods or services.
You’re leaving out a lot: gold and silver have significant industrial usage and aesthetic demand so while their rates fluctuate the floor is based on thousands of years of consistent value. You can certainly lose money buying high and selling low but there’s no equivalent to the way Bitcoin could fall below the cost of running the network if people switched to something else because only a few major holders have a significant reason to use it. Since it’s such a small fraction of a percentage of the global economy, almost nobody other than speculators would notice.
That brings me to why your point is wrong: sovereign currencies are backed by governments and that means that there is some intrinsic demand because that currency is used to pay taxes and is paid to civil servants, contractors, etc. In all but the worst run countries that has a substantial anchoring effect. Bitcoin has nothing like that, which is one reason why it’s so volatile – which is great for a speculator but not anyone writing contracts with values set in BTC.
That brings me to why your point is wrong: sovereign currencies are backed by governments and that means that there is some intrinsic demand because that currency is used to pay taxes and is paid to civil servants, contractors, etc. In all but the worst run countries that has a substantial anchoring effect. Bitcoin has nothing like that, which is one reason why it’s so volatile – which is great for a speculator but not anyone writing contracts with values set in BTC.
Pardon my babbling - maybe I'm naive but thats why I'm way more on board with ETH over BTC because it can at least facilitate new sorts of.. financial instruments and products (call it what you will, but the fact that NFTs are currently popping off for some artists is pretty cool to see, even if it feels contrived), whereas the value of BTC is basically resting entirely on its first mover advantage. And this is to say nothing of the energy requirements and ecological costs of proof of work..
It's hard for me to just accept the fact that hype drives demand, and demand sets the price. The hype can be a meme or be seemingly ignorant of better alternatives, but it doesn't matter the speculative feedback loop can apparently irrationally sustain itself for a long time.
I really wonder what the next major recession is going to look like.
It's hard for me to just accept the fact that hype drives demand, and demand sets the price. The hype can be a meme or be seemingly ignorant of better alternatives, but it doesn't matter the speculative feedback loop can apparently irrationally sustain itself for a long time.
I really wonder what the next major recession is going to look like.
Basically, I’d look at the hard demand as people who _need_ to have a particular asset: if you have a contract saying you’re paying me in Bitcoin that means that you’re going to pay the fees needed to keep the network operating. Very, very few people have those and so in most cases the decision is either based in the belief that you’ll be able to sell for a greater value later or an ideological belief, neither of which is especially stable.
> You’re leaving out a lot: gold and silver have significant industrial usage
Most of the traded gold sits in a vault and is never touched as then it would need to be retested for purity or something. Sure, if the economy would crash to the point that gold-as-an-investment-instrument is worthless, you could take it out of the vault and sell it for industrial use, so it has at least some intrinsic value, but I doubt it would retain a lot of its value if everyone tried doing that.
Most of the traded gold sits in a vault and is never touched as then it would need to be retested for purity or something. Sure, if the economy would crash to the point that gold-as-an-investment-instrument is worthless, you could take it out of the vault and sell it for industrial use, so it has at least some intrinsic value, but I doubt it would retain a lot of its value if everyone tried doing that.
That’s why I said floor: if you buy gold now, you might not be able to sell it for as much as you hope but it’s exceedingly unlikely that the value will drop to $0 because industrial users will still use and people will keep buying jewelry. You might have to sit on it for a while but thousands of years of history suggest that demand will persist.
In contrast, Bitcoin’s hashes have no industrial or aesthetic value and they’re not even linked to the concept. If Ethereum becomes more popular, cryptocurrencies could be successful as a concept even if Bitcoin speculators have millions of dollars worth of inputs nobody wants to buy. Since there are almost no situations where someone has no other options for a transaction, it’s really for the network to collapse if the price drops below the mining threshold - the number of people who are going to pay a premium to avoid PayPal/Square, wire transfers, etc. is unlikely to be enough to support an intentionally inefficient architecture.
In contrast, Bitcoin’s hashes have no industrial or aesthetic value and they’re not even linked to the concept. If Ethereum becomes more popular, cryptocurrencies could be successful as a concept even if Bitcoin speculators have millions of dollars worth of inputs nobody wants to buy. Since there are almost no situations where someone has no other options for a transaction, it’s really for the network to collapse if the price drops below the mining threshold - the number of people who are going to pay a premium to avoid PayPal/Square, wire transfers, etc. is unlikely to be enough to support an intentionally inefficient architecture.
Bitcoin has a floor too: the black market. Go to any dark market and they’ll only accept Bitcoin. This is why even if Bitcoin crashes massively it’ll always have a value. Now that still doesn’t explain why gold and bitcoin are valued that high currently.
It's impossible to make coinjoins ("bitcoin laundry service") illegal as they can be run p2p and over tor. EDIT: you can of course make them illegal, however it's impossible to enforce that.
You could however make "accepting" coinjoined UTXO's illegal, but the lightning network fixes this (you can use coinjoined coins to open channels, lightning payments do not know the payer).
If a government decides you need to do full kyc to buy a coffee, then it might be time to emigrate :D
You could however make "accepting" coinjoined UTXO's illegal, but the lightning network fixes this (you can use coinjoined coins to open channels, lightning payments do not know the payer).
If a government decides you need to do full kyc to buy a coffee, then it might be time to emigrate :D
>If a government decides you need to do full kyc to buy a coffee, then it might be time to emigrate :D
The more likely scenario would be that it's treated like cash. You're not going to be questioned for using it to buy coffee, but if you decide to buy a house with a sack of cash they'll start asking questions.
The more likely scenario would be that it's treated like cash. You're not going to be questioned for using it to buy coffee, but if you decide to buy a house with a sack of cash they'll start asking questions.
Precisely. They would be able to look into any transactions or series of transactions trivially. However in most cases won't care.
It’s trivial to require all businesses not to touch transactions involving a list of addresses. Once that happens, all these games fall apart because trying to obscure the identity means that people will only participate in them if they intend to break the law and after the first busts they’ll learn that it’s a bad idea to publish that intention to a public ledger.
You can't say "don't touch coins from these addresses" because it would be trivial to DoS people by sending dust from a blacklisted address to other people's wallets.
If they sent more than infinitesimal amounts, it’s unsustainable; if they don’t, it’s easily filtered — and that’s assuming that they didn’t just direct you to send the amount to some dump address if you wanted to disavow it. Simply telling a few large exchanges to do that automatically would take care of the majority of users.
You have to be loaded to consider DoSing with current transaction fees anywhere near practical.
And it's not like the government couldn't fine the businesses equal to say, 1.5x the amount transferred from the blacklisted address.
And it's not like the government couldn't fine the businesses equal to say, 1.5x the amount transferred from the blacklisted address.
