Bitcoin Forum

The US Regulatory Vice Closes on Bitcoin (http://www.zerohedge.com/news/2013-05-06/us-regulatory-vice-closes-bitcoin)



But, of course, regulation will destroy bitcoin, so sell all your coins now, because in the end, the Banksters will always win; there is no way to defeat them. That's how it goes, right? Because, you know "if I can't go down to teh gas station, fill up my tank, and pay in BTC, it will never be anything other than a bubble." Right. It couldn't POSSIBLY be a revolutionary new protocol that will have a hand in defeating the evil banksters and putting monetary power back in the hands of the people. It has to be regulated to be accepted!

So, since [ (a) regulation, and (b) throwing government money at a problem to solve it ] drive prices WAY DOWN (hence bear argument that regulation will cause bitcoin to crash and die), let's look at some examples of markets where throwing government money at / regulating a problem has caused prices to go WAY DOWN.

Drugs. Back in the 1950s, they were so much more expensive. A bag of weed cost like $250 and a bag of heroin ran you $2500. Now, you can get both on the street corner for $20 and $10 respectively. Thanks to government regulation of individuals and businesses, as well as throwing money at the problem (law enforcement $$ and school education $$, etc.) drug prices have gone WAY DOWN and hardly anybody uses them, and the same thing will happen to Bitcoin if it is regulated.

College. A great example of how throwing gov't money at something causes prices to go down. College used to be real expensive - in the 50s, a 4-year degree at a good school cost something in the range of $120,000. Now, you can get a degree at a university or a private school for only $20,000, much like in European countries. This is thanks to federally-guaranteed student loans driving DOWN the price of education and now every single poor low-income person in America can afford to go to college.

Almonds. In California, the Almond Board lobbied the legislature to pass regulation requiring all almond growers to purchase $500,000 pasteurization machines. Naturally, this caused all small almond growers to instantly go out of business. Because we live in Bizarro-world, and everything is the opposite of what it seems, the requirement of $500,000 along with reducing competition actually caused almond prices to go WAY DOWN, and so the exact same thing will happen to Bitcoin.

P2P Filesharing This has nothing to do with prices, but rather, adoption. As we all know, once the Government got wind of P2P torrent filesharing, they began regulation and prosecution, going after individuals who downloaded torrents as well as websites who enabled users to download torrents of illegal material. The effect of that now is that absolutely no body in the entire world is able to use BitTorrent software; in fact, it is absolutely not a widespread practice to hop on the net, find a torrent in 2 seconds, and download a movie illegally, because the government made that impossible due to regulation, and the exact same thing will happen to ButtCon.

TL;DR: So, I've given you 3 absolutely IRREFUTABLE examples of how government regulation, interference, and "throwing government money at a problem" always, 100% of the time, causes prices to go WAY DOWN.
Bitcoin is going to CRASH guys, due to regulation; tell me your thoughts and try to convince me not to sell ALL of my coins in the next 24 hours.

Bitcoin Report Volume 47 (CFTC FUD) (https://www.youtube.com/watch?v=nz_1JlykBf0)

Drug prices went down because of supply. Bitcoin is a finite, non expandable supply.

College prices went way UP. Tuition costs go up EVERY YEAR. I've been in school seven years and every year tuition goes up.

That college example just destroyed your credibility. Are you living under a rock? Gov't has created a HUGE bubble in higher education finance. Or were you being facetious?

https://nces.ed.gov/fastfacts/display.asp?id=76
http://money.cnn.com/2012/10/24/pf/college/public-college-tuition/index.html

http://i2.cdn.turner.com/money/dam/assets/121023093645-chart-college-tuition-fees-monster.jpg

Exactly. drugs is a BILLION dollar or maybe even TRILLION dollar industry. education cost have been INCREASING every year. AND P2P filesharing is widespread despite government regulation my friend. google piratebay as a start.

EDIT:

well if she was indeed trying to be sarcastic that was a lot of effort -.-

lol you all can't tell each of those points were meant to be sarcastic? Duh? Guess you missed the point of his (her?) entire post...

If you didn't get the sarcasm by skimming over the text you are doing something wrong.

My freakin God guys, is it not obvious that my entire post was sarcastic?  ;D ;D ;D BitTorrent example was a dead giveaway.

1) Yes, college costs have gone UP, due to federally guaranteed money pit

2) Drugs have gone UP too, it is much more expensive to grow and ship drugs when there are federal agents hunting you down every step of the market from production to end user. 

