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Why Isn't Bitcoin Banned Everywhere?

52 points by morpheos137 6y ago

morpheos137 6y ago
I think the writer's speculation about government central banks buying Bitcoin in the future is economically illiterate...
ilaksh 6y ago
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.
- JumpCrisscross 6y ago
  > 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?
  - ilaksh 6y ago
    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 But it seems obvious that the economic tools we are working with are severely outdated and insufficient.
    - JumpCrisscross 6y ago
      This is trying to back into post-scarcity socialism with a technical tool based on ownership. That seems challenging.
      - ilaksh 6y ago
        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.
        throw99c 6y ago
        About the form of money being quite dated: https://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/ 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.
        ilaksh 6y ago
        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.
epx 6y ago
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.
- listenallyall 6y ago
  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.
  - twelve40 6y ago
    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".
    - listenallyall 6y ago
      a 20% annual price increase = "cheap" to you? did your salary increase 20% since March 2020? didn't think so.
      - twelve40 6y ago
        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?
        listenallyall 6y ago
        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.
rawtxapp 6y ago
It's simple, you can't ban it. You can ban the on-ramps and off-ramps, you can't ban p2p transactions.
- baby 6y ago
  Yes you can, you could shut down access to seed peers IPs, to miner pool IPs, at the exchange level, etc.
  - rawtxapp 6y ago
    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.
    - sodality2 6y ago
      For sure, but that would effectively kill BTC.. So much of it is due to institutional investment it would probably halve overnight.
      - rawtxapp 6y ago
        > 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.
        baby 6y ago
        Adoption of what?
yawaworht1978 6y ago
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.
bondarchuk 6y ago
>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/ https://bitcointreasuries.org/
throwaway8581 6y ago
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.
- doggosphere 6y ago
  At some point people just leave. Or revolt. There's a reason there isn't a 90% income tax.
  - JumpCrisscross 6y ago
    > At some point people just leave. Or revolt. Sure. But this has almost nothing to do with which currency is used.
    - doggosphere 6y ago
      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.
  - deleted 6y ago
    [deleted]
  - jokethrowaway 6y ago
    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.
kjrose 6y ago
My explanation is that Bitcoin is precisely the opposite of anonymous. If everyone started to use a currency like this it would almost impossible to hide transactions without obviously using something like a "bitcoin laundry service" which in itself would be easy to make illegal. 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.
- grumple 6y ago
  This is the real answer. It allows governments around the world to easily track all of your transactions- without subpoenas or laws required.
  - kjrose 6y ago
    I'm amazed at how many people don't get this. Like the sec would kill for this level of control.
- thatswrong0 6y ago
  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.
  - acdha 6y ago
    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.
    - kjrose 6y ago
      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.
jMyles 6y ago
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.
- amelius 6y ago
  You're missing the fact that people can still invest in other things.
  - jMyles 6y ago
    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?
    - amelius 6y ago
      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.
      - jMyles 6y ago
        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.
JumpCrisscross 6y ago
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 https://en.m.wikipedia.org/wiki/Currency_of_Ecuador [2] https://carnegieendowment.org/chinafinancialmarkets/56856 https://carnegieendowment.org/chinafinancialmarkets/56856
- deleted 6y ago
  [deleted]
kkwteh 6y ago
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.
- frankbreetz 6y ago
  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.
  - kkwteh 6y ago
    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.
biolurker1 6y ago
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.
- tejohnso 6y ago
  > 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?
  - biolurker1 6y ago
    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.
- coinward 6y ago
  The reason is that there is no entanglement to the material world which allows you to remain pseudonymous if you choose so
  - biolurker1 6y ago
    You mean you can't buy stuff with paper dollars? Can someone track those dollars?
- heavyset_go 6y ago
  > 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.
paulpauper 6y ago
This is a bad article. Governments are pushing back by trying to destroy the fungibility of bitcoin through blocklists and kyc
CyberRabbi 6y ago
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.
mrkramer 6y ago
Some useful links: [1] Is Bitcoin Legal? https://www.investopedia.com/ask/answers/121515/bitcoin-legal-us.asp 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_or_territory https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...
99_00 6y ago
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.
- louloulou 6y ago
  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.
  - 99_00 6y ago
    >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.
    - louloulou 6y ago
      Because it's not a monopoly (by definition) if there is competition with a different monetary policy.
      - 99_00 6y ago
        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.
        louloulou 6y ago
        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.
parsimo2010 6y ago
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.
- gruez 6y ago
  > 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".
  - morpheos137 6y ago
howmayiannoyyou 6y ago
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.
louloulou 6y ago
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.
- bcrl 6y ago
  The code is free speech. Using it is not, however difficult enforcing that may be. Plenty of actions individuals may undertake are outlawed in modern society.
  - louloulou 6y ago
    How is using it not free speech? You're literally just signing a message and sending it to other nodes on the network.
- baby 6y ago
  Ever heard of popcorn time?
choward 6y ago
> 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.
heavyset_go 6y ago
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?
- louloulou 6y ago
  Because it has a fixed supply and known issuance schedule. Its supply has basically zero volatility. It has price volatility relative to other currencies because the market is having a hard time evaluating how much such a thing is worth.
  - coinward 6y ago
    Price discovery is a volatile thing
- coinward 6y ago
  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.
benreesman 6y ago
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.
tlb 6y ago
Bitcoin is wildly profitable for governments whose citizens hold it. They can tax it as capital gains (when transferred or eventually as part of an estate) which means in the long term they'll get something like 25% of the market cap every 50 years.
- ur-whale 6y ago
  Not all countries have capital gains.
xiphias2 6y ago
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.
jonahbenton 6y ago
(2018)
fragsworth 6y ago
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.
simonblack 6y ago
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.
baby 6y ago
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?
injustice 6y ago
H
jangid 6y ago
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?

