Bitcoin Forum

Starting with the premise that the US Government tries to take down bitcoin entirely. 

What would be the most likely form(s) of attack? 
Would they be able to keep any viable form of attack secret or shift blame to another entity? 
Which if any methods do you believe would have a likelihood of success given a concerted effort? 
What would very rough dollar cost estimates be for various methods?
Would there be signals of an attack or could this occur with no warning?
Could any responses be developed within the bitcoin framework or do you see another existing or proposed cryptocurrency that would be safe from such attacks?

Sorry I know it is a messy bunch of questions, but perhaps also the most important to consider long-term.

US have no intention to take it down.

They cannot take it down. Can you take down Internet ?

You opened my eyes, it's obvious now. Thank you !

first they will illegalize bitcoin using some funny excuses (drugs , laundering etc)
second ban bitcoin trading platform & frozen tons of bitcoin related companies' accounts (wall st damn banker are willing to do this)
third assert any bitcoin trading activities with US citizens  is illegal ， prepare to suppress bitcoin companies overseas
fourth arrest tons of people to intimidate you guys

A couple of thoughts:

- The cryptography could be broken. Nobody would know about it.
- The block chain gets too big to maintain for the average bitcoin user. We would know about it and possibly be able to fix it in time.

I want to bypass a side debate on whether they would try to take it down and just begin with the premise they try.  If you want to consider whether they would try such a thing research: Liberty dollar, EGold, MFGlobal, etc. 

As I understand it a 51% attack would be one possibility, but I'm not an expert and really admire the collective knowledge enabled by focused discussion on this forum.

Yes, I should have said I'm focused on more "techinical" attacks like a 51% attack - things that could take it down worldwide.  I think we have a good idea with precious metals how things would play out with the traditional "make it illegal" approach.

Yes , you can. The free internet project it's just a joke at the moment. The main traffic still relies on cables and satellites.
Take down a few cables like that grandma did in Georgia? (the country/not state) and problem solved.
Also the routing servers can be taken down easily.
I remember somebody saying that the us has 10 times the amount of rockets needed to destroy 90% of the largest databases in the world.

So , yes , it can be done. But nobody is insane enough to try it.

Also , why the internet , just raid the location where the mining pools are take control and ..1 hour , 10 blocks , bitcoin problem solved.
At the moment bitcoin is a grain of sand compared to other things the government is preoccupied.

Hopefully , until it becomes a real problem for them we will fix some of the vulnerabilities.
 

I suspect that it would take the form of:

 - bio-metric based positive identification for network access.

 - real-time network utilization analysis.

 - filtering and blocking unauthorized protocols and traffic.

 - multinational carrier level embargoes against non-aligned jurisdictions.

Most people would be mainly not seriously impacted by implementation of most of these things, and all of them could be justified after the promised 'cyber 9/11' which we are assured is coming.

mining these days is mostly centralized, you have few pools that have the most of the network hash power, p2pool is not that popular which really bothers me, so an attacker (could be US government or any one else) in has to achieve that 51% in order to start his own fork and do a big mess.

the easiest way and most efficient is to heavily DDOS the biggest pools, they say that they are DDOS protected but 100 DDOS protection is a myth, so lets say the attacker can take the biggest 3 pools (BTCguild, GHash.IO, Eligius) this is equal to 66% of the network hash rate.

so the technical aspect of the scenario is possible, but the question that popup is why ? if I have that kind of power I would just mine and make money, because such operation will cost millions of dollars, who wants to invest (lose) millions of dollars to do such thing ?

the million dollar question is what the government and big organizations think of Bitcoin ? in which position Bitcoin stands ? is bitcoin a threat for them ? will they ever regulate bitcoin ?

it is a serious matter that should be discussed but when you have the answers to these questions it will be easier to imagine the 51% attack.