You can actually test that regulators are doing exactly this. There are a few digital currencies which (attempt to) protect the anonymity of all transactions. Monero is the most popular such coin. Go try and exchange some directly with fiat currency. You'll find that it's quite a bit more difficult than with bitcoin. Most legitimate exchanges don't take Monero to stay within anti-money laundering regulations.
Fun thing, I looked it up for banknotes. Turns out there are only 15 billion euro banknotes. Fits in a Postgres database! Most of the cycles are extremely short: Withdraw at the ATM, pay at the bakery, back to the bank. If banks took note of note numbers, it would probably be straightforward to trace 80% of the transactions. And trace banknotes that stayed 6 months offline, and those that are always withdrawn by someone and used in a specific suburb (=possible drug deal), especially when he pays everything else with credit card.
Of course it is 20x less efficient than tracking Bitcoins, and requires input sources from several places, but it’s fun to know that even banknotes are quite easily traceable.
Of course it is 20x less efficient than tracking Bitcoins, and requires input sources from several places, but it’s fun to know that even banknotes are quite easily traceable.
People forget that government authority comes from their monopoly on the right to bust down your door, take your physical possessions, and imprison you. Sure, you might have billions of dollars worth of BTC, but that's no good for you from the inside of a prison cell or if the government prevents you from acquiring the physical possessions that wealth normally lets you buy.
If you come up with some way to cheat the tax man, the tax man will come up with a way to make you pay interest and penalties. One man can evade all of the taxes, and all people can evade some of the taxes, but all people can't evade all of the taxes. The state always wins and will always take as much of a cut of the economy as it wants to.
If you come up with some way to cheat the tax man, the tax man will come up with a way to make you pay interest and penalties. One man can evade all of the taxes, and all people can evade some of the taxes, but all people can't evade all of the taxes. The state always wins and will always take as much of a cut of the economy as it wants to.
At some point people just leave. Or revolt. There's a reason there isn't a 90% income tax.
It looks like governments in the world keep getting bigger and bigger. If all western countries all agreed to raise taxes, people wouldn't have much of a choice.
Is saving more of your income worth living in Africa, South America or South Asia? There have been proposals for a Global Minimum Tax which is pretty scary.
There are also alternative ways to redistribute wealth from individuals to a centralised state. The Great Reset seems to go in this direction.
Is saving more of your income worth living in Africa, South America or South Asia? There have been proposals for a Global Minimum Tax which is pretty scary.
There are also alternative ways to redistribute wealth from individuals to a centralised state. The Great Reset seems to go in this direction.
If democratic western countries increase taxes, then it may be the will of the majority of the people, given that they have the power of governance via elections.
There was a 91-92% top marginal tax rate 70 years ago, and there wasn't a mass exodus or revolt.
People with incomes that high have too much to lose in a revolution. Also, part of being filthy rich is living wherever you want without having to worry about the cost, which is why most rich people live in the most expensive locales in first world countries.
People with incomes that high have too much to lose in a revolution. Also, part of being filthy rich is living wherever you want without having to worry about the cost, which is why most rich people live in the most expensive locales in first world countries.
>There was a 91-92% top marginal tax rate 70 years ago, and there wasn't a mass exodus or revolt.
AFAIK the real tax rate at the time wasn't anywhere near that because there were tons of exemptions/deductions.
AFAIK the real tax rate at the time wasn't anywhere near that because there were tons of exemptions/deductions.
There was a 91-92% top marginal tax rate 70 years ago, and there wasn't a mass exodus or revolt.
What percentage of the population was affected?
What percentage of the population was affected?
> At some point people just leave. Or revolt.
Sure. But this has almost nothing to do with which currency is used.
Sure. But this has almost nothing to do with which currency is used.
It was a reply to:
The state always wins and will always take as much of a cut of the economy as it wants to.
The state always wins and will always take as much of a cut of the economy as it wants to.
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Power like what you've described comes from control of the money supply. If I have billions of dollars worth of BTC I may start paying men with guns to defend me from the other men with guns, well then we have a power struggle.
> Power like what you've described comes from control of the money supply
So Ecuador [1] and every member of the Eurozone are powerless? As well as practically every revolutionary force in history? What about governments when we were on the gold standard?
> If I have billions of dollars worth of BTC I may start paying men with guns to defend me from the other men with guns, well then we have a power struggle
This works equally well with your holding Bitcoins or dollars or renmimbi. Wealth conveys power. Whether it is held in gold or Bitcoin or Amazon stock is irrelevant.
[1] https://en.m.wikipedia.org/wiki/Currency_of_Ecuador
So Ecuador [1] and every member of the Eurozone are powerless? As well as practically every revolutionary force in history? What about governments when we were on the gold standard?
> If I have billions of dollars worth of BTC I may start paying men with guns to defend me from the other men with guns, well then we have a power struggle
This works equally well with your holding Bitcoins or dollars or renmimbi. Wealth conveys power. Whether it is held in gold or Bitcoin or Amazon stock is irrelevant.
[1] https://en.m.wikipedia.org/wiki/Currency_of_Ecuador
Do you think revolutionary armies didn't pay their soldiers?
Gold standard reflected sound monetary policy and kept government misallocations in check. Since moving to the fiat standard, governments have unleashed record spending. Bitcoin is exposing what happens to the money as a result of the monetary expansion.
Bitcoin has replaced gold, and those of us who have adopted a BTC standard will have separated in prosperity levels from our fiat based peers within a generation or two.
Gold standard reflected sound monetary policy and kept government misallocations in check. Since moving to the fiat standard, governments have unleashed record spending. Bitcoin is exposing what happens to the money as a result of the monetary expansion.
Bitcoin has replaced gold, and those of us who have adopted a BTC standard will have separated in prosperity levels from our fiat based peers within a generation or two.
> those of us who have adopted a BTC standard will have separated in prosperity levels from our fiat based peers within a generation or two
What you’re describing is true of any asset that appreciates in value. The wealth confers power. That it is a currency is irrelevant.
If the U.S. switched its legal tender to Bitcoin tomorrow, it would change how we borrow and spend. But it would be no more of a shock to the system than a balanced budget amendment on the Treasury and the Fed. (Less, in fact, since the U.S. on Bitcoin could still deficit spend.)
What you’re describing is true of any asset that appreciates in value. The wealth confers power. That it is a currency is irrelevant.
If the U.S. switched its legal tender to Bitcoin tomorrow, it would change how we borrow and spend. But it would be no more of a shock to the system than a balanced budget amendment on the Treasury and the Fed. (Less, in fact, since the U.S. on Bitcoin could still deficit spend.)
A Bitcoin-funded military coup. Now that’s sci-fi stuff!
My phrasing: the USA military determines the value of the USA dollar.
I binged on David Graeber last year. I so appreciate criticisms of the Liberal tradition from outside of the Liberal (left vs right) sphere. It's like only being able to appreciate the forest once you get out of the forest.