BTW, if anyone tries to seriously debate this using the prior attempts at cryptocurrencies which were crushed by federal intervention, it is important to note that those were centralized so that would be a classic case of "apples and oranges." We see the long, drawn-out, perpetually unsuccessful attempt to curb illegal torrent downloads - that is because it is a decentralized system (of course, the torrent file hosts are weak points in the same way that exchanges are.)

Heavily regulating exchanges could be seen as a centralized "weak point" but then again, prohibition involved shutting down wineries, breweries and distillers, but the "common man" still managed to get drunk on Friday nights...

Damn trolls.

Don't blame BitcoinAshley, it was so obvious that the only one to blame is yourself.

http://www.uncommondescent.com/wp-content/uploads/2013/04/Strawman.jpg (http://en.wikipedia.org/wiki/Straw_man)

Scarecrow!

what's sarcasm ?????

Would have been if I actually RTFOP.

And that's the problem. Read and answer then. Not catch a single keyword and throw in your opinion.

Or just hash it out in the thread like I did and continue to skim pages of text. Internet is serious business though, I know.

Cool, learned something new. Hadn't heard of that.

I don't buy the drugs argument.

Drugs are more expensive as as a result of government intervention because the demand for them hasn't gone down, but supply has. Their utility is the same as it always was.

Bitcoin's utility goes down the more difficult it is to obtain and use as a result of government intervention. So demand drops as well as supply (in the US at least). The ultimate effect on price is thus difficult to determine, and will be a result of the form any intervention takes, and the opportunities to use it cross border that remain.

Different story, entirely.

 :D :D :D :D :D :D

Indeed.

Squidface, you have missed the point entirely -- NO AMOUNT OF REGULATION / CONTROL CAN INHIBIT, EVEN IN PRINCIPLE, THE ACTIONS OF A DECENTRALIZED OPERATION.

I would say sorry for yelling but... I'm a metal head.  \m/  RIP, Jeff Hanneman.

https://www.youtube.com/watch?v=nz_1JlykBf0

What you described is exactly what happened in the drug market, too. Sure, demand went up because more people used drugs. Supply went down.

"Bitcoin's utility goes down the more difficult it is to obtain and use as a result of gov't intervention" ... The supply of drugs went down as a result of government intervention. You are perhaps arguing that demand for bitcoin will go down because utility has decreased and/because supply has also gone down? How come that didn't happen with drugs? How come supply and utility/ease of use (i.e. you have to be VERY CAREFUL when transporting them, and anytime you buy them you risk imprisonment) went down but demand went UP?

Ahh, I say, but that doesn't matter as much as we think it does, much like the appeal of drugs doesn't count on the ability to bring them places or buy them without fear of imprisonment. What bitcoin does best is also what gold and silver do best. Gold and silver have limited utility (when was the last time you went to a store that accepted gold and silver, except in backwater areas of Utah?) yet they have performed better as a store of value than EVERY SINGLE fiat currency in the entire world.

So my argument is that the following: "Bitcoins will go down in value if you can't buy them anonymously on an online exchange and use a bitcoin debit card to buy gas i.e. reduced utility due to government regulation" is false because there is and will be incredible demand to simply use a quasi-commodity that isn't controlled by Ben Bernanke.

There will always be a demand for monetary freedom. If you have to convert back to dollars via your friend Joe's OTC (parallel: go out on the corner and find a drug dealer to get your marijuana) it's still a lot better than sitting there while your Argentinian Peso loses 25% every year (day-to-day volatility aside, bitcoin has a better track record in terms of long-term trend value retention.) I guess it all comes down to how bad people want it as a place to throw fiat to save it from Bernanke and use as a cash OTC currency vs a place to throw it to buy gas and cigarettes at the corner store and speculate/day trade 24/7 on MtCox. I suspect the former will eventually become most folks' preference, especially as the global financial situation continues to deteriorate...

Thank you sir.

Oh, while I remember - as for the strawman accusation on the previous page; I forget who made it - that only applies if I'm addressing an actual person's argument. I have seen plenty of bear arguments that are completely different and unrelated, and I have seen plenty that indicate that regulation would kill bitcoin due to decreased utility. I am responding to the latter and it is a hypothetical argument that I created to respond to and thus there can be no straw man as I constructed the argument myself. It just happens to mirror arguments that I've seen in the past, and in no way do I claim that all bears make this argument or that any specific bearish posters on these forums make that specific argument ;D 
Had an actual bear made an argument that was unrelated, and I mischaracterized it as a "bitcoinz will fail due to regulation" argument and responded that way, the strawman accusation would be legitimate. But, nice try there bucko.