Thanks for the answers, to diverge again as to why:  If bitcoin continues unchecked it will likely displace fiat currency to a large degree.  Fiat currency is the main power source for the entire banking industry and to a lesser degree the US Govt.  The US / European Establishment are very unlikely to stand by as a large portion of their power structure is dismantled and handed over to diffuse individuals.  You can see already with the Mt Gox account seizure, bank account closures, etc. what the govt/banks think of bitcoin - they want to destroy it.  They have already done the same with EGold, Liberty Dollar, and many others.  However, bitcoin is so widely held, popular, apparently difficult to attack, and clearly a moral good that a traceable attack, at this point, is going to be a last resort.  I'd expect to first see a continued propaganda effort and further attacks on the fiat-bitcoin interface.  This will drive bitcoin further underground and give impetus to the propaganda that it is the currency of illegal activities.  Eventually this can attempt to build public support for destroying bitcoin.  So, back to the most important questions...

at this point I cant imagine Bitcoin taking over the Fiat system, I might change my point of view when larger adoption appears or when governments make an official statement about the hole thing, but you have no idea of how governments are struggling to change their Falling fiat systems, they know the size of the mess they are dealing with but change is not that simple as we think.

many will disagree about what I will say, but I truly think that regulation is a really important thing here, which bring us back to "technical part" of an attack.

the theory of a 51% attack is possible, the motive is the question again. so lets say, to get a 51% of the network you need around $500 million  worth of equipment add to that electricity AC,internet..... that money will be worth of using only once because when you take Bitcoin down you just achieved something and you lost $500M, but again this doesnt mean the death of Bitcoin.

if you both have $50 billion, would you invest $500 million to "try" to kill a supposed threat, or wouldn't be easier to take the ride and invest and double/triple/... your money.

I understand you input here, I just want to convince my self why anyone will try to kill Bitcoin. because you know if they wanted to do it, they could do it long ago when people used to mine with CPU then GPU. which again bring another question, if governments and banks hate bitcoin, why didn't they compromise the network when it was smaller and weaker ?


 

A government will spend a few billion dollars on paperclips or prison overtime or endless wasteful projects.  The easiest way for any government to take down Bitcoin is to invest a few billion in mining kit and hoard all they produce.  They would force up the difficulty while having the ability to flood the market so other miners would be pushed out.

Or they could just buy all Bitcoin.  Again, a few billion is peanuts to a government.

I won't sell my very last bitcoin for anything less than a billion and assuming enough others are willing to do the same as myself then no government will ever be able to buy all the bitcoins.

Think about that for a second.  All new Bitcoin would be produced and hoarded by the government.  The government is buying all Bitcoin so everyone does as you will do and hoards forever.  Users will move to an altcoin for gambling or drugs or remittances and Bitcoin will be a footnote in history.

Isn't that it - game over - Bitcoin dead?

yes it seems that I've been a bit ignorant, you remind me about the stupidity of some politicians, I forgot about the billions spent for endless and meaningless war, I guess you are right.

Well I agree with your conclusion.  The government would have made us all rich and we would be repeating the process with an altcoin so the government would be making us all rich again.  So Bitcoin is safe - no government will bother doing that. 

But if they did want to destroy Bitcoin it seems they can do so just by investing in mining kit.

Yeah you forgot a detail : take down Bitcoin, you have 10 others Altcoins coming. It's is infinite. Bitcoin is not just a digital currency : it is an idea. You can't stop an idea.

I think this answers it:

My God we are all in agreement.  Shall I ask a moderator to lock and delete the thread before the thing gets contagious???

Ouh, a little more phantasy, please. The goverment would not be intereseted to shut or take Bitcoin down. They are intereseted that people stop using it! That is a big difference.


Goverment can not buy or hoard it. This will drive up the price which would be at this early stage a good commercial for bitcoin. But later the gov could dump them all which would tear down the price. This would be bad. In my opinion the goverment would(will) try first to put the name bitcoin in mud. Make it illegal to trade. Yeah, you can't forbide Bitcoin, but Bitcoin would be small for all time.

