"It's until one-two major governments decides to make it illegal to deal in bit-coins..."
I don't know about other governments, but I doubt the US will ever declare Bitcoin illegal (though I am told to never say never). Supporting my viewpoint, the US Treasury Department, through FinCEN, has recently tacitly approved Bitcoin: http://www.businessinsider.com/is-bitcoin-legal-2013-4
I think the US government would prefer to take the benefits of Bitcoin (startups springing up everywhere, taxable Bitcoin economic activity, etc), rather than banning it because the technology is used by a minority of users for illegal activity.
"For one, because they don't like money systems they can not control"
This is a broken argument. The US does not control the Euro, or Yen, etc, yet they do not make it illegal to trade in Euros/Yens within the borders.
>This is a broken argument. The US does not control the Euro, or Yen, etc, yet they do not make it illegal to trade in Euros/Yens within the borders.
They don't, but that's because Euros/Yens are backed by foreign governments that would mind this on a diplomatic level. Bitcoin is a much easier target. And most governments would agree to work together on banning it.
Also: the US might not "make it illegal to trade in Euros/Yens" but it does whatever it can to keep the Euro/Yen down. Especially before Euro got itself in trouble anyway. If any small country attempts to do mass business in Euros for example (e.g selling petrol in the currency), the US puts all of their diplomatic (and sometimes military) pressure on them to revert back to using the dollar.
>I think the US government would prefer to take the benefits of Bitcoin (startups springing up everywhere, taxable Bitcoin economic activity, etc)
Not very appealing advantages.
For one, the government doesn't care for "startups springing up everywhere", it mostly caters to established big corporate interests that can afford lobbying.
Second, the bitcoin economic activity will not be any more taxable than conventional economic activity. Actually, it would be even less. Plus, if bitcoin is banned, its economic activity will just migrate to conventional money again, it wont be lost.
Third, the US government needs to be able to print (inflated) money at will -- something which bitcoin doesn't allow.
"They don't, but that's because Euros/Yens are backed by foreign governments".
No, that is not the reason. Replace "Euros/Yens" with "gold" in my sentence, and my point stands with gold being backed by nothing. Basically the US government is totally fine with side markets that they cannot control directly and that exist in parallel with the USD (whether it is EUR, gold, Bitcoin, whatever).
Your other argument also fails to convince me that the government would want to declare Bitcoin illegal. You say it can be used for money laundering, but gold and cash can already be used for money laundering (and even more discreetly since trading gold or cash does not leave a trail like in the Bitcoin blockchain). The US govt does not make gold and cash illegal because they realize it is silly/unenforcable/pointless and would hurt the economy more than it would manage reducing illegal activity. Case in point: the US did attempt to criminalize possession of gold in 1933, but they eventually realized how silly and stupid this was, so they decriminalized it!
When the Internet was being developed throughout the world, were you the kind of person who looked at it and envisioned that its censorship-resistant decentralized aspect could be used to facilitate the transmission of potentially illegal information (software, data, child porn, ideas, etc, especially in countries with no freedom of speech) and said "geesh I bet governments are going to make Internet illegal"?
"For one, the government doesn't care for 'startups springing up everywhere'"
I think my point was clear that these startups are potentially the start of a big new economy complementing the current one that could financially benefit the government with revenues from taxes. So, yes, the government would love to see a big economy pop up.
"Plus, if bitcoin is banned, its economic activity will just migrate to conventional money again, it wont be lost."
No. The world economy is not a zero-sum game. It is possible to create wealth (wealth is stuff we want, not money, see http://www.paulgraham.com/wealth.html ) and Bitcoin and its economy would certainly create extra wealth. Another example showing how silly your assumption that the economy is a zero-sum game is: since the start of e-commerce, do you think that it has stolen commerce from or mostly added to the brick-and-mortar industry? Obviously, sometimes stolen (journals, etc) but e-commerce has mostly added wealth and economic activity on top of the brick-and-mortar one. In other word the size and richness and wealth of the current economy far surpases the one of the economy pre-Internet.