This is good news imo.

Bitcoin can't fly under the radar forever in the US, and so there were basically two possibilities: It gets regulated, or it gets effectively banned.

Looks like we're getting the better of the two.

Also, this is probably GREAT news to entrepreneurs who were nervous about getting into bitcoin because of its grey legality.

Ah. America. Land of the free freedom directly proportional to your own level of wealth.  :)

If production of certain goods/services are restricted, supply will decrease and price will go up. If an artificial incentive is created to boost demand for a good/service, demand will increase and price will go up. If Bitcoin use is restricted, supply will stay the same and demand will decrease. That will cause the price to go down.

Anyway, the CFTC is only regulating financial instruments related to Bitcoin, not Bitcoin itself, so it's not a problem. I just wanted to demonstrate that the OP doesn't understand basic economics.

Wow.  History much?

Prohibition = booze supply increased, price went way down
WWII parachute material = supply of nylon stockings went up, price stayed the same
War on Pot = supply increased massively, price to get high went down (price per weight went up, but quality went through the roof)
War on file sharing = supply dwarfed demand, price went free
War on porn
War on etc., etc., etc.

EDIT:  silk stockings... * sigh *

Oh - and war on literacy (Medieval Era) = printing press

Restricting things that mass numbers of people want

NEVER

EVER

Works.

Unless it's lemon flavored coke  :-[

Yeah.  That cartel down in Medellín really needs a good marketing guy...  :D

Alcohol prices skyrocketed during prohibition, and alcohol quality decreased dramatically. The rest of those items got cheaper because of new technologies. As an example, do you think the war on file sharing made files free, or did the invention of file sharing itself make them free? Did porn get cheaper because of the internet or because governments frown upon porn? You are confusing inventions with interventions. The invention of the printing press is not the same as a war on literacy.

Do you really think that if Bitcoin exchanges were closed down, the price per coin would go up? I'm just asking a hypothetical question; I don't actually think that the exchanges will be closed down. Imagine if tomorrow, Mt. Gox announced that they were being shut down. People would be scrambling to sell their coins and get their dollars back in the bank.

Just buy back in now :) Your post isn't gonna help you lower the price xD

Most people involved with Gox would probably scramble, but then afterward, anyone looking for BTC (even those that previously scrambled) will be happy to pay an exorbitant premium for them, from Shades McBitcoin down on the corner.  People WANT monetary freedom EVEN MORE than they want pot, and they want pot quite a bit...

When I stayed in CA, near San Jose, there was a certain hydroponics store I became friendly with the employees of.  (sue me for ending that sentence with a preposition.)
Anyhoo, the OWNER of the store (who was himself a huge pot head), voted NO on CA's prop 19 (outright legalization of marijuana), BECAUSE he knew if prices did not remain HIGH (LOL PUN), his store would likely go out of business.

Prohibition of a high demand product = huge price markup.

+2  8)

So what, you advocate communism? That's out of place in a Libertarian community. 8)

Liquidity and convertability are the largest part of Bitcoin's value. It's not a consumption good that people would need. Therefore, making Bitcoins harder to attain decreases their value.

Do you really think that if MtGox went poof, prices would increase in the OTC market? ;D ;D ;D

It unlawful to have child porn on your computer, when will it be illegal to have a bitcoin wallet on your hard drive?  Or at least an unregistered wallet.

I get the sarcasm. But I do believe that in the long run, Bitcoin derivatives and other financial scams will really harm Bitcoin.

Just remember that Bitcoin was MEANT to empower normal people - undermining the power of bankers and the other Wall Street bastards. As soon as bankers and Wall Street bastards start to play with Bitcoin, it may be its end.

Just my 0.02BTC

Yes.  Liquidity and convertability would not be a problem by the time such a catastrophic event as MtGox shutting down occurs, because the idea of Bitcoin will have already gone viral by then.

Tell me about it.

don't people recognize satire when they see it anymore?

in the 50's before govt regulation, satire was everywhere.

Noticed many posts were distractions from the real issue of the topic....

Bitcoin is going mainstream, getting the attention of the Feds, and they want to use it for power, revenue or both.

For the kind poster on the previous page who accused me of not understanding basic economics, I think you did a pretty good job of illustrating that it is, in fact, yourself who does not understand  ;D

Good/service + government intervention/repression/regulation/etc = lower supply vs same or higher demand = higher price.

You are arguing, so far as I can tell, that the intervention/etc would not not influence supply (not true, since fewer exchanges and higher barrier of entry into a regulated market would make it harder and harder for people to get bitcoins.) Only in bizzaro-world (where everything is the opposite of what it seems) would goods/services, in the vast majority of cases, be THE SAME OR EASIER to get in a repressed market.