Anyway. Graeber asks a lot of hard questions. Such as "What is money?" And provides historical precedents which may lead to answers. Like prior relationships between money, currency, debt, empire, military, markets, capitalism.
For a long time, governments minted gold (or whatever) into currency. Then we adopted some kind of virtual currency, so now there's more money than their is actual currency. (Which, humorously, is not first time in history.)
More recently, non government systems like bitcoin are minting electricity into currency. I don't really care that "there's no there there". Meaning the lack of a physical existence (eg gold or unobtainium or whatever) doesn't bother me.
However, I am concerned that there's no big ass military compelling everyone to treat bitcoin as a fiat currency. Until then, bitcoin is just an escrow or collectible.
A very, very fragile escrow.
It feels like the tulip bulb craze. aka Castles in the sky. Bitcoin's preceived value is held up by everyone's belief that they can sell their holdings to the next sucker.
Which is fine. Until it isn't.
What happens when the inevitable shock happens? When there's the equivalent of a run on the bank? When everyone tries to "withdraw" by converting bitcoin to US dollars at the same time?
Who's gonna step in and stabilize the system?
Right now, no one.
So then all that currency, minted bitcoin, just goes up in smoke. Poof.
We've seen this story play out so many times.
I binged on David Graeber last year. I so appreciate criticisms of the Liberal tradition from outside of the Liberal (left vs right) sphere. It's like only being able to appreciate the forest once you get out of the forest.
Anyway. Graeber asks a lot of hard questions. Such as "What is money?" And provides historical precedents which may lead to answers. Like prior relationships between money, currency, debt, empire, military, markets, capitalism.
For a long time, governments minted gold (or whatever) into currency. Then we adopted some kind of virtual currency, so now there's more money than their is actual currency. (Which, humorously, is not first time in history.)
More recently, non government systems like bitcoin are minting electricity into currency. I don't really care that "there's no there there". Meaning the lack of a physical existence (eg gold or unobtainium or whatever) doesn't bother me.
However, I am concerned that there's no big ass military compelling everyone to treat bitcoin as a fiat currency. Until then, bitcoin is just an escrow or collectible.
A very, very fragile escrow.
It feels like the tulip bulb craze. aka Castles in the sky. Bitcoin's preceived value is held up by everyone's belief that they can sell their holdings to the next sucker.
Which is fine. Until it isn't.
What happens when the inevitable shock happens? When there's the equivalent of a run on the bank? When everyone tries to "withdraw" by converting bitcoin to US dollars at the same time?
Who's gonna step in and stabilize the system?
Right now, no one.
So then all that currency, minted bitcoin, just goes up in smoke. Poof.
We've seen this story play out so many times.
It seems to me there is one important reason which isn't mentioned here. Attempting to ban Bitcoin would just confirm the need for its existence, giving it a ton of credibility and making it all the more compelling. Any ban attempt would simply be counterproductive.
This is not true. Whether you believe it or not, there are several reasons the government could use to ban bitcoin and say they are protecting the customer.
-It's a speculative bubble, that will cause a transfer of wealth from the poor to rich(I.E. Hedge funds will find a way to front run)
- It uses a ton of energy, with the climate accords they could get many countries to ban it at once. Why should a few bitcoin holders be allowed to destroy the plant.
Whether these arguments hold water or not( I think they both do) They both at least make sense and the majority of people can understand them.
-It's a speculative bubble, that will cause a transfer of wealth from the poor to rich(I.E. Hedge funds will find a way to front run)
- It uses a ton of energy, with the climate accords they could get many countries to ban it at once. Why should a few bitcoin holders be allowed to destroy the plant.
Whether these arguments hold water or not( I think they both do) They both at least make sense and the majority of people can understand them.
It’s not clear to me how the public would receive these kinds of arguments. The public has little trust in government. I think they would be too skeptical to take these arguments at face value. A ban attempt would come with considerable risk it seems to me.
>A store of value is not threatening
Quite so. After all, every other store of value is mostly owned by the ruling class. The way to neutralize the threat of a new store of value is simply to own it. I don't think it is too late for that. Elites already own 6.5% of the total supply: https://bitcointreasuries.org/
Quite so. After all, every other store of value is mostly owned by the ruling class. The way to neutralize the threat of a new store of value is simply to own it. I don't think it is too late for that. Elites already own 6.5% of the total supply: https://bitcointreasuries.org/
No bitcoin was not starting a new shadow financial system. Op has the wrong idea. You don't base such a system on the most transparent money the world has ever seen. Why do people even tech people think that bitcoin is shadow money when it's traçable and designed to be so? That's such a mystery. I think people want it to be shadow so they can blame it or just that they like conspiracies and illuminati.
> Why do people even tech people think that bitcoin is shadow money when it's traçable and designed to be so?
As I understand it, it is designed to be easily verifiable by any participant. How is it designed to be traceable?
As I understand it, it is designed to be easily verifiable by any participant. How is it designed to be traceable?
Go on blockchain.info and track all money exchanges. Pick one and track all its history. It's like the universe you can see as far as the big bang.
The reason is that there is no entanglement to the material world which allows you to remain pseudonymous if you choose so
You mean you can't buy stuff with paper dollars? Can someone track those dollars?
> No bitcoin was not starting a new shadow financial system
If Bitcoin started a new shadow financial system, then so did collectible card games and Ebay.
If Bitcoin started a new shadow financial system, then so did collectible card games and Ebay.
Not every country controls its own currency [1]. Sovereignty and monetary authority are distinct.
(I’m personally increasingly convinced that the U.S. dollar’s reserve currency status no longer benefits America [2].)
[1] https://en.m.wikipedia.org/wiki/Currency_of_Ecuador
[2] https://carnegieendowment.org/chinafinancialmarkets/56856
(I’m personally increasingly convinced that the U.S. dollar’s reserve currency status no longer benefits America [2].)
[1] https://en.m.wikipedia.org/wiki/Currency_of_Ecuador
[2] https://carnegieendowment.org/chinafinancialmarkets/56856
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This is a bad article. Governments are pushing back by trying to destroy the fungibility of bitcoin through blocklists and kyc
Governments do not want to ban things, they want to have them subjected tk kyc, aml , taxes if possible.
They are also slow to adapt, laws cannot be passed with the stroke of a pen.
And btc is not really anonymous.
The government does not need monetary policy to be in charge. They need firepower and a monopoly on law enforcement.
And btc is not really anonymous.
The government does not need monetary policy to be in charge. They need firepower and a monopoly on law enforcement.