> You say it can be used for money laundering, but gold and cash can already be used for money laundering (and even more discreetly since trading gold or cash does not leave a trail like in the Bitcoin blockchain)
Spoken like a person who has never tried to launder millions of dollars in gold. You don't just go down to the pawn shop and redeem millions of dollars in gold.
"Mexican authorities say that, since 2008, criminal gangs have robbed so many trucks carrying gold shipments that some mining companies have been forced to switch to aerial transportation"
I don't really understand what stealing trucks full of gold has to do with any of this. He said that the US is "totally fine with side markets that they cannot control directly" and that "Your other argument also fails to convince me that the government would want to declare Bitcoin illegal." and I have to agree.
They need to be able to control the currency, thus bitcoin will never become more than it is now. I'd bet on the powers that be squashing it a million times.
>No, that is not the reason. Replace "Euros/Yens" with "gold" in my sentence, and my point stands with gold being backed by nothing.
For one, the US government has banned gold for decades. So it's not that "OK" with it. It also closely monitors gold deals for money laundering purposes. Not to mention that there are governments all over the world that still forbid the private gold ownership.
>Basically the US government is totally fine with side markets that they cannot control directly and that exist in parallel with the USD (whether it is EUR, gold, Bitcoin, whatever).
The US government is totally NOT-fine with anything it cannot control, especially side markets. Gold is a bad example: they already have banned it once in the past. EUR is also a bad example, because its a legitimate foreign currency (of 400 million people), not some "side market". And bitcoin is also a bad example, because it's insignificant at the time -- a very small niche. There are small software shops that make more money annually than bitcoin has at this point.
>You say it can be used for money laundering, but gold and cash can already be used for money laundering (and even more discreetly since trading gold or cash does not leave a trail like in the Bitcoin blockchain). The US govt does not make gold and cash illegal because they realize it is silly/unenforcable/pointless and would hurt the economy more than it would manage reducing illegal activity. Case in point: the US did attempt to criminalize possession of gold in 1933, but they eventually realized how silly and stupid this was, so they decriminalized it!
It's not that "eventually realized how silly and stupid it was". Like "oh, snap, why did we ever do such a thing? We are never to take the same decision again". It was just that another government, 4 decades removed from the one who took the original decision, and in different circumstances and economic climate, reverted the decision. We are 4 decades after that again, and things can change again if similar occasions to 1933 occur (which was in the "Great Depression" era).
Plus, the US still keeps very close tabs on gold, especially as it related to money laundering.
Something that they are willing to do for Bitcoin also. From the Wall Street Journal: "the U.S. is applying money-laundering rules to "virtual currencies," amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities. The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000. Moreover, firms that receive legal tender in exchange for online currencies or anyone conducting a transaction on someone else's behalf would be subject to new scrutiny, said proponents of Internet currencies".
>No. The world economy is not a zero-sum game. It is possible to create wealth (wealth is stuff we want, not money, see http://www.paulgraham.com/wealth.html ) and Bitcoin and its economy would certainly create extra wealth.
The economy might not be a "zero-sum game", but currency pretty much is. You kill a currency, activity and wealth migrates to another.
Plus, wealth is also destructed every day. A 0.0001% drop on Wall Street will destroy more wealth than all current bitcoins combined (which is a laughable amount, $150M, IIRC).
In my eyes, bitcoin is a geeky and early-adopter obsession slash fad, that attracts the wrong kind of people (the "gold-rush" types and techno-naive) and gives them false assurances.
Your argumentation attempts to compare Bitcoin to the fact there is a very real possibility that the US government will declare gold illegal again in the future... I am sorry but this makes me see you as a lunatic. If you believe that about gold, you may just as well believe they will make wearing red shirts illegal on Wednesdays. No amount of arguing will make you change your mind.
You say euros and gold are "bad examples", but I could cite tons of other examples. For example the US perfectly allows holding and trading in all (virtually all?) foreign currencies including countries it has strained relationships with (Iranian rial, Burmese kyat, etc) and these countries have economies as large as, if not larger than Bitcoin. And because none of these foreign exchanges or currencies are illegal, I doubt Bitcoin will be made illegal.
