Bitcoin Forum

If the amount of people using bitcoin continues to go up as it has along with corresponding increase in services, at some point it will become an honest threat to the sovereignty of the state. At this point, the states (the powerful ones anyway) will have no choice but to intervene and shut down all of the services (mtgox, glbse, bitinstant, this forum etc) that users depend on in order to facilitate exchange within and between currencies. My question is: Is it possible for this decentralized currency to build out an equally robust and decentralized service infrastructure? If not, what is the contingency plan for when this happens?

I believe the touted solution is Mesh Networks

I believe this is why .bit and namecoin were created. Only some people will use it if the scenario you describe goes down, but it's an option.

What's even worse than that is if exchanges will intentionally manipulate the market in order to grab more Bitcoin. This is why I've been advocating for a math based fiat denomination for Bitcoin. Bitcoin can have the currently traded price encoded into the blockchain based on analyzing trades reported.

One government acting alone could not take down all the websites, since they could just be moved to other countries and/or run as Tor hidden services.

The US government could make it difficult or impossible for companies like Mt Gox, BitInstant, and BitPay to operate with USD bank accounts but that wouldn't neecessarily mean the end of those services - there is more than one currency in the world. An adverse legal climate in the US might only have the effect of making those services devote more of their efforts towards expanding other markets like Europe, China, Japan, India, Brazil, etc.

Who said anything about one government acting alone? Just take a look at what happened to Assange and you will see that in the world today when something threatens even just one nation state (the US in this case), they can exert very heavy diplomatic pressure to ensure that it is a coordinated shutdown takes place (and in this case, many governments will be acting in their own interest, together). Make no mistake about it, when it happens it will be come without warning and be so swift that the market will not even have time to react. It's clear that there are other safehavens in the world that might become a haven for such businesses to continue, but at the moment, the businesses are simply not there. They are exposed in a huge way simply by residing in developed countries with interests in keeping trade in their own currencies. At the least this means a bottoming of the price and stagnation until these businesss can relocate to setup elsewhere. My question revolves on how to avoid such a scenario by creating a resilient infrastructure now.

Making the entire network operate through TOR may hide the exchange servers. But would you trust such hidden servers?

Potentially, yes I would. But there are still at least two issues with this:

1. User adoption goes back to the old days because people had a hard enough time figuring out how to use bitcoin, now they have to know how to use Tor as well... not an ideal situation.
2. Wire transfers and other traditional forms of transferring (large amounts) of money to such services becomes prohibitively difficult and adds yet another layer blocking user adoption.

They can't even shutdown Pirate Bay. Bitcoins will be hard for them to stop without shutting down the entire internet.

Should a government act against bitcoin, it would drive the price through the roof.

If you're worried about it start competing services in one of those safe haven countries. You'll either encourage the current market leaders to diversify their risk similarly or else they won't and you'll end up with all their business.

The FreedomBox - https://www.freedomboxfoundation.org/goals/index.en.html - has just been released and that can operate in ad-hoc mesh networks although I think that solution is a long way off if ever possible.  Exchanges could be hosted as hidden services within the I2P or Tor networks but you still have to get the fiat cash into those exchanges.  Maybe Pecunix could be used or Ripple -http://ripple-project.org/ - if it gained enough traction. 

yes, and it's even more important than the success of bitcoin that this happens. Not only as means of resilience against an attack but also as a motor for a less hierarchical society.

If it didnt mean dropping everything to move to a country where I know noone (and likely don't speak the language), believe me, I would. This thread more than anything is an appeal to those who might already reside in one of those countries.

It wouldn't hurt to ask Bitcoin websites, especially those with registered with a .com TLD, for Tor hidden service support.

I think this issue is blown out of proportion. If certain exchanges are shut down, there will be others. There will be classifieds, craigslist, etc. for in-person exchange. Besides, shutting down exchanges would likely drive up adoption of btc as direct medium of exchange, without intermediate conversion to government fiat. Finally, more and more people - including smart individuals in governments have vested interest in Bitcoin. They see its value for personal reasons, but also in the bigger picture.  Bitcoin in itself is not that big of a danger to anyone, it is more of an opportunity. Think Internet.

The sites move to TOR. Problem solved.

By all means, yes. Much more than I would trust governments.

Not if they use a trading system like bitcoin.de: buyers transfer money to sellers directly.

Obviously this requires users trusting eachother (the site works with a trust / rating system, which works pretty well btw) but there are no fiat transactions to or from the service provider anymore. Their fees are entirely paid in bitcoins. The sire could operate completely anonymously.

Yes looks good that project.  I just wished they sold plug (in to your modem/router) and play (Ad Hoc'able) hardware that could also act as local MeshNetworks.  With Pirate Boxes and RaspberryPi's available I think someone will start selling them sooner or later.