I think the author comes pretty close to what I think is the right answer: on the scale of nations, BTC doesn't matter. It's an experiment. It's not more anonymous than paper currency, and not much more effective at laundering money. Governments aren't worried about it because it isn't really changing anything. If I want to buy a nuke, tank, or a fighter jet, BTC isn't solving the the hard problems related to that (taking delivery of said nuke, tank, or jet without being intercepted). BTC is enabling stoners to buy drugs online, and frankly, governments aren't that worried because stoners were already buying drugs.
I also don't think it's so much as "governments don't care about people storing wealth" so much as "it's not storing wealth." It's not worth as much as you think it is, and it's not that good at storing wealth (I will accept that it may be a decent high-risk opportunity for growth). The current $1 trillion market cap is calculated by assuming all of the 18.65 million BTC ever mined could be sold at the current asking price. But they can't be, because the order books aren't that deep and never will be, plus there are a lot of mined BTC that are in wallets with lost keys. It's probably still worth more than some small countries, but BTC definitely isn't worth $1 trillion. And when you consider BTC as a store of wealth, gold is a way better choice. I don't want my store of wealth to be experiencing gargantuan shifts in value over a few weeks.
It might sound like I'm shitting on BTC. I'm not, I think it's a cool experiment. I like the idea of being able to transfer money to friends without fees, and I'm glad that crypto helps keep banks honest. It was certainly novel. If I were to shit on anyone, it would be cryptocurrency bros that are full of themselves and think that their one thing is going to turn the world upside down. I'm for BTC as long as people don't get too hung up about it and instead we see BTC as helping us figure out ways to do financial things better.
I also don't think it's so much as "governments don't care about people storing wealth" so much as "it's not storing wealth." It's not worth as much as you think it is, and it's not that good at storing wealth (I will accept that it may be a decent high-risk opportunity for growth). The current $1 trillion market cap is calculated by assuming all of the 18.65 million BTC ever mined could be sold at the current asking price. But they can't be, because the order books aren't that deep and never will be, plus there are a lot of mined BTC that are in wallets with lost keys. It's probably still worth more than some small countries, but BTC definitely isn't worth $1 trillion. And when you consider BTC as a store of wealth, gold is a way better choice. I don't want my store of wealth to be experiencing gargantuan shifts in value over a few weeks.
It might sound like I'm shitting on BTC. I'm not, I think it's a cool experiment. I like the idea of being able to transfer money to friends without fees, and I'm glad that crypto helps keep banks honest. It was certainly novel. If I were to shit on anyone, it would be cryptocurrency bros that are full of themselves and think that their one thing is going to turn the world upside down. I'm for BTC as long as people don't get too hung up about it and instead we see BTC as helping us figure out ways to do financial things better.
> The current $1 trillion market cap is calculated by assuming all of the 18.65 million BTC ever mined could be sold at the current asking price. But they can't be, because the order books aren't that deep and never will be
You can say that about literally any asset because "market cap" doesn't mean "liquidation price".
You can say that about literally any asset because "market cap" doesn't mean "liquidation price".
Assets that have a real income stream behind them at least have a price floor. For example you would not expect a house to sell for less than the present value of some number of years rent, you would not expect the sum of shares of a company to sell for less than the liquidation value of its assets less its liabilities, etc. Bitcoin has precisely 0 equity or income stream attached to it. It is not an income producing asset. It does not grant claim to real assets like a bond or a stock. There is zero underlying. That is why the term "Bitcoin market cap" is BS. There is nothing to capitalise. Bitcoin could be priced at $0 or $1,000,000 either way its present price per unit does not relate to the net value of all Bitcoins as a market cap would.
>Assets that have a real income stream behind them at least have a price floor. [...] Bitcoin has precisely 0 equity or income stream attached to it.
Is this a relevant factor considering that many assets are trading several times above this price floor? In other words, if you bought $5000 worth of shares in a highly overvalued company (eg. GME or TSLA), and the bubble pops, is it really much consolation to you that there's a price floor of $100 rather than $0?
>That is why the term "Bitcoin market cap" is BS. There is nothing to capitalise.
This is technically correct in the sense that "market cap" is only defined for companies (according to wikipedia at least), so you could say that it's wrong to quote the "market cap" for anything other than companies (cryptocurrency, precious metals, commodities, houses).
Is this a relevant factor considering that many assets are trading several times above this price floor? In other words, if you bought $5000 worth of shares in a highly overvalued company (eg. GME or TSLA), and the bubble pops, is it really much consolation to you that there's a price floor of $100 rather than $0?
>That is why the term "Bitcoin market cap" is BS. There is nothing to capitalise.
This is technically correct in the sense that "market cap" is only defined for companies (according to wikipedia at least), so you could say that it's wrong to quote the "market cap" for anything other than companies (cryptocurrency, precious metals, commodities, houses).
>Is this a relevant factor considering that many assets are trading several times above this price floor?
Yes. But the market can stay "irrational" for a long time. Many people have won the greater fool game over the years.
>This is technically correct in the sense that "market cap" is only defined for companies.
Market cap is a measure of the total equity of company as priced in the stock market. Since nobody can own the "Bitcoin network" like they can own a shares of a company "market cap" is nonsense when used as a term to describe the value of the Bitcoin network. There is no underlying equity to capitalise at any price.
Yes. But the market can stay "irrational" for a long time. Many people have won the greater fool game over the years.
>This is technically correct in the sense that "market cap" is only defined for companies.
Market cap is a measure of the total equity of company as priced in the stock market. Since nobody can own the "Bitcoin network" like they can own a shares of a company "market cap" is nonsense when used as a term to describe the value of the Bitcoin network. There is no underlying equity to capitalise at any price.
Alternative explanations:
1. BTC is a proxy for gold and greatly relieves pressure on gold prices and the money-center banks and sovereigns accumulating/trading gold.
2. BTC circumvents capital controls in countries where those with the power to stop BTC are using it move funds into free market economies; and those free market economies are happy to see the outflows from adversarial regimes.
3. BTC (and crypto in general) expands global liquidity without the need to print even more USD/EUR/RMB.
4. A failure/crash of BTC - should it occur - would result in a flight to USD/US Treasuries and the like. If you're looking for a possible conspiratorial outcome - look here.
5. Massive money supply growth has laid bare the need for an alternative currency, and even USGOV/EU/CCP recognizes the need.
1. BTC is a proxy for gold and greatly relieves pressure on gold prices and the money-center banks and sovereigns accumulating/trading gold.
2. BTC circumvents capital controls in countries where those with the power to stop BTC are using it move funds into free market economies; and those free market economies are happy to see the outflows from adversarial regimes.
3. BTC (and crypto in general) expands global liquidity without the need to print even more USD/EUR/RMB.
4. A failure/crash of BTC - should it occur - would result in a flight to USD/US Treasuries and the like. If you're looking for a possible conspiratorial outcome - look here.
5. Massive money supply growth has laid bare the need for an alternative currency, and even USGOV/EU/CCP recognizes the need.