If I was the goverment I would buy or produce 51% of the mining power and try to take a few double spending which gets public. Or they hack important bitcoin providers like coinbase. Don't make it illegal! Then I would have the people against me. Put in a flaw so the people will hate it.

Another strategy would be that the gov bribe people that they say they put money into a cold storage and now the money is gone. Who would take Bitcoin still serious?

it is stupid to think that governments will buy Bitcoins but just for the fun of it lets imagine that they will do, so you pay Taxes to your goverments then they proceed and buy your Bitcoins with your taxes and tax you again for the money that money that you've got from selling Bitcoin and all over again.... what a funny loop right ?

In addition to this, the US gov. and banksters has to take into account that this currency will continue to flourish in China, Russia, South America etc.
Trying to destroy it with external measures, like fear mongering and laws, may not be on their block at all. At this point they would probably have to ruin it technically.

If they really wants to take it down, it would have been done already.

My guess is they are going to regulate it now.

US Federal Judge already stated Bitcoin is a form of currency.   

Bitcoin exist in China, England and other EU countries, started to spread in the USA, Japan with each government approval one form or the other already.  Each government may have different version of regulations but so far, none of those big countries are try to shut it down.

Some example of supression but now more they are educated what it is, it will open up the door for everyone to be accepted.

Just remember when Paypal came out, everyone was saying that was bad, geek's money, you must be doing something bad if you have to use Paypal to pay someone.  Now, Paypal is another form of payment.

They surely can take down bitcoin but that will be much like taking down Fulltilt/Pokerstars or Silkroad, public attention rises and new ones sprout.

You guys have realised that manopolies are impossible, inless violece is used. The government is good at that though.

What would be there motivation?

Remember that the us government (or any large government for that matter) is made up of individuals acting in their own interests, often within huge beauracracies, which then operate in their own best interests and often compete with each other for power, money, etc. 99% of these people have probably never heard of Bitcoin and don't care about much beyond a nice paycheck and getting home to watch Homeland. Even Federal Reserve employees are like this, yes I know a few.

I say this because I keep reading about "they". "They" will outlaw Bitcoin. Who is they? There is no smoke filled room with old men deciding the fate of Bitcoin. The system is huge, complex, and has grown ever dependent on itself. It is a house of cards, a lumbering dinosaur, and not nearly as nefarious as some of you think.

One thing for sure is that without the dollar they are powerless: a silent coup. That is the beauty of Bitcoin.

The discussion keeps drifting from my original technical question, but OK I should have posted on the tech board - and for most people understanding if an attack would come is more important.  Yes, the govt is a collective consciousness - I didn't want to get into this since it is part of the side issue of if or when "they" attack.  The reason bitcoin wasn't taken down immediately, imo, is precisely because a collective consciousness is slow to act and bitcoin was hard to attack.  Eventually the collective consciousness of the Establishment will recognize the threat and act more forcefully.  Yes that may be years in the future but this is a different debate vs the originally technical question of how an attack would occur, could blame be shifted, and if there would be warning.

If US government decides to "attack" Bitcoin, it'll go like this:
1. They will send cease and decease letters to all large pools (even the ones outside of US)
2. For those who do not comply, they will turn off domains
3. They will send cease and decease letters to all exchanges (even the ones outside of US)
4. For those who do not comply, they will turn off domains.
Boom! In one week 90% of Bitcoin infrastructure is gone.
Price of BTC plummets close to nothing.
People are afraid of using it because it's "illegal".
Cost to the government less than $100k.

How many of you received cease and decease letter from a government organization?
It's a pretty traumatic experience... will be enough to scare most people shitless.

   

https://thepiratebay.sx/

Your scenario in effect.

Yes.  Torrenting is a close analogy.  How it would play out when risk takers nest eggs are in play, I don't know.