I await your reply explaining in a convoluted way why each and every foreign currency or commodity is somehow a "bad example", and why the US would allow them but not Bitcoin.
What a pessimist you are. I would not want to live in your world. In mine, in the hypothetical case we will need to fight for Bitcoin, we will, like we did against the SOPA bill.
The government is made for the people. Don't you forget that.
You misunderstand me. I meant it was an uphill battle to argue to all the paranoid people that the U.S. government has yet to outlaw trading in Yen, Euro, etc, even though it doesn't control those currencies either.
>You misunderstand me. I meant it was an uphill battle to argue to all the paranoid people that the U.S. government has yet to outlaw trading in Yen, Euro, etc, even though it doesn't control those currencies either.
What exactly gave you the right to call me "paranoid"?
The fact that I said the US might ban the Bitcoin?
For one, the Bitcoin is NOT like the Euro or the Yen at all. It doesn't have any government to back it, and it has properties that make it not very likable to any large government.
Banning bitcoin wont be like banning Euro or the Yen, which are legitimate, sovereign national currencies.
It would be like banning or freezing assets in off-shore accounts (which governments have been known to do). Or like banning the private buying of gold (which the US had done, from 1933 to mid-seventies:
"Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States". The order criminalized the possession of monetary gold by any individual, partnership, association or corporation."
Private / alternative currencies have been banned in several cases all over the world. One example from Wikipedia:
In Australia, the Bank Notes Tax Act of 1910 practically shut down the circulation of private currencies by imposing a prohibitive tax on the practice. It was later repealed and a fine imposed for private currencies (Commonwealth Bank Act 1945). Many other nations have similar such policies to eliminate private sector competition.
Or:
The co-operative society Jord Arbejde Kapital was founded in Denmark during the Great Depression in 1931. The society issued a popular local currency which was subsequently outlawed by the Danish government in 1933.
Not to mention that the whole idea that the US doesn't care at all about Yen and Euros is flawed BS. The US would very much like to keep the dollar unthreatened as the "golden world standard". But those currencies belong to very large economies and countries for the US to be able to do anything about it. Not to mention that the Yen is tied to the dollar in intricate ways nowadays (Chinese own trillions of it).
Still, when any third world or developing country expresses a desire to do business in Euros (something that happened oftentimes before the Euro crisis), the US exerts as much political and diplomatic pressure as it can to have them revert course.
So, using the fact that the US does not ban the Yen and the Euro as an "argument" why it cannot ban bitcoin? Really, not the very best in informed thinking. To call one "paranoid" about arguing the possibility of the bitcoin ban? Even worse (and rude to top).
You might as well say that since the US hasn't entered a war with China or EU, it will never enter a war with a terrorist group operating outside any government. Seeing that China and EU are huge countries/unions, whereas the Bitcoin community is just an ad-hoc random assembly of people investing on an alternative monetary system.
"Or like banning the private buying of gold (which the US had done, from 1933 to mid-seventies"
...which proves my point! This was stupid and ultimately led to all sorts of negative economic consequences, therefore the US reverted the decision in the mid seventies. Now you are arguing that the US would somehow make the same mistake with Bitcoin?!
If anything, the history of government is full of governments making the EXACT same mistakes.
And the reason they dropped the gold ban was less that they found that "it was stupid and led to all sorts of negative economic consequences" and more to a changing political climate at the time and Nixon's monetary policy. Things that can easily change.
Btw, other governments still prohibit the private ownership of gold (except under special agreements and of course as jewelry).
I don't know about other governments, but I doubt the US will ever declare Bitcoin illegal (though I am told to never say never). Supporting my viewpoint, the US Treasury Department, through FinCEN, has recently tacitly approved Bitcoin: http://www.businessinsider.com/is-bitcoin-legal-2013-4
I think the US government would prefer to take the benefits of Bitcoin (startups springing up everywhere, taxable Bitcoin economic activity, etc), rather than banning it because the technology is used by a minority of users for illegal activity.
"For one, because they don't like money systems they can not control"
This is a broken argument. The US does not control the Euro, or Yen, etc, yet they do not make it illegal to trade in Euros/Yens within the borders.