Bitcoin cannot break government's Monopoly on monitarey policy because you must, under threat of violence use the government's currency. If are productive you must use it to pay taxes.
If you are dependent on government you must use it if you want government support.
In Germany it's considered "private money". How is that not breaking "government's monopoly on monetarey policy"? They never had such a thing to begin with.
>How is that not breaking "government's monopoly on monetarey policy"?
You tell me why/how it is breaking the "government's monopoly on monetary policy, since it's your example.
You tell me why/how it is breaking the "government's monopoly on monetary policy, since it's your example.
Because it's not a monopoly (by definition) if there is competition with a different monetary policy.
You can pay the taxes and fees needed to live in the world with "private money"?
I don't know what kind of taxes and fees are in Germany, but where I live you must pay property tax, medical fees, sales tax, drivers licence fee, income tax all in the government's currency. If you don't pay these fees your property will be seized and you will be put in jail. You must use the government's currency. If you value your freedom and property you have no choice.
I don't know what kind of taxes and fees are in Germany, but where I live you must pay property tax, medical fees, sales tax, drivers licence fee, income tax all in the government's currency. If you don't pay these fees your property will be seized and you will be put in jail. You must use the government's currency. If you value your freedom and property you have no choice.
Sure. There are also plenty of shops that don't accept bitcoin either, so if you need to use a service (private or government) you would convert it into something they would accept. The point is that there are no taxes associated with the conversion.
Therefore, you are not subject to government monetary policy (on your savings) because you would only convert what you needed to at the point when you have to pay for the services.
Therefore, you are not subject to government monetary policy (on your savings) because you would only convert what you needed to at the point when you have to pay for the services.
The same reason any asset isn’t banned by governments. Government overreach notwithstanding, we still have a legal system based on economic liberty. The only thing illegal about Bitcoin, like any non-monetary asset, is not playing taxes when you trade it.
Another reason why it hasn't been banned yet is that it is generally easier for people in political/legal positions to avoid making a commitment on whether they're for or against bitcoin by simply purchasing a little bit.
All they have to do is purchase JUST enough that they don't care which way it flips.
If you take the argument one level deeper, you might come to the conclusion that nearly all rational participants in politics will purchase some amount of it. And if the price rises while this happens, they may personally feel like supporting it rather than destroying it.
And since the price will rise while this happens, well, it becomes a bit of a self-fulfilling prophecy.
All they have to do is purchase JUST enough that they don't care which way it flips.
If you take the argument one level deeper, you might come to the conclusion that nearly all rational participants in politics will purchase some amount of it. And if the price rises while this happens, they may personally feel like supporting it rather than destroying it.
And since the price will rise while this happens, well, it becomes a bit of a self-fulfilling prophecy.
I have great difficulty in regarding BitCoin as 'real'. The same way that I have difficulty in regarding paper tokens (currency, share certificates, gold certificates, etc) as 'real'. Those paper tokens have ZERO real intrinsic value, no matter what numbers can be printed on them.
Examples where the zero 'paper'value is reflected in what the tokens represent: Zimbabwe and Confederate banknotes, share certificates in non-existent companies, deeds to nationalised land, etc.
BitCoin is really just a set of numbers, no different to the very simplistic "2 + 2", and having no more intrinsic value than that.
Examples where the zero 'paper'value is reflected in what the tokens represent: Zimbabwe and Confederate banknotes, share certificates in non-existent companies, deeds to nationalised land, etc.
BitCoin is really just a set of numbers, no different to the very simplistic "2 + 2", and having no more intrinsic value than that.
These articles often seem to miss the fact that there are much more modern cryptocurrencies these days that are stable because they are tied to the price of a fiat currency like the USD, and much more efficient and green than Bitcoin.
This still poses the question: what about anonymity enhanced cryptocurrencies like zcash? Why are these legal?
Furthermore why are unhosted wallets legal as well? It seems like FinCEN is fine with them so far and do not treat them like VASPs (so not affected by the travel rule). Why?
This still poses the question: what about anonymity enhanced cryptocurrencies like zcash? Why are these legal?
Furthermore why are unhosted wallets legal as well? It seems like FinCEN is fine with them so far and do not treat them like VASPs (so not affected by the travel rule). Why?
Some useful links:
[1] Is Bitcoin Legal?
https://www.investopedia.com/ask/answers/121515/bitcoin-lega...
[2] Legality of bitcoin by country or territory
https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...
[1] Is Bitcoin Legal?
https://www.investopedia.com/ask/answers/121515/bitcoin-lega...
[2] Legality of bitcoin by country or territory
https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...
There's another reason (that is actually written in the whitepaper): governments are made up of people. The people who recognize how powerful Bitcoin is can make more money from buying/mining it than attacking it. This game theory also works when governments are fighting eachother. Many people suspect that governments will have to get into Bitcoin mining in the future, as it will be part of national security.
Banning is not a solution to anything. And as far as the value is concerned, it will definitely go down initially when legitimate people will pull out. But in the long run, it will rise because of the alternative illegal use of the currency.
Another thought is that there are ~200 countries. Some of them survive only on illegal funds. Will it be possible to ban this thing completely?
Another thought is that there are ~200 countries. Some of them survive only on illegal funds. Will it be possible to ban this thing completely?
> If it came down to it, and central banks felt a digital currency posed enough of a threat, they would happily incentivize (or mandate) usage of their own currency in order to maintain sovereign monetary policy.
They already do mandate it which is why they don't see it as a threat. It's called taxes, fees, and fines. In the US you can only pay those in dollars so there's your demand for their own currency.
They already do mandate it which is why they don't see it as a threat. It's called taxes, fees, and fines. In the US you can only pay those in dollars so there's your demand for their own currency.
Bitcoin happens to be a handy money sink. Governments did nothing to deter the real estate bubble because it helped/helps to sink excess liquidity. (It is long debated that inflation rates are bogus because they don’t take the price increase of houses into consideration). For me, if this Bitcoin craze helps to keep low the prices of things I want, I am happy.
what's cheap? food? nope. gasoline? nope. lumber or housing materials? definitely nope. a decent computer? nope. financial assets? nope. healthcare? nope. tv set? ok sure.
stock (sp500): one year ago: 2500. Today: 4000.
retail gas in US: one year ago: 2.41. Today: 2.86.
So yes, compared to some major asset classes that are omitted from consumer inflation calculations, gas is "cheap".
retail gas in US: one year ago: 2.41. Today: 2.86.
So yes, compared to some major asset classes that are omitted from consumer inflation calculations, gas is "cheap".
a 20% annual price increase = "cheap" to you? did your salary increase 20% since March 2020? didn't think so.
