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7 years ago: The first bitcoin article on HN with comments! https://news.ycombinator.com/item?id=1532670 https://news.ycombinator.com/item?id=1532670 One of t

7 years ago: The first bitcoin article on HN with comments! https://news.ycombinator.com/item?id=1532670 https://news.ycombinator.com/item?id=1532670 One of the posters says the feds will shut it down. I also thought this too. This remains one of the most enduring mysteries of Bitcoin to me. Why has the government taken such a hands off approach?

Retric 9y ago
Because it's awesome from a government standpoint with every single transaction being public it's very easy to track. Various proposals to generate anonymity have been created, but with the sky high transaction costs none of them are currently viable.
- albertgoeswoof 9y ago
  If this was true it would be quite naive, given there are now cryptocurrencies with anonymous transactions out there (e.g. Monero, zcash etc.), which could completely replace bitcoin - or at the very least are easy to transact with.
quickthrower2 9y ago
How does a government stop it? And if they could, could they also stop illegal file sharing in a similar way?
- modeless 9y ago
  They ban exchanging Bitcoin for fiat currencies, which completely disconnects Bitcoin from the traditional financial system. Underground and in-person exchanges would continue but at much lower volumes with higher friction and fees, and the value of Bitcoin would crash. This is diffrerent from file sharing because file sharing does not need a connection to the traditional financial system to be useful for most people.
  - programmarchy 9y ago
    Why would the value crash? Typically, artificially restricting supply raises prices, like with drugs and other contraband.
    - eli 9y ago
      Drugs are inherently valuable -- you can ingest them! Bitcoins are not. A bitcoin that is harder to buy or sell is a bitcoin that is necessarily worth less.
    - quickthrower2 9y ago
      This is restricting demand, not restricting supply.
      - programmarchy 9y ago
        That doesn't seem right. Usually restricting demand is done by raising prices, with the causality working in the other direction. If people want Bitcoin (say because their government is inflating their fiat currency and they want a safe haven) and purchasing Bitcoin is prohibited, you'd have pent-up demand which would push prices up.
  - drewmol 9y ago
    I agree, and if you look at online poker in the US, they were able to drastically reduce the amount of people playing and money involved by simply restricting payment processors' involvement.
- blhack 9y ago
  Make it illegal and pursue legal action against anybody who allows you to ACH them money. Hilariously, this is the type of censorship that bitcoin solves.
  - quickthrower2 9y ago
    That won't shut down Bitcoin, because there are other countries with internet.
- deleted 9y ago
  [deleted]
chii 9y ago
Because there's no reason for a democratic govt to shut it down. The only reason they would is to prevent capital flight (not to mention it's very hard to shut down in any case)
- wallace_f 9y ago
  Our government is closer to a plutocracy than a democracy, and look at what happened to other people that kicked out central banks (Gadaffi, Sadam, Hitler). The Fed swelled their balance sheet to 4.5trillion to bail out the banks. They can just electronically create money out of thin air. Everyone has a price, and when you have ultimate power you're in denial of 95%++ of people's human nature if you don't believe that power does not corrupt.
  - zjaffee 9y ago
    It's total bullshit when people say that all the countries without central banks were the ones being attacked by the US military, north korea has a central bank, Libya has had a central bank continuously since the 1950s. The fact that this type of fake news is so heavily proliferated and believed damages the ability of working institutions to keep their legitimacy.
    - wallace_f 9y ago
      I made a mistake, but this is the problem with online comments -- brevity leads to necessary oversimplification. Gadaffi was trying to oust the type of central bank they had been forced to have in Libya. I will explain. Admittedly this is pretty far out in the realm of Wrongthink. Just look at Investopedia or an econ text book, and what they say about the question: does the Fed print money. They say no[1]. This is utterly, undeniably false. After the 2008 financial crisis the Fed's balance sheet ballooned to 4.5 trillion. How did they get that money? I can assure you that they did not (1) take out loans, or (2) produce goods or services at a profit. They electronically debit an account with money, and then go to Wall St and buy what no one else wanted to buy. What did Gadaffi do? He tried to kick out their central bank that was imposed on them by the UN, by creating a gold standard.[2] Most elite politicians are not nice people. They don't care about unjust wars, constitutional abuse or torture. They laugh like maniacs at Gadaffi's torture and death[3]. Fake News is just a useful term to disparage Wrongthink. Every government in the history of this planet has a natural tendency towards cronyism and tyranny. If you take the headlines at face value and don't take the time to actually investigate the legitimacy of the facts then you are no different than any other subject of any other government in history, willingly subjugated to their ideas of what is right and wrong. 1 - https://www.investopedia.com/ask/answers/082515/who-decides-when-print-money-us.asp https://www.investopedia.com/ask/answers/082515/who-decides-... 2 - https://www.globalresearch.ca/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/5594742 https://www.globalresearch.ca/hillary-emails-reveal-nato-kil... 3 - https://youtu.be/Fgcd1ghag5Y https://youtu.be/Fgcd1ghag5Y
umanwizard 9y ago
"The feds" can't just shut down whatever they want; there is a process.
- dajohnson89 9y ago
  cute
- googletazer 9y ago
  Tell that to all the people who had cash confiscated at airports and on the road. Too bad their property can't defend itself in the court of its peers - maybe a washing machine and a night stand. NEVER trust any governments.
bringtheaction 9y ago