See here for how to build a peer-to-peer currency exchange:

  https://en.bitcoin.it/wiki/Ripple_currency_exchange

That said, I think it's unlikely that action against Bitcoin exchanges would last for long unless they were done very early (like in the next year or two). If there are enough people who campaign politically for it to be allowed to grow and breathe, politicians will respond to that, as they are desperate to find some convincing story around banking that is stronger than just the endless cycle of "add some rules/remove some rules/limit bonus sizes".

How would prices go up, if the infrastructure which supports these prices was removed?

It is an enormous danger to any nation state. If you dont control the currency, you dont control the country.

bitcoin.de... is also hosted on a domain by the largest economy in europe. This will clearly also be on the list of sites to take down (once they decide that is necessary).

See my earlier response. User adoption suffers tremendously as a result. This is not a scaleable solution.

Can you be more specific? How exactly does Bitcoin present danger to a nation state (more than cash or gold or paypal or dwolla)?

If, for example, the US government can no longer entice people to its military machine via worthless US dollars, people will not enter its military machine and the US will get very angry. The only way for bitcoin or any cryptocurrency to really succeed is to eventually start removing significant value from existing fiat currencies to itself. It will cause inflation above and beyond standard inflation and people will stop wanting the currency. It is a clear and present threat to the establishment.

Military spending is bad, but it's not what's making fiscal sanity impossible - it's transfer payments, especially transfer payments to retired public sector workers.

Nearly all pension funds are insolvent because they promised benefits which required mathematially-impossible returns to fund. The degree of insolvency seems to be directly proportional to the policial clout the constituency of these funds represents - California, Illinois, UAW, etc. The stock market is being kept propped up by unbacked credit emissions to delay the time at which these funds must confess that they won't be able to pay out what was promised.

That is not a threat that bitcoin has anything to do with though, that is a threat all by itself.

The ability to print new currency (or unbacked credit) at will only delays the inevitable as long as people can't flee to another currency. Mass acceptance of Bitcoin would bring the sooner than it otherwise would happen.

I am being SATIRISTIC

http://stochastically.com/img/bitcoin-flag.png (http://stochastically.com)

How is the infrastructure removed? Who's going to shut the net down?

Investing in bitcoins is merely making a bet that the internet will still be functioning in three, four, five years or more.

Thanks for bringing this up OP.  Certainly a contingency plan should be on the table. 

More specifically coins are not a threat to a nation state but rather to those that control and profit from control of fiat money supply.  Indeed gold is an apt analogy, as if people started using gold as transaction currency the money masters would be no longer able to take as much value from the people as they wished.  A brief review of the banning of gold ownership is merited. 

https://en.wikipedia.org/wiki/Executive_Order_6102

Wow, 1933 to 1974. 

Simply put, the money printing press is a valuable asset.  It earns some folks on the order of 10 trillion $ per year (good luck figuring out just how much it really makes).  That's big business so you might expect these players to try to squash something like gold hoarding or bitcoins which threaten it. 

On the other hand, these folks have another option.  They can run with the money.  Buy gold and bitcoins with their infinite dollars, and retire in comfort.  Its been a good run, and that is probably the best option on the table for them now, introduce a relatively massive inflation and run.  The cards were already on the table before Satoshi threw the aces down.

But I'm sure glad to see some improved TOR integration in the latest release anyway.     

Well, people will need to pay tax with the countrys currency.
So there will be a need and use of that countrys currency and I dont think citizens of a country would want to totally get rid of their own currency.

Its also an opportunity for any country. Like the internet. Creating jobs and getting millions in money.
The countries first to adopt new technology will earn most on it.

In fact if I where a government I would like my citizens to hold highest amount of Bitcoins possible as it might be the currency of the future on internet. It can be regulated by random inspections.

Though .com, .net, .org should be avoided at all cost.
They can be pulled away.

I´m not sure they will bother that much right now either.

Bitcoin needs to grow to $150 to be more than a tiny tiny problem.
Its so small it would be allmost embarrasing right now for them to care.
Thats what I think, but I might be wrong. They might not have to much to do.

Though in reality Bitcoin benefits every single human in the world. Except the 100 bankers who own the majority in the big banks.

That's the wrong answer.

We don't need an alternative to the Internet. At least not at this stage, if it becomes nessecary to fork the network that decision can be made on an individual basis.
But the opposite is happening. THEY are leaving. (http://www.internet2.edu/) The Internet is here to stay, and so are we (https://projects.eff.org/~barlow/Declaration-Final.html).
If this one is played out right we will inherit all the existing infrastructure (including the power over ipv4 space) in addition to the list of community networks  (google that one).

But that's not enough, the next logical step is to decentralize power and production which will be a colossal task even compared to running the whole internet.

Indeed, gold is the best analogy to bitcoin because it is both scarce and not controlled (in an outright way) by the nation states. However, I am convinced that through the use of the massive reserves that both the IMF and the governments around the world have, they are manipulating the price of gold as they please. The difference with bitcoin is that it has no historical precedent and the governments and other major players have not had the time to invest in it (nor the need to do so... yet).

For this reason bitcoin is actually a much safer hedge against inflation (or global fiat currency meltdown) than gold imo.

Interesting developments, the Cyberspace declaration as well as Internet 2. So, do you think Internet 2 will be something separate from the internet, or is it just a name for a project on the internet? Also, I'm not 100% sure if the analogy to an age old declaration of independence makes sense or is valid. It seems a bit wanted, as in made to fit, and I have difficulties of understanding how a world of thought can or should be disconnected from a world of bodies. Would love to learn more though.

Concerning the topic of this thread: Btc is far from safe imo. Just look at all this crap going on with Megaupload and others, lawyers and courts acting massively against internet users who download copyrighted material. They are of the opinion that yes, thoughts and ideas can be shared with everyone in the world at no cost, but should they? They think ideas are property, and artists, inventors, businesspeople, and scientists need to be compensated because their minds cannot survive without their bodies.

Universities and other institutions,even though they use the net, are de facto separate from the internet already. Thinking about expensive subscriptions like Jstor and locked databases with scientific knowledge. If someone attacked wikipedia the "good old internet" would be left with homepages and blogs and facebook alias myspace pages only.

AFIK Internet2 is a genuine separate network, a darknet if you will, only that people behind it are in academia and goverment.

The declaration of Independence of Cyberspace is an old hat, and it doesn't necessarily just apply to the internet as Cyberspace by definition transcends it. It is just, that if going through the hassle of creating a mesh network it should be part of the internet. Creating a physical darknet on purpose is equal to burning bridges which should be avoided if possible.

I don't believe the meshnet behind the freedom box is supposed to replace the internet, but rather a way to get around censorship and provide free internet access to those who can't afford it and so on. But if Big Internet decided to attack something like bitcoin, it would certainly work as a "darknet" around such censorship.

Yes, yes, and yes!

Viva Satoshi!

No, internet2 is mostly just a physical network, a subset of the internet, but with faster lines.  It carries same internet protocols and traffic that you are used to.  It just means that nodes on it have reliable high speed links to each other.

For example, Stanford can send data to MIT using private I2 links between universities across the country rather than handing the traffic to commercial carriers.

Bitcoin may be changing the financial system. But the political systems are changing as well.

Look at this guys: http://en.wikipedia.org/wiki/Pirate_Party_Germany

Last year they have already moved into four state parlament in germany and will probably move into the parlament in the next elections.

Parties like them are forming in all european states. And there is already one in Canada ( http://www.pirateparty.ca/ ). (Damn US with their two party system.).

Systems are chaning. Not only the finacial system, but on many layers in paralel.

Getting this party to accept bitcoin donation would be awesome though. Pirate Party of New Zealand has already stated they will accept bitcoins. And the founder of swedens pirate party has moved his complete savings into bitcoin.

So maybe bitcoin will not be illigal after all.

This is new to me, that it uses the same protocols is clear, why reinvent the wheel. But from my understanding traffic from the regular internet isn't routed over internet2 lines.

Bitcoins are legal its just numbers...

Déjà vu. I've heard these words said by a guy who organized September 11 attacks...

Excellent trolling sir!

Even if the Pirate Party came into power in any European country, wouldn't they ultimately face the same problems that bitcoin will be causing?

I doubt any country/government can allow to be without full control over their currency, not even the most liberal of all. Or would it be different if they started to accept taxes in bitcoin?

Right, they don't typically offer routes across their high speed network to the rest of the world.  The whole point is having a good system for connecting one I2 node to another I2 node, not improving the internet for everyone.  But the project also is for learning how to manage dynamic high speed networks, and that will trickle out to the rest of the world as the rest of the world upgrades their shit.

Wow, I did not know you knew OBL and he used bitcoin, or could see ironic jokes.

Sorry, but the Pirate Party here in Germany are wussing out already.

They don't accept Bitcoins because it's too "uncontrollable", they largely lean towards leftish socialism. They want a basic income guarantee for everyone.

They weakened their position about copyrights due to pressure from the establishment, their position's got not much to do with Rick Falkvinge's recent point (http://falkvinge.net/2012/09/03/a-fair-free-market-or-the-copyright-monopoly/) anymore. They'll go the way of the German Green Party in the 80ies which started with high (albeit leftish) ideals but eventually got assimilated into the system.

i think a nation/state financed attack on the network would actually be quite harmful to Bitcoin.  They could hire a much bigger nest of hackers :)

oh...and they can kidnap people and send them to Cuba...without too much international outcry...

I believe that mid and high level bueracrats will become increasingly desperate to cash out before the fiscal situation becomes untenable so if they start paying attention to Bitcoin at all it will be to launder whatever public funds they can get their hands on for their own use.

I believe tools like the following for "in person" exchanges can be beneficial to avoiding the use of banking services:

http://TradeYourBitcoin.com

Something tells me a certain washed-up comedy forum is going to be excited when they come across this.