Ok, some "rouge" Bitcoin trading will remain.
But who cares when public confidence is destroyed
and no legitimate business can operate?

Your scenario seems plausible.  But quickly people would realize that the value store in the blockchain is safe (if potentially locked) and many smart people would be working overtime to circumvent the attack.  I'm sure the value of BTC and confidence in the system would plummet, but not to anywhere near zero, and the effects would be transient.

In order for the scenario to be more robust and durable, and regime of monitoring and attack would need to be implemented, or emplaced as part of a broader initiative of global network management.  I don't rule this out because there are lots of things which could drive such an effort.  Distributed crypto-currencies are probably a minor (but potentially growing) aspect of the threat mosaic.

I guess the point I was trying to make is that if enough individuals within the government stand to profit from Bitcoin and it's in their interest to jump the fiat ship, any attack will likely never happen.

All you mathemagician coders tend to look at things too black and white :)

Yes, I believe it'll take a hit, but I don't believe Bitcoin will be taken down; public confidence in torrenting, however, has never been higher, and economies have had to adapt to it (consider music-streaming services & online radio such as Pandora and last.fm and video-streaming services such as Netflix and Hulu to give people a reason not to bother with torrents.)  It doesn't matter if it's illegal if the public prefers it; people consistently break laws they didn't make if they don't agree with them, as they should; only thing governments can do is get in the way, and if governments get in the way of the world, I'd side with the world.

An attempt would cost billions of dollars and have a very slim chance of doing any damage. What ever happens, there is not going to be a "takedown". I think it is impossible.

of course they can forbid all trading and holding of btc.

i guess the price would go down 50-70% and then recover over time. if other countrys are okay with that technologie, they will have an advantage.

but i dont think, that they forbid that.

Yes, I agree with that too. Also, that no matter what happens Bitcoin will be operational.
However, in peoples' mind torrent'ing music is not the same as torrent'ing money.
From an early age we are taught that doing anything illegal with money is really bad.
Unlike sneaking into a movie or copying your friends music.
Psychologically these actions are NOT on the same level of "illegal".
 
If government convinces public that Bitcoin is illegal, that would be the end of "mainstream" Bitcoin.

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P.S biozombies


i Russian
but intelectual intuition i understand  ::)


this some true

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who create paper dolar analog federal rezerve
who create usa

who make war iraq,afganistan,difirents revolutions and etc,kosovo,ukraine,iran,egypt,now is procedure syria

make a lot globas proublums sionizm

who is god

goild
oil
drugs

i think this bankzters make global monopoly

make bomb city how people slep [this how democraty come]

NEW WORLD ORDER

read 1 coment

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http://www.youtube.com/watch?v=p_J1viY2cE0


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Who know true say you how realy this come in this 2013

You have asked important questions, and even more important details about such questions. Any consideration of any one aspect of any identified attack vector could be a lengthy discussion unto itself. You may wish to avoid letting the conversation derail into whys and wherefores, lest the signal get buried in the noise.

If the US government finds bitcoin disruptive enough, they will outlaw it, using any of the already mentioned  reasons as justification.
1. Once bitcoin becomes illegal in US, the country's trade partners will likely follow suit.
2. Existing bitcoin  money exchanges will shutter, tanking the bitcoin dollar price.  
3. Money speculators and money launderers, interested in fiat exchange rather than ideology, lose interest.
4. Bitcoin mining, already centralized & commercialized, will become easy prey for law enforcement.  Profitability, already shot due to (1), will not justify operating under the radar.  Hash rate plummets.
5. Possible protocol/packet filtering at tier-1 provider level, likely unnecessary.
6. Diehards keep the network alive, but with fiat flowing out instead of in, it becomes irrelevant.
TL;DR:  Nothing high-tech needs to happen, no 51% attacks, no crypto-cracking. 