I could imagine a number of reasons including 1. Crypto currency has potential that outweighs it's threat. Being able to transfer funds to people in other parts of the world is of interest to several government agencies. Perhaps crypto currency could help them do this better / more efficiently / whatever than today. 2. They will have to be extremely on top of the situation in order to be able to bring down a crypto currency. 3. Even if they kill one, three others will rise to take the place that it had. That being said, I guess they could just ban crypto currency and perhaps most people would comply and the ones that were angered couldn't do much else than to watch it crumble.
- zenlikethat 9y ago
  As another poster noted, you forgot (4) Bitcoin in its current form has a ton of potential for surveillance and supervision.
modeless 9y ago
You hit the nail on the head. I think if Bitcoin had started out with the private and untraceable transactions from ZCash or Monero, governments would have banned it long ago. I still expect ZCash and Monero to be banned eventually. Bitcoin is actually much less private and more traceable than cash, and so governments seem willing to tolerate it. (Though China did ban it...)
- tehlike 9y ago
  There are mixers that hide the coins and stuff. Bitcoin's level of anonymity might just be sufficient.
bobbygoodlatte 9y ago
I think one big reason is that regulators don't want the US to miss out on a large wave of value creation. If Bitcoin becomes a mainstream currency, it could be a very good thing for the US. If US citizens own a large amount of the BTC in circulation that could lead to more investment in the US economy and a larger tax base. Beyond Bitcoin, if crypto tokens begin to supplant public stocks (which I'm not saying they will), it would be incredibly foolish to cut off US citizens from those markets
- alexbeloi 9y ago
  >I think one big reason is that regulators don't want the US to miss out on a large wave of value creation. There is no value created, it is just redistributed through rent-seeking. The US might hope that the redistribution goes in its favor if, as you say, more early adopters are in US rather than abroad. The global effect of rent-seeking is that money gets pulled out of productive enterprises and into non-producing assets, lowering GDP. Whether or not the easy access to money laundering channels makes up for the lost GDP or makes it worse, I am curious to see.
SomeStupidPoint 9y ago
> Why has the government taken such a hands off approach? Because it's something like win-win-win for them? 1. They don't stifle a new technology for no reason. 2. They can always regulate it later, with the added bonus that they'll be able to stick a bunch of people they want to investigate with non-compliance charges for failing to register at the appropriate time. Similarly, how many people do you think are doing their taxes right on BTC? Easy arbitrary audit material if you can ever link their accounts. 3. I'm not sure the government is opposed to digital money that leaves an immutable, public record of cryptographic witnesses to transactions. The pseudo-anonymity isn't worth much against a pervasive global adversary watching all the pipes. They link the BTC to your actions, the keys to your machine, and you may as well have signed a confession. So there's little incentive to act quickly and lots of incentive to give the radicals into BTC a chance to slip up on OPSEC.
- phil248 9y ago
  To add a little socialist critique, governments have been hands-off crypto-currencies because major financial institutions haven't started ramping up the pressure, yet.
seanmcdirmid 9y ago
You mean the USA government? Because they have no legal basis to take action. Rule of law is weird like that.
- gregschlom 9y ago
  I'm not sure I understand your comment. There seems to be plenty of anti money-laundering laws that would provide a legal basis.
  - seanmcdirmid 9y ago
    You can prosecute people for money laundering, that is very different from banning bitcoin.
- matt_wulfeck 9y ago
  They could probably make a case against the largest mining pools if they suspect any hint of money laundering. If you control even just two of these pools you effectively control the entire network.
- raldi 9y ago
  Legislatures pass all kinds of new laws to restrain new technologies. (Sometimes for good reasons, sometimes not.)
  - seanmcdirmid 9y ago
    Sure, but that usually requires an act of Congress. You can’t just pass it as an administrative rule.
- tehlike 9y ago
  SEC and IRS is a real thing. Which means they can regulate it behind these organizations.
programmarchy 9y ago
Allow me to don my tinfoil hat... Could be that Bitcoin is a technology developed and promoted by international central banks, cloaked with a cyberpunk aura via Satoshi. Bitcoin could be an ideal global currency, so long as the central banks could control enough computing power and coin holdings.
- jameskegel 9y ago
  I think it's more likely that the Gov is doing what they normally do and fully assessing a situation first- especially in this situation because how can you meaningfully hurt a decentralized network of this size when it may be easier to just tax it like a resource.
arkis22 9y ago
The government is Satoshi Nakamoto.
mrb 9y ago
In the early days of the Internet revolution, many people raised concerns about illicit use of Internet. I guess it's the same thing with Bitcoin... Why would the US government want to ban Bitcoin anyway? Bitcoin isn't particularly useful for laundering money because converting to/from fiat in any significant quantity usually requires a Bitcoin exchange and they follow proper AML/KYC procedures (those who don't get shut down.) Bitcoin is not particularly associated to illicit activities any more so than cash: http://www.coindesk.com/bitcoin-economy-black-market-sin-report/ http://www.coindesk.com/bitcoin-economy-black-market-sin-rep... Bitcoin helps the economy: $1+ billion has been invested in Bitcoin/cryptocurrency companies, creating thousands of jobs. I would say many officials in the government understand Bitcoin is a technology with a lot of potential, and it would be stupid to outlaw it from the start. Watch the November 2013 US Senate hearing on Bitcoin if you want to get a sense of how some officials perceive it: https://www.washingtonpost.com/news/the-switch/wp/2013/11/18/this-senate-hearing-is-a-bitcoin-lovefest/ https://www.washingtonpost.com/news/the-switch/wp/2013/11/18...
monort 9y ago
Because it's too early, bitcoin is still small. Wait until some terrorists use it for funding.