You are also arguing, so far as I can tell:
(1) that the utility of bitcoin as an easy cheap way to hop down to the convenience store and buy petrol and cigarettes is more important than its protocol, its decentralized P2P structure, and its potential as a store of value that outperforms and hedges against inflating fiat currencies.
(2) since its features that you consider more important would be the ones affected by government regulation, the demand will therefore go down, completing your "unaffected supply vs lower demand" equation for lower prices.

I disagree. With regulation, supply will go down and demand will go up. Heck, abusive regulation itself is something that bitcoin was practically designed to circumvent. I'm not condoning using bitcoin for any illegal activities (i.e. thwarting regulation) but to think that one of the very problems bitcoin is perfectly suited to work around will cause its demand to be reduced in the face of that very utility being realized - sorry, doesn't work like that. 

Thanks to everyone that posted here who "Got it." ;D There's a bigger picture here - (1) feds are waking up, and (2) a decentralized protocol (like bittorrent) is nearly impossible to effectively regulate.

We cannot escape a fundamental truth about humanity: If something has value, then powerful and wealthy people will seek to acquire and control it.

Therefore Bitcoin has 3 possible futures:
1) Continuously adapt and operate outside of the reach of such control,
2) Give into the control - but possibly under different and better "rules" than centralized currencies, or
3) Become irrelevant and unused and fade into history.



+1 !

guess i need to buy more litecoins then

All jokes aside, the Commodity Futures Trading Commission regulations aren't about Bitcoin, but derivates and futures on Bitcoin, which totally fall into their field of duty, but this implies one very important thing: BTC is accepted as money on a gov scale. Very positive, imo.

I read a comparison of bitcoin with online gambling, and how the US killed that market on its shores. I am finding it far more difficult to turn my fiat into bitcoins, and while that does mean I was protected from the last crash, its not the best way of trying to use a currency!

I have an idea that whatever you might read in documentation and press releases, the governments of the world have a different agenda for bitcoin until it finds a way to have control of this new technology.

My guess is that will will eventually get a visacoin and a mastercoin, all based on the works of Satoshi and this forum. That will only happen when the government are happy with whatever regulations they put in place. 

But I seriously doubt they will be involving us in that discussion!

The parallels are there. The regulation question is actually quite scary.

The 2006 UIGEA came out of nowhere and was tacked on to "must-pass" legislation without discussion. All major operators exited the market either voluntarily or through asset forfeiture. It effectively crippled the US share of online poker players. By targeting banks first and foremost, the small operators that were left had to turn to more seizure-conscious batch processing which has turned payment processing into a cruel joke. 2-day ACH drafts are now 8+ week paper checks (many of which bounce) or bank wires; fees are up; withdrawal limits are similar to bitcoin exchanges -- you can't get your fiat out. And this is given the situation where player pools are miniscule compared to pre-2006 and pre-2011 (when domains and bank accounts of the 3 largest operators were seized) levels.

We've already seen how the banking system can be used to attack the operations of bitcoin exhanges. This has been on a very small scale. Payment processing from bitcoin to fiat is already difficult and timely. If any major government targets the banks, shit is going to hit the fan hard. If an already difficult deposit process becomes even more difficult, timely, and shady (as high margin offshore profiteers increasingly become the only source of payment processing), and if withdrawals get even worse than they are..... money dries up quick.

I mean, we in the US are using Russian, Japanese, Slovenian exchanges. We all hope for positive developments in re to regulation. But we are in a very grey legal area... and if we get pushed further into the black market, the next round of operators are going to be far worse even.

+1
But also "shadow money" how they call it. Which they (think they) can crush anytime if they want to do so.

BitcoinAshly is my new favorite person on here. at first i was like aughh what the fuck are you talking about!! oh man im gunnaaa..... ohhhhh wate a minute. this seams a bit...... humm oh ya she is crowing it up. hahaha . that was a good one my friend. thank you. it like making fun of republicans and they dont even know it....... your are on par with "the colbert report" pose as an ass and realy you are making fun of the asses hahahah love love love it.

believe it or not, but this cftc thing is actually adding to bitcoin's legitemacy...  it may be hard to see at the moment...

I would argue there are many markets around the world that do not have the economic infrastructure the US has, as corrupt as it is, which need a monetary system. Bitcoin, with all of its well-known capabilities, fits this niche nicely, and as such would increase in demand regardless of US intervention.