Seems like you completely ignored this part: "compared to some major asset classes that are omitted from consumer inflation calculations"
sp500 going from 2500 to 4000 in the same year is 60%. Yes, a 20% price hike compared to a 60% price hike makes for a cheaper outcome in the end, when gas is "compared to some major asset classes", in my example the US stocks. Why is this so difficult?
sp500 going from 2500 to 4000 in the same year is 60%. Yes, a 20% price hike compared to a 60% price hike makes for a cheaper outcome in the end, when gas is "compared to some major asset classes", in my example the US stocks. Why is this so difficult?
I ignored it because it is irrelevant. People's purchasing power isn't based on the stock market index, it is based on their income. Even a retiree who is net withdrawing... a 60% upwards move in the stock market doesn't mean that retiree has 60% more purchasing power this year.
Use some of your purchasing power on an economics book.
Use some of your purchasing power on an economics book.
Right. I think it's a good explanation.
I am very hopeful about Ethereum 2.0. But as the article says, it seems that if it really starts to have high transaction rates that make it compete as real money or even see things like distributed autonomous organizations take off, governments will probably protect their turf.
Here are a couple of fantasy scenarios. First, maybe government will just not be able to effectively ban Ethereum, despite trying. And a new era of decentralization and effective and fair international cooperation flourishes.
Or two, maybe instead of WWIII, countries decide to work together to create a new international system, based on a shared currency built on Ethereum and tied to a comprehensive decentralized resource tracking system (possibly bringing in other distributed protocols). Designed to ensure food, housing, sustainability, and security security for the global populace and cut back on runaway inequality. It will be a new type of economics, more sophisticated and based on sustainable practices rather than infinite growth.
Well I did say they were fantasies.
I am very hopeful about Ethereum 2.0. But as the article says, it seems that if it really starts to have high transaction rates that make it compete as real money or even see things like distributed autonomous organizations take off, governments will probably protect their turf.
Here are a couple of fantasy scenarios. First, maybe government will just not be able to effectively ban Ethereum, despite trying. And a new era of decentralization and effective and fair international cooperation flourishes.
Or two, maybe instead of WWIII, countries decide to work together to create a new international system, based on a shared currency built on Ethereum and tied to a comprehensive decentralized resource tracking system (possibly bringing in other distributed protocols). Designed to ensure food, housing, sustainability, and security security for the global populace and cut back on runaway inequality. It will be a new type of economics, more sophisticated and based on sustainable practices rather than infinite growth.
Well I did say they were fantasies.
> Designed to ensure food, housing, sustainability, and security security for the global populace and cut back on runaway inequality
Why do you think a deflationary currency built on staking assets would reduce inequality?
Why do you think a deflationary currency built on staking assets would reduce inequality?
It's a starting point that provides much more capability than something like a traditional currency. The potentially deflationary aspects can be changed with source code modifications if necessary.
But I did mention other decentralized technologies. What I was proposing was a massive social-technological engineering task rather than a complete solution.
But it seems obvious that the economic tools we are working with are severely outdated and insufficient.
But I did mention other decentralized technologies. What I was proposing was a massive social-technological engineering task rather than a complete solution.
But it seems obvious that the economic tools we are working with are severely outdated and insufficient.
This is trying to back into post-scarcity socialism with a technical tool based on ownership. That seems challenging.
It's really about having a more nuanced understanding of these systems.
Money is one of the earliest technologies. It is also one of the most successful because of its ability to allocate power and resources in a way that facilitates both cooperation and hierarchy.
But its form is quite dated. It needs to become a high technology. Some of the "socialistic" ideals (such as food and housing security) are nearly undeniable, if you have moved on from Social Darwinism (which many have not unfortunately).
But socialists have traditionally failed to appreciate the great success of money, the necessity of evolution and freedom, and robustness of dynamic networks over centralized systems.
We have technologies that are sophisticated enough that we can have dynamic evolving systems but still have housing security and limit inequality while remaining sustainable. But we aren't going to be able to do that with old-fashioned traditional money or by banning money or some central control system. To accomplish our goals we need to make society into a high-technology by integrating our innovations properly.
Money is one of the earliest technologies. It is also one of the most successful because of its ability to allocate power and resources in a way that facilitates both cooperation and hierarchy.
But its form is quite dated. It needs to become a high technology. Some of the "socialistic" ideals (such as food and housing security) are nearly undeniable, if you have moved on from Social Darwinism (which many have not unfortunately).
But socialists have traditionally failed to appreciate the great success of money, the necessity of evolution and freedom, and robustness of dynamic networks over centralized systems.
We have technologies that are sophisticated enough that we can have dynamic evolving systems but still have housing security and limit inequality while remaining sustainable. But we aren't going to be able to do that with old-fashioned traditional money or by banning money or some central control system. To accomplish our goals we need to make society into a high-technology by integrating our innovations properly.
About the form of money being quite dated: https://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hate...
"And now here we are in a world of high information technology — and people think it’s smart, nay cutting-edge, to create a sort of virtual currency whose creation requires wasting real resources in a way Adam Smith considered foolish and outmoded in 1776."
Whatever the high-tech economic mechanism will be, bitcoin doesn't seem likely to be it.
"And now here we are in a world of high information technology — and people think it’s smart, nay cutting-edge, to create a sort of virtual currency whose creation requires wasting real resources in a way Adam Smith considered foolish and outmoded in 1776."
Whatever the high-tech economic mechanism will be, bitcoin doesn't seem likely to be it.
Right. I wasn't recommending Bitcoin. I was talking about things more along the lines of Ethereum.
Ethereum is what happens when you keep evolving the idea of Bitcoin. Bitcoin is what happens when you freeze the idea.
But I will say that despite the wastefulness and other flaws of Bitcoin, at least it uses math to verify the ledger, rather than relying on authority and private entities to distribute points without any real verification.
Money is just a points system used to distribute control over resources. The main advantage of cryptocurrency is that it uses math to verify that people are not cheating in their points distribution.
Ethereum is what happens when you keep evolving the idea of Bitcoin. Bitcoin is what happens when you freeze the idea.
But I will say that despite the wastefulness and other flaws of Bitcoin, at least it uses math to verify the ledger, rather than relying on authority and private entities to distribute points without any real verification.
Money is just a points system used to distribute control over resources. The main advantage of cryptocurrency is that it uses math to verify that people are not cheating in their points distribution.
At the end of the day Bitcoin is free speech. It's open source code that people run which allows them to sync and update a database.
It is untenable to ban such a thing in "free" societies and have people still buy in to the idea that they are free.
It is untenable to ban such a thing in "free" societies and have people still buy in to the idea that they are free.
Ever heard of popcorn time?
This article uses the phrase "store of value" 11 times to describe Bitcoin. How is an asset that is as volatile Bitcoin considered a store of value and not a speculative asset?
I've been using Bitcoin as money(store of value, unit of account, means of payment) as much as possible for the last 5 years.