None of this is likely to happen, i'm not cashing out  :D

This is why I proselytize liberty ;)

I don't know the likelihood, but I would not expect a significant clamp-down on unauthorized currencies absent a crisis in fiat currency frameworks as well.  The latter seems to me to be the most likely inducement for the former as there would be an enormous amount of collateral damage which would be best avoided unless it is the least bad option.

I mention it because to gauge the likely trajectory of Bitcoin (and related efforts) under an attack like this, the disposition of the mainstream monetary framework would probably be playing the largest factor.  And I wouldn't anticipate it being all peaches-n-cream in USD land either.

They can not take it down as they cant take Torrents down because they are peer to peer and no CEO to arrest  :)

Well, I can say that my last bitcoin is gonna cost them ALOT!

First, you have to ask who is "the government". Big corporations, capitalists and other criminals including several lawmakers and politicians from all countires in the world sent billions to tax havens for decades. Now the FED and the governments are raining their parade by printing zillions and blocking capital movements. Bitcoin could be seen as a new "haven". And these guys were able to convince DC that wiring money to a dubious corporation in "Cayman Islands" is lawful, I don't doubt that they can lobby DC and Berlin in favor of bitcoin, even if bitcoin is bad for the government is good for the elites that run the show.

All of these points are incorrect.
They can't do anything.

You want to focus on technical attacks to bitcoin. I don't think it will be that kind of attack.

http://imgs.xkcd.com/comics/security.png


 

Nobody said that I know my own password.  :)

Why all this talk about taking it down.  The reality is that it's already been shown not to be so good at covert drug dealing and the only thing left is speculation.  As long as governments get their tax cut they just don't care.  They got the printing press and taxes.  They will gladly support 100 winkelvoss / bitcoin trust etfs and as many exchanges as want to register and track users.  Sure there will be wealth made but real change takes time and mass populace discontent and we just aren't anywhere near that.  Enjoy the riches and be quick on the sell trigger if and when your stash becomes fuck you money.

I'll try once again to answer this and then go back to the original question.  Bitcoin was set up specifically because the govt took down earlier models which were more vulnerable.  Again, research EGold, Liberty Dollar, etc.  To say the banks/govt will just stand around while they lose control over currency (power) is unrealistic imo, but nonetheless that discussion needs a different thread. 

Could an attack such as a 51% attack succeed in eradicating bitcoin (erasing all or "recent" transactions)?  Could it be done anonymously?  And again, most importantly, is there any solution to this within the bitcoin framework or in a proposed cryptocurrency.  For example what if the blockchain of a new cryptocurrency were hosted only through servers in safe countries run by vetted individuals?  What if the coins were not mined but donated at a given rate to a basket of legal protection & PR entities while the trusted servers ran off transaction fees?  Is anything being considered or constructed as a backup in case bitcoin is taken down by a 51% attack - is there a consensus solution?  Because if there is no backup or solution it makes such an attack far more likely.

Yes a >50% (it isn't 51% btw) can erase all transactions since it forks (the miner can just mine empty blocks) and if that miner keeps winning then the blockchain could be rendered effectively useless as no tx would ever confirm (whilst it is still building the longest chain).

This problem has been discussed before but no solution has yet been proposed other than some sort of manual control (i.e. centralised decision) to be made by the devs.

I would certainly like to see a better method to prevent "unwinding back to the last check point" but seemingly no good (or agreed) method has been proposed.

Usual misconception , only the traffic is peer to peer
In order to get either the torrent file or the magnet link you have to go to a website (like piratebay to get it) which can be taken down and that's all folks.
Without the torrent hash you won't be able to download anything.
And don't come back with the childish argument...they are unable to bring tpb down... they can and they will if it would be really threatening.

If they keep low and just sprout non sense about the pirateparty and so , they are left alone , if they start doing things like Kimdotcom , they might end in a car crash.

Surely if they tried, the mining community and current users would just switch to another crypto or quickly create a SHA256 bitcoin 2.0, as mentioned short of switching off the internet (impossible) they cant stop it.