As for the OP, I take from her post the following points:

Labeling something illegal does not reduce demand, it only causes demand to mask itself.

Government regulation has a history of harming, rather than benefitting, economic markets; and as such can be expected to act in kind regarding bitcoin.

Revolutionary technologies have a way of proliferating  regardless of oppression.

That and the amazing amount of people on this forum who lack critical thinking skills.

This is very much based on your list of illegal stuff.  If you go down that list to the boring stuff, the rule that government intervention increases demand isn't true.

60w light bulbs were made illegal in the EU a few years ago - we must now use low energy light bulbs which cost 10 times as much.  But there are no dodgy light bulb salesmen hiding in doorways trying to sell me illegal light bulbs.

Leaded petrol (gasoline) was made illegal 20 years ago, yet, there was never a demand for this old fuel from hardcore drivers, not happy with the alternative.

Even cigarettes which are being made more and more illegal through harder ways to buy them is also suffering from a lowering of demand.  Latest usage figures are touching 20% of the population, down from 50% 40 years ago.

Its only when the item being made illegal doesn't have an alternative which is good enough for the public that government's find that there is a black market formed.  And in bitcoins case, I don't think that is going to happen.  While its cool to be able to use bitcoins to cut out government, I don't know how big a market there is for that exclusive use - I don't think its so big that people are willing to go against big government to get their hit!

Although I could be wrong ;)

Yes, this is key. I do have high hopes that governments will not attempt to shut down the bitcoin market (not that they could, entirely, of course), and the relatively non-threatening nature of FinCEN's scheme supports that. But personally I am cautious, as I have in the past lost considerable money to government seizure in the grey market.

There is currently little demand for bitcoin as currency. We are nowhere near the critical levels of adoption that would be required to stave off massive downward price movement in the case of being targeted by major governments.

If this were to happen, speculators -- virtually the only thing that is massively propping up bitcoin prices -- will dump en masse. They will move on to much safer investments.

In the case of online poker, US consumers clearly decided in favor of brick-and-mortar casinos and specifically legal forms of gambling. What will demand look like if new users begin to get the impression that dealing in bitcoin is "illegal"? If regulatory schemes come about that are too costly or legally uncertain, venture capital dries up.

Not trying to troll... this is a scenario that should be considered. I lean bullish longterm, but I consider bitcoin quite risky (this is only one scenario that could crush it). And those perma-bulls who have pie-in-the-sky ideas about what regulation will look like need a reality check. This will make or break bitcoin.

I find that we often talk here as if bitcoin has already achieved mass adoption. It hasn't. We are a very long way from that. The new money coming in -- how long it will sustain we will see -- IMO is not from bitcoin users, but by and large from speculators. That is not sustainable.

This is the key to everything - bitcoin is not mainstream, and when I talk to 'plain folk' / muggles / real people etc nobody knows what a bitcoin is, or why they would want one!

We are still looking at the internet circa 1993, but we don't have a friendly media helping us push a vision of Money 2.0 on to a apathetic public. 

Rather than talk about a bitcoin being worth billions per coin as a sign of success, its time to start spending to get the message out there.

If you want to limit regulations, we need to demonstrate that bitcoins is more about pizza than paying for drugs and human traffic! Its far more difficult to limit people using their own currency if all they are doing is buying sensible stuff from people who are honest traders.

Maybe its time to start finding bitcoin users in Africa and show the world what free trade actually looks like?

Well said. If we want bitcoin to succeed, we need to bootstrap the marketplace and show the world it's value. Speculators have their role, and they're performing it well. We as a community need to develop easy to use, integrated markets that utilize bitcoins strengths to make everyday life easier. The is a limited market for political goods and services, there is an endless market for revolutionary ideas that reduce the cost of living.

Email wasn't widely adopted because it had an agenda to crush the post office, it was adopted because it was cheaper and more efficient.

Well, have you worked in a Baumarkt some time ago? They were CRUSHED by the demand and people ran their doors in. They all bought every single light bulb you could find, because peopel are sceptical of these low energy lights.

Which is a good thing, since the new technology to look at is LED and banning lightbulbs was premature. They should have been banned together with energy saving bulbs running on Mercury at the same time, leaving the market open for only LED.

Well, I don't know where you live, but in southern europe you can get illegal light bulbs in every convenience store run by chinese or pakistani people. And you have 3 of those in each building block.

Yeah, we don't have those  in Germany. People ran to the hardware markets and basically bought bulbs for three generations :D

I've always contended that if CFL bulbs had become popular through natural market forces then they would have been banned because of the mercury.