From the perspective of a "pioneering early adopter", Bitcoin does not seem volatile. Instead, it seems like prices across the board are going down and everything is getting cheaper.
The effect on me is that since my saving is rewarded, I'm now way better at saving. I've stopped making irrational, impulse purchases. I'm far more in tune with my spending.
I'm also able to keep the purchasing power I earn from working. This beats the hell out of losing it slowly.
Volatility hasn't been a problem for me.
From the perspective of a "pioneering early adopter", Bitcoin does not seem volatile. Instead, it seems like prices across the board are going down and everything is getting cheaper.
The effect on me is that since my saving is rewarded, I'm now way better at saving. I've stopped making irrational, impulse purchases. I'm far more in tune with my spending.
I'm also able to keep the purchasing power I earn from working. This beats the hell out of losing it slowly.
Volatility hasn't been a problem for me.
Governments have a label for financial activity they don’t like: “money-laundering” (or if you really piss someone off “financing terrorism”). I’ve never understood the techno-libertarian bloc of crypto enthusiasts. If someone were to succeed to at “decentralizing finance” they would land in prison if they were lucky, and if a nation sheltered them it would be sanctioned if it was lucky.
If I awoke from a fever dream with the unbreakable government-proof cryptography currency paper scribbled on a legal pad I’d burn it.
If I awoke from a fever dream with the unbreakable government-proof cryptography currency paper scribbled on a legal pad I’d burn it.
(2018)
I think the writer's speculation about government central banks buying Bitcoin in the future is economically illiterate...
It's simple, you can't ban it. You can ban the on-ramps and off-ramps, you can't ban p2p transactions.
Yes you can, you could shut down access to seed peers IPs, to miner pool IPs, at the exchange level, etc.
What do you mean by pool IPs?
edit: after your clarification, you can easily use tor, IP addresses can be easily changed, miner's don't have to use the same IP address, they can solve the block wherever they want and broadcast it from wherever they want. There is even satellite blockchain connections now.
At exchange level, that's what I mean by on-ramp and off-ramp, that would only push exchanges to decentralized platforms and to black markets.
edit: after your clarification, you can easily use tor, IP addresses can be easily changed, miner's don't have to use the same IP address, they can solve the block wherever they want and broadcast it from wherever they want. There is even satellite blockchain connections now.
At exchange level, that's what I mean by on-ramp and off-ramp, that would only push exchanges to decentralized platforms and to black markets.
For sure, but that would effectively kill BTC.. So much of it is due to institutional investment it would probably halve overnight.
> So much of it is due to institutional investment it would probably halve overnight.
Which is why I really doubt the gov would ban it. Especially now that many gov members understand it somewhat (Gary Gensler, head of SEC, used to teach blockchain course at MIT, many senators are publicly holding, etc).
But regardless, BTC was very much alive when it was trading at 1$, so I wouldn't really equate dead/alive with price, it would just hinder adoption.
Which is why I really doubt the gov would ban it. Especially now that many gov members understand it somewhat (Gary Gensler, head of SEC, used to teach blockchain course at MIT, many senators are publicly holding, etc).
But regardless, BTC was very much alive when it was trading at 1$, so I wouldn't really equate dead/alive with price, it would just hinder adoption.
Outside of speculation, money laundering, black markets, and grey market remittances what real world use cases does Bitcoin have today? Gary Gensler taught a course on blockchain at MIT? So what. What does he understand? How to make a decentralised cyclical Ponzi scheme? That is the "store of value" use case that is now being touted since medium of exchange and unit of account are basically non-competitive with traditional (read: real) currencies. Issac Newton bought into the South Sea bubble. Did that mean the bubble was credible? Did that mean Newton "understood" it or was he merely suckered in by the hype?
Anybody who is trained in economics who thinks Bitcoin is a serious useful, thing as opposed to an Ponzi is probably somebody who has a financial, professional, or social interest in Bitcoin "succeeding." See regulatory capture. For the past 20 years regulators have been basically asleep in a lot of areas in America. They woke a bit after the financial crisis 10 years ago but "too big to fail" and bailing out the banks (moral hazard) showed they were not serious about doing anything unpopular but salutary. Likewise now regulators are tolerant or supportive of blockchain bullshit simply because it is popular.
Similar thing has gone on with driverless cars. The technology is obviously not economically viable (much less technically) and yet at every step in the way has been enabled by regulators. State DMVs should never have issued autonomous car permits, because the technology is bullshit. Yeah I am sure after billions of dollars of sunk costs Waymo can navigate some geofenced area of Phoenix / Chandler. So what? Were is the "innovation" if the "AI" driver is more expensive and less universal than a human driver? If autonomous navigation is a tractable problem why not ships, planes, trains before cars? Planes have more degrees of freedom so are less likely to hit something in seconds if they make a mistake. Same for ships. Trains are bound to rails. Cars have to stay on the road but the road is not systemically cleared (as rails are) and there is nothing mechanically binding the car to the road. Driverless cars are the hardest vehicle class to automate, and yet they were taken seriously. When people will drive a cab for under $10 a hour I don't see how AI that costs 10s of thousands of dollars to do a worse job can compete.
When money is cheap, bullshit proliferates.
Anybody who is trained in economics who thinks Bitcoin is a serious useful, thing as opposed to an Ponzi is probably somebody who has a financial, professional, or social interest in Bitcoin "succeeding." See regulatory capture. For the past 20 years regulators have been basically asleep in a lot of areas in America. They woke a bit after the financial crisis 10 years ago but "too big to fail" and bailing out the banks (moral hazard) showed they were not serious about doing anything unpopular but salutary. Likewise now regulators are tolerant or supportive of blockchain bullshit simply because it is popular.
Similar thing has gone on with driverless cars. The technology is obviously not economically viable (much less technically) and yet at every step in the way has been enabled by regulators. State DMVs should never have issued autonomous car permits, because the technology is bullshit. Yeah I am sure after billions of dollars of sunk costs Waymo can navigate some geofenced area of Phoenix / Chandler. So what? Were is the "innovation" if the "AI" driver is more expensive and less universal than a human driver? If autonomous navigation is a tractable problem why not ships, planes, trains before cars? Planes have more degrees of freedom so are less likely to hit something in seconds if they make a mistake. Same for ships. Trains are bound to rails. Cars have to stay on the road but the road is not systemically cleared (as rails are) and there is nothing mechanically binding the car to the road. Driverless cars are the hardest vehicle class to automate, and yet they were taken seriously. When people will drive a cab for under $10 a hour I don't see how AI that costs 10s of thousands of dollars to do a worse job can compete.
When money is cheap, bullshit proliferates.
Adoption of what?