Let us not forget as long as one copy of the latest blockchain is kept, the entire network is rebootable. Also governments maybe able to shutdown big mining farms, but we could just get it going with the graphics cards and CPUs(they can't just forbid people buying computers, can they?), it may even be beneficial as nobody dares to setup big ASIC farms again, decentralization achieved! About 51% attack, it's entirely preventable, Gavin has posted an idea which seems to work, it's just that it's not an urgent task.

what if they force ISPs to block 8333 port, it seems stupid but it is a possibility.

Dead easy to change the port - and as Bitcoin traffic is small compared to things like Bittorrent it could also be hidden within other protocols if push came to shove.

it will take some time to change that, most nodes wont be able to broadcast/listen other nodes, and changing the port can create two different forks old nodes cant listen new nodes.

Edit: and this can buy them some time....

True - I was only meaning that changing the port is technically dead easy (i.e. they would be playing "whack-a-mole").

sorry I now got what you meant.

Its easy, they just need to force microsoft to put in some kind of program that stop bitcoin wallet and miners...

This could be done however Microsoft couldn't ban all the different software and then the ones that popped up after the fact.  If this was possible then uTorrent wouldn't exist.

Shutdown of the Bitcoin network is not possible. Apart all the arguments brought here it has simply a geopolitical reason - read this:  http://tinyurl.com/oq8lhme (http://tinyurl.com/oq8lhme)  Point (1)

Microsoft can't do that.
Also this is why there are other OS's.

Terrible, terrible thoughts.

Really fighting the urge to rant here about how dumb this is.

It gets broken? Change algorithm.
Block chain gets too big? Only make users download the newest part of it (up to a year?), or mini blockchain.

The general solution to that would probably to to whack the mole so hard that the other moles don't want to play.

I cannot judge the conditions under which such a strategy might be employed and thus the effectiveness of the strategy.  There are way to many potential factors and scenarios.  It is certainly worth tossing into the mix as a potential threat when it comes to long term planning though.  IMHO anyway.

the government can and will take down bitcoin

1) claim bitcoin is used to facilitate terrorism, money laundering and drugs - check!
2) have the bankers get worried about bitcoin and pressure the puppets into taking action - check! eu paper and senate hearings
3) prevent any banks from doing any bitcoin related anything
4) ban all the bitcoin exchanges
5) pressure all trading partners of EU and US to follow suit, which is basically everyone


once bitcoin is locked out of the fiat world, it is dead, done, finished.

no business with any presence in the US or EU will touch bitcoin with a 10 foot pole, same with banks.

at that point what will you do with your bitcoins? just hoard them?

the largest exchange is now in china. they have taken jobs, markets and now bitcoin. for the US to stop bitcoin it would have to stop china

The problem is that they don't have a world government. So bitcoin infrastructure could always flee to more bitcoin friendly jurisdictions. so for the sake of discussion, lets say we had a world government, or the us government had the leverage to sufficiently twist the arms of every other government on the planet in order to gain compliance. In this case there would be two possible attack vectors that i can think of. They could outlaw the production of CPU's without hardware back doors and then search through peoples computers for bitcoin activity or they could force people to purchase licenses to use encryption and monitor the isps for anyone who violated encryption licensing laws.

Neither of those things are very likely, so whats more important to talk about than what they could do to outright kill it is what they will probably do to harm it. Instead of trying to kill it out right they will try to strangle it slowly with regulation. they will make it more and more difficult to get it in and out of fiat by creating more and more invasive regulations for exchanges. They may create regulations that force businesses that accept bitcoins to reject mixed coins and/or relay information about the transactions to a centralized database. Or they may even make it illegal for businesses to accept bitcoin as payment.

+1
The government generally isn't bad as in evil, generally its bad as in incompetent. 
Problem is, when you have the monopoly on the right to kill, steal and imprison and impoverish, it