Retric 9y ago

Because it's awesome from a government standpoint with every single transaction being public it's very easy to track. Various proposals to generate anonymity have been created, but with the sky high transaction costs none of them are currently viable.

albertgoeswoof 9y ago
If this was true it would be quite naive, given there are now cryptocurrencies with anonymous transactions out there (e.g. Monero, zcash etc.), which could completely replace bitcoin - or at the very least are easy to transact with.

quickthrower2 9y ago

How does a government stop it? And if they could, could they also stop illegal file sharing in a similar way?

modeless 9y ago
They ban exchanging Bitcoin for fiat currencies, which completely disconnects Bitcoin from the traditional financial system. Underground and in-person exchanges would continue but at much lower volumes with higher friction and fees, and the value of Bitcoin would crash. This is diffrerent from file sharing because file sharing does not need a connection to the traditional financial system to be useful for most people.
- programmarchy 9y ago
  Why would the value crash? Typically, artificially restricting supply raises prices, like with drugs and other contraband.
  - eli 9y ago
    Drugs are inherently valuable -- you can ingest them! Bitcoins are not. A bitcoin that is harder to buy or sell is a bitcoin that is necessarily worth less.
  - quickthrower2 9y ago
    This is restricting demand, not restricting supply.
    - programmarchy 9y ago
      That doesn't seem right. Usually restricting demand is done by raising prices, with the causality working in the other direction. If people want Bitcoin (say because their government is inflating their fiat currency and they want a safe haven) and purchasing Bitcoin is prohibited, you'd have pent-up demand which would push prices up.
- drewmol 9y ago
  I agree, and if you look at online poker in the US, they were able to drastically reduce the amount of people playing and money involved by simply restricting payment processors' involvement.
blhack 9y ago
Make it illegal and pursue legal action against anybody who allows you to ACH them money. Hilariously, this is the type of censorship that bitcoin solves.
- quickthrower2 9y ago
  That won't shut down Bitcoin, because there are other countries with internet.
deleted 9y ago
[deleted]