OK, so it's perhaps possible to ban it by completely changing the nature of the internet (and hoping that each block isn't beamed down from satellites). If that's the yardstick, then I think it's not unreasonable to simply say it can't plausibly be banned.
I guess you can’t ban anything then.
Sure you can.
We're not talking about ivory here, which has an incredibly elaborate and difficult-to-hide supply chain (and even at that, is still sometimes smuggled).
We're talking about permissionless network traffic. Blocks can be broadcast via shortwave if necessary (of course this will be slow, but not too slow for the 'store of value' use case).
Have we lost all sense of the difficulty of censoring the internet?
We're not talking about ivory here, which has an incredibly elaborate and difficult-to-hide supply chain (and even at that, is still sometimes smuggled).
We're talking about permissionless network traffic. Blocks can be broadcast via shortwave if necessary (of course this will be slow, but not too slow for the 'store of value' use case).
Have we lost all sense of the difficulty of censoring the internet?
Technically governments can't ban anything but they can discourage anyone from doing something by levying massive penalties if they are caught. Which in practice means those without power go to jail for it while those with power can do whatever they want with it.
Exactly. I recently saw a near by forest tourist area closed off with threat of $143 fine. I thought damn I have that cash I could literally go for a private picnic in the woods worst case is $143. I can afford that. Then I realized that mentality must exist to a greater extent with the rich. Park where they want and just pay the ticket. Ignore rules and for anything and perhaps just pay a fine.
I've often though, instead of speeding tickets we could just have speeding fees. Monitor cars, and charge a measured rate per-mile by speed. Pay for everything, for get road taxes!
Sure you can. Banning doesn't mean eradicating. Making it illegal or taxed heavily would push it underground and tank adoptions. People will still be able to break the law and use it, but no businesses will invest.
In fact its extremely easy to go after users seeing as its a public ledger and all that. You can claim some laundering schemes will protect users but any significant movement of money will be trackable unless your opsec is perfect.
In fact its extremely easy to go after users seeing as its a public ledger and all that. You can claim some laundering schemes will protect users but any significant movement of money will be trackable unless your opsec is perfect.
> Banning doesn't mean eradicating
Eradicating Bitcoin wouldn’t be that hard. Publicly committing to repeatedly launching 51% attacks is well within the budget of many governments. It would singularly destroy the currency without even requiring criminal statute. Hell, I think the President could do it without permission from Congress.
But why? Why do that? Bitcoin threatens nobody. It underwrites a lot of wealth. And voters don’t care about it.
Eradicating Bitcoin wouldn’t be that hard. Publicly committing to repeatedly launching 51% attacks is well within the budget of many governments. It would singularly destroy the currency without even requiring criminal statute. Hell, I think the President could do it without permission from Congress.
But why? Why do that? Bitcoin threatens nobody. It underwrites a lot of wealth. And voters don’t care about it.
> Making it illegal or taxed heavily would push it underground and tank adoptions.
I agree with you! It wouldn't stop it though, just like prohibition didn't stop alcohol consumption. If anything, it would make the system more resilient over time. Besides, the governments would want to retain some control through exchanges, rather than lose all control and possible tax benefits, etc.
I agree with you! It wouldn't stop it though, just like prohibition didn't stop alcohol consumption. If anything, it would make the system more resilient over time. Besides, the governments would want to retain some control through exchanges, rather than lose all control and possible tax benefits, etc.
Sure, but if you ban the on-ramps and off-ramps you've mostly blocked the ways people can obtain and use bitcoins.
You could also ban mining if you wanted to, though that's slightly more difficult to enforce.
You could also ban mining if you wanted to, though that's slightly more difficult to enforce.
A nation state has a number of effective measures to block it: require ISPs to block its port and major sites, put punitive taxes on any exchange points into the local currency, require people to certify under oath the origin of funds they’re using for transactions, etc. Since Bitcoin helpfully provides the government with a full transaction log, it’s extremely risky to try to bypass these controls since your history is revealed if you or anyone you have ever dealt with leaks your identity. They also have enough capacity to either do a 51% attack directly or to compromise enough miners to get there – does anyone think those groups are NSA-proof?
The better question is why they’d want to. For example, the U.S. government doesn’t have an ideological crusade – pay your taxes, follow anti-money laundering laws, etc. and they don’t care.
The better question is why they’d want to. For example, the U.S. government doesn’t have an ideological crusade – pay your taxes, follow anti-money laundering laws, etc. and they don’t care.
The post glosses over the most obvious explanation: because any serious and widespread ban will cause its price to soar, and this will be both an embarrassment to the state(s) in question and, if it truly is threatening in some way, make it moreso.
I'm astonished at the way this is hand-waved:
> Remember, if governments truly believed Bitcoin were a threat, they would outlaw it and shut down cryptocurrency exchanges. This would crater prices and liquidity. It would not be the end of Bitcoin of course, but it would be the end of Bitcoin’s dream of displacing gold.
...what? Is there any example of government banning something and that thing later appearing in an illicit market at a lower price? I can't think of one.
I'm astonished at the way this is hand-waved:
> Remember, if governments truly believed Bitcoin were a threat, they would outlaw it and shut down cryptocurrency exchanges. This would crater prices and liquidity. It would not be the end of Bitcoin of course, but it would be the end of Bitcoin’s dream of displacing gold.
...what? Is there any example of government banning something and that thing later appearing in an illicit market at a lower price? I can't think of one.
You're missing the fact that people can still invest in other things.
Am I? In what way do you think that the presence of a nearly infinite number of other instruments changes the tendency for illicit markets to price things at a premium?
Look, many people use Bitcoin as a speculative investment. Most people want to keep away from criminal activity, except if it is the only way to get access to something (like drugs). If Bitcoin were banned, most people would invest in other things and hence Bitcoin price would drop.
I don't know if fewer people will choose to hold bitcoin in such a scenario. I think that there's something to be said about the social and political complexity that might lead to such a decision, and whether that is a factor for peoples' thinking.
I am, however, confident, that irrespective of the number of holders, that the price will go up. I don't understand your last point at all. It seems to me to be the same as suggesting that in the presence of cannabis prohibition that the price will decrease because people will choose to use other medicines and psychoactives. The two are only distantly related; fewer users does not imply a lower price.
I am, however, confident, that irrespective of the number of holders, that the price will go up. I don't understand your last point at all. It seems to me to be the same as suggesting that in the presence of cannabis prohibition that the price will decrease because people will choose to use other medicines and psychoactives. The two are only distantly related; fewer users does not imply a lower price.
A sudden flood of sellers will cause the price to crash. At that point, the question is if the price can recover. In theory it could, but I wouldn't be so confident, as the currency just lost a big chunk of its market.
Essentially, you want to guarantee a way for governments to be able to track every transaction, this would be the way to do it.
That being said, I am not anti bitcoin, I just don't see it as a privacy thing.