52 points by morpheos137 6y ago

I think the writer's speculation about government central banks buying Bitcoin in the future is economically illiterate...

ilaksh 6y ago

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.

JumpCrisscross 6y ago
> 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?
- ilaksh 6y ago
  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.
  - JumpCrisscross 6y ago
    This is trying to back into post-scarcity socialism with a technical tool based on ownership. That seems challenging.
    - ilaksh 6y ago
      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.
      - throw99c 6y ago
        About the form of money being quite dated: https://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/ 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.
        ilaksh 6y ago
        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.

epx 6y ago

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.

listenallyall 6y ago
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.
- twelve40 6y ago
  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".
  - listenallyall 6y ago
    a 20% annual price increase = "cheap" to you? did your salary increase 20% since March 2020? didn't think so.
    - twelve40 6y ago
      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?
      - listenallyall 6y ago
        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.

rawtxapp 6y ago

It's simple, you can't ban it. You can ban the on-ramps and off-ramps, you can't ban p2p transactions.

baby 6y ago
Yes you can, you could shut down access to seed peers IPs, to miner pool IPs, at the exchange level, etc.
- rawtxapp 6y ago
  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.
  - sodality2 6y ago
    For sure, but that would effectively kill BTC.. So much of it is due to institutional investment it would probably halve overnight.
    - rawtxapp 6y ago
      > 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.
      - baby 6y ago
        Adoption of what?

yawaworht1978 6y ago

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.

bondarchuk 6y ago

>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/ https://bitcointreasuries.org/

throwaway8581 6y ago

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.

doggosphere 6y ago
At some point people just leave. Or revolt. There's a reason there isn't a 90% income tax.
- JumpCrisscross 6y ago
  > At some point people just leave. Or revolt. Sure. But this has almost nothing to do with which currency is used.
  - doggosphere 6y ago
    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.
- deleted 6y ago
  [deleted]
- jokethrowaway 6y ago
  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.

kjrose 6y ago

My explanation is that Bitcoin is precisely the opposite of anonymous. If everyone started to use a currency like this it would almost impossible to hide transactions without obviously using something like a "bitcoin laundry service" which in itself would be easy to make illegal. 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.

grumple 6y ago
This is the real answer. It allows governments around the world to easily track all of your transactions- without subpoenas or laws required.
- kjrose 6y ago
  I'm amazed at how many people don't get this. Like the sec would kill for this level of control.
thatswrong0 6y ago
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.
- acdha 6y ago
  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.
  - kjrose 6y ago
    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.

jMyles 6y ago

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.

amelius 6y ago
You're missing the fact that people can still invest in other things.
- jMyles 6y ago
  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?
  - amelius 6y ago
    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.
    - jMyles 6y ago
      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.

JumpCrisscross 6y ago

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 https://en.m.wikipedia.org/wiki/Currency_of_Ecuador [2] https://carnegieendowment.org/chinafinancialmarkets/56856 https://carnegieendowment.org/chinafinancialmarkets/56856

deleted 6y ago
[deleted]

kkwteh 6y ago

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.

frankbreetz 6y ago
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.
- kkwteh 6y ago
  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.

biolurker1 6y ago

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.

tejohnso 6y ago
> 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?
- biolurker1 6y ago
  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.
coinward 6y ago
The reason is that there is no entanglement to the material world which allows you to remain pseudonymous if you choose so
- biolurker1 6y ago
  You mean you can't buy stuff with paper dollars? Can someone track those dollars?
heavyset_go 6y ago
> 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.

paulpauper 6y ago

This is a bad article. Governments are pushing back by trying to destroy the fungibility of bitcoin through blocklists and kyc

CyberRabbi 6y ago

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.

mrkramer 6y ago

Some useful links: [1] Is Bitcoin Legal? https://www.investopedia.com/ask/answers/121515/bitcoin-legal-us.asp 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_or_territory https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...

99_00 6y ago

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.

louloulou 6y ago
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.
- 99_00 6y ago
  >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.
  - louloulou 6y ago
    Because it's not a monopoly (by definition) if there is competition with a different monetary policy.
    - 99_00 6y ago
      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.
      - louloulou 6y ago
        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.

parsimo2010 6y ago

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.

gruez 6y ago
> 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".
- morpheos137 6y ago

howmayiannoyyou 6y ago

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.

louloulou 6y ago

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.

bcrl 6y ago
The code is free speech. Using it is not, however difficult enforcing that may be. Plenty of actions individuals may undertake are outlawed in modern society.
- louloulou 6y ago
  How is using it not free speech? You're literally just signing a message and sending it to other nodes on the network.
baby 6y ago
Ever heard of popcorn time?

choward 6y ago

> 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.

heavyset_go 6y ago

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?

louloulou 6y ago
Because it has a fixed supply and known issuance schedule. Its supply has basically zero volatility. It has price volatility relative to other currencies because the market is having a hard time evaluating how much such a thing is worth.
- coinward 6y ago
  Price discovery is a volatile thing
coinward 6y ago
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.

benreesman 6y ago

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.

tlb 6y ago

Bitcoin is wildly profitable for governments whose citizens hold it. They can tax it as capital gains (when transferred or eventually as part of an estate) which means in the long term they'll get something like 25% of the market cap every 50 years.

ur-whale 6y ago
Not all countries have capital gains.

xiphias2 6y ago

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.

jonahbenton 6y ago

(2018)

fragsworth 6y ago

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.

simonblack 6y ago

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.

baby 6y ago

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?

injustice 6y ago

jangid 6y ago

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?