chii 9y ago

Because there's no reason for a democratic govt to shut it down. The only reason they would is to prevent capital flight (not to mention it's very hard to shut down in any case)

wallace_f 9y ago
Our government is closer to a plutocracy than a democracy, and look at what happened to other people that kicked out central banks (Gadaffi, Sadam, Hitler). The Fed swelled their balance sheet to 4.5trillion to bail out the banks. They can just electronically create money out of thin air. Everyone has a price, and when you have ultimate power you're in denial of 95%++ of people's human nature if you don't believe that power does not corrupt.
- zjaffee 9y ago
  It's total bullshit when people say that all the countries without central banks were the ones being attacked by the US military, north korea has a central bank, Libya has had a central bank continuously since the 1950s. The fact that this type of fake news is so heavily proliferated and believed damages the ability of working institutions to keep their legitimacy.
  - wallace_f 9y ago
    I made a mistake, but this is the problem with online comments -- brevity leads to necessary oversimplification. Gadaffi was trying to oust the type of central bank they had been forced to have in Libya. I will explain. Admittedly this is pretty far out in the realm of Wrongthink. Just look at Investopedia or an econ text book, and what they say about the question: does the Fed print money. They say no[1]. This is utterly, undeniably false. After the 2008 financial crisis the Fed's balance sheet ballooned to 4.5 trillion. How did they get that money? I can assure you that they did not (1) take out loans, or (2) produce goods or services at a profit. They electronically debit an account with money, and then go to Wall St and buy what no one else wanted to buy. What did Gadaffi do? He tried to kick out their central bank that was imposed on them by the UN, by creating a gold standard.[2] Most elite politicians are not nice people. They don't care about unjust wars, constitutional abuse or torture. They laugh like maniacs at Gadaffi's torture and death[3]. Fake News is just a useful term to disparage Wrongthink. Every government in the history of this planet has a natural tendency towards cronyism and tyranny. If you take the headlines at face value and don't take the time to actually investigate the legitimacy of the facts then you are no different than any other subject of any other government in history, willingly subjugated to their ideas of what is right and wrong. 1 - https://www.investopedia.com/ask/answers/082515/who-decides-when-print-money-us.asp https://www.investopedia.com/ask/answers/082515/who-decides-... 2 - https://www.globalresearch.ca/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/5594742 https://www.globalresearch.ca/hillary-emails-reveal-nato-kil... 3 - https://youtu.be/Fgcd1ghag5Y https://youtu.be/Fgcd1ghag5Y

umanwizard 9y ago

"The feds" can't just shut down whatever they want; there is a process.

dajohnson89 9y ago
cute
googletazer 9y ago
Tell that to all the people who had cash confiscated at airports and on the road. Too bad their property can't defend itself in the court of its peers - maybe a washing machine and a night stand. NEVER trust any governments.

bringtheaction 9y ago

I could imagine a number of reasons including 1. Crypto currency has potential that outweighs it's threat. Being able to transfer funds to people in other parts of the world is of interest to several government agencies. Perhaps crypto currency could help them do this better / more efficiently / whatever than today. 2. They will have to be extremely on top of the situation in order to be able to bring down a crypto currency. 3. Even if they kill one, three others will rise to take the place that it had. That being said, I guess they could just ban crypto currency and perhaps most people would comply and the ones that were angered couldn't do much else than to watch it crumble.

zenlikethat 9y ago
As another poster noted, you forgot (4) Bitcoin in its current form has a ton of potential for surveillance and supervision.

modeless 9y ago

You hit the nail on the head. I think if Bitcoin had started out with the private and untraceable transactions from ZCash or Monero, governments would have banned it long ago. I still expect ZCash and Monero to be banned eventually. Bitcoin is actually much less private and more traceable than cash, and so governments seem willing to tolerate it. (Though China did ban it...)

tehlike 9y ago
There are mixers that hide the coins and stuff. Bitcoin's level of anonymity might just be sufficient.

