

Ask HN: Can governments actually stop bitcoin? - mathgladiator


======
Rhapso
Short answer: no.

Long answer:

Possibilities:

Make it illegal: This will most likely turn bitcoin into what they are afraid
it will be. If use of bitcoin is made illegal we cannot use it for personal or
business use, and those who would use it for illegal reasons, trafficking in
illegal goods and money laundering would still use it and would be the sum of
the bitcoin economy.

Regulate it (end point taxation, quotas, or caps): This is the best action of
the government we can hope for. The government will act, and this is what
economists will tell them to do. End point taxation will be hard to enforce
but would be just has hard to enforce as full illegality: it would allow
government control, yield revenue versus lose it and give everybody what they
want. This is the compromise position.

Ignore it (How things are now, but not going to stay this way): The government
will ignore bitcoin until it causes a problem. A problem means in this case,
that they are up for re-election and their constituents care about it or the
credit card companies/banks get worried and send in their lobbyists. Neither
of these things will happen until somebody makes an easy to use consumer
facing product that allows easy use of bitcoin in everyday life that can
challenge any established product (this is surely already happening).

Right now there is a lot of clamor and potential. Nobody is going to move in
the legislature (the judiciary's hands are tied until somebody gets sued and
the executive tends to stay out of this stuff until one of the other two sets
the rules) until a real incident has happened with bitcoin. i.e. somebody is
caught using it to launder money for something publicly inflammatory or some
startup comes up with a great way to sell it to the consumer masses.

~~~
hollerith
>If use of bitcoin is made illegal we cannot use it for personal or business
use, and those who would use it for illegal reasons, trafficking in illegal
goods and money laundering would still use it and would be the sum of the
bitcoin economy.

Not very useful for money laundering if it is not very useful for non-criminal
transactions.

~~~
Rhapso
Conceded. limiting bitcoin use to activities illegal in the US would limit the
scope of any laundering operations via bitcoin to moving money out of the
country or into the criminal-transaction economy.

~~~
ashconnor
But that wouldn't stop laundering in other countries.

------
antiscam
It's a huge myth that Bitcoin is beyond the reach of governments. There are
three reasons for this.

First, Bitcoin isn't actually decentralized. It's not a true open-source
community of developers; the core group is tiny, and few others are
knowledgeable about the protocol, which is poorly documented. Remove the
mainline client and you'd destroy Bitcoin. The exchanges are hugely
centralized. Exceedingly few people use Bitcoin for anything else other than
buying and selling dollars, and there's only one place to do that in any
volume - an unregulated Japanese exchange of questionable legality.

Second, Bitcoin is extremely vulnerable to denial-of-service attacks, both
network-based (even the original developers were aware of this) and as a
result of the higher-level Bitcoin protocol itself. The best analyst on these
matters, someone using the label "ComputerScientist" at, among other places,
Ben Laurie's blog (links.org) estimated that it would cost less than $1
million to topple the system without even any cleverness - just by obtaining a
majority of the "legitimate" hashing power of the network.

Third, though this is more speculative, most people don't like to engage in
financial crime; it's not psychologically the same thing as downloading a CD
or a television show. Nobody thinks they're supporting significantly illicit
activity by downloading some music that otherwise would have cost them $7.
People can be easily persuaded -- rightly -- that they're supporting money
laundering, significantly illegal and immoral purchases, and so on using
Bitcoin. Indeed, because Bitcoin is essentially unneeded for legitimate
transactions (and probably can't compete in the long term on transaction fees
with other legitimate payments systems), its primary use aside from
speculation is currently illegal activity, and there's no reason to think that
will change.

------
fragsworth
They can shut down websites and businesses that facilitate transactions,
arrest people who are caught in bitcoin exchanges, and demonize it in general.
But none of these things will actually destroy the system. I believe they
would have to shut down the Internet to really do it in.

------
sktrdie
Just like internet providers are blocking the BitTorrent protocol they could
just as well block BitCoin. And governments can do anything until we free
ourselves from internet provides and just live in a huge mesh wireless
network. :)

~~~
MostAwesomeDude
Or we build more darknets.

------
adambyrtek
A government could always make BitCoin illegal, which wouldn't technically
break the system, but provide a huge disincentive for legitimate users.