bobbygoodlatte 9y ago

I think one big reason is that regulators don't want the US to miss out on a large wave of value creation. If Bitcoin becomes a mainstream currency, it could be a very good thing for the US. If US citizens own a large amount of the BTC in circulation that could lead to more investment in the US economy and a larger tax base. Beyond Bitcoin, if crypto tokens begin to supplant public stocks (which I'm not saying they will), it would be incredibly foolish to cut off US citizens from those markets

alexbeloi 9y ago
>I think one big reason is that regulators don't want the US to miss out on a large wave of value creation. There is no value created, it is just redistributed through rent-seeking. The US might hope that the redistribution goes in its favor if, as you say, more early adopters are in US rather than abroad. The global effect of rent-seeking is that money gets pulled out of productive enterprises and into non-producing assets, lowering GDP. Whether or not the easy access to money laundering channels makes up for the lost GDP or makes it worse, I am curious to see.

SomeStupidPoint 9y ago

> Why has the government taken such a hands off approach? Because it's something like win-win-win for them? 1. They don't stifle a new technology for no reason. 2. They can always regulate it later, with the added bonus that they'll be able to stick a bunch of people they want to investigate with non-compliance charges for failing to register at the appropriate time. Similarly, how many people do you think are doing their taxes right on BTC? Easy arbitrary audit material if you can ever link their accounts. 3. I'm not sure the government is opposed to digital money that leaves an immutable, public record of cryptographic witnesses to transactions. The pseudo-anonymity isn't worth much against a pervasive global adversary watching all the pipes. They link the BTC to your actions, the keys to your machine, and you may as well have signed a confession. So there's little incentive to act quickly and lots of incentive to give the radicals into BTC a chance to slip up on OPSEC.

phil248 9y ago
To add a little socialist critique, governments have been hands-off crypto-currencies because major financial institutions haven't started ramping up the pressure, yet.

seanmcdirmid 9y ago

You mean the USA government? Because they have no legal basis to take action. Rule of law is weird like that.

gregschlom 9y ago
I'm not sure I understand your comment. There seems to be plenty of anti money-laundering laws that would provide a legal basis.
- seanmcdirmid 9y ago
  You can prosecute people for money laundering, that is very different from banning bitcoin.
matt_wulfeck 9y ago
They could probably make a case against the largest mining pools if they suspect any hint of money laundering. If you control even just two of these pools you effectively control the entire network.
raldi 9y ago
Legislatures pass all kinds of new laws to restrain new technologies. (Sometimes for good reasons, sometimes not.)
- seanmcdirmid 9y ago
  Sure, but that usually requires an act of Congress. You can’t just pass it as an administrative rule.
tehlike 9y ago
SEC and IRS is a real thing. Which means they can regulate it behind these organizations.

programmarchy 9y ago

Allow me to don my tinfoil hat... Could be that Bitcoin is a technology developed and promoted by international central banks, cloaked with a cyberpunk aura via Satoshi. Bitcoin could be an ideal global currency, so long as the central banks could control enough computing power and coin holdings.

jameskegel 9y ago
I think it's more likely that the Gov is doing what they normally do and fully assessing a situation first- especially in this situation because how can you meaningfully hurt a decentralized network of this size when it may be easier to just tax it like a resource.

arkis22 9y ago

The government is Satoshi Nakamoto.

mrb 9y ago

In the early days of the Internet revolution, many people raised concerns about illicit use of Internet. I guess it's the same thing with Bitcoin... Why would the US government want to ban Bitcoin anyway? Bitcoin isn't particularly useful for laundering money because converting to/from fiat in any significant quantity usually requires a Bitcoin exchange and they follow proper AML/KYC procedures (those who don't get shut down.) Bitcoin is not particularly associated to illicit activities any more so than cash: http://www.coindesk.com/bitcoin-economy-black-market-sin-report/ http://www.coindesk.com/bitcoin-economy-black-market-sin-rep... Bitcoin helps the economy: $1+ billion has been invested in Bitcoin/cryptocurrency companies, creating thousands of jobs. I would say many officials in the government understand Bitcoin is a technology with a lot of potential, and it would be stupid to outlaw it from the start. Watch the November 2013 US Senate hearing on Bitcoin if you want to get a sense of how some officials perceive it: https://www.washingtonpost.com/news/the-switch/wp/2013/11/18/this-senate-hearing-is-a-bitcoin-lovefest/ https://www.washingtonpost.com/news/the-switch/wp/2013/11/18...

monort 9y ago

Because it's too early, bitcoin is still small. Wait until some terrorists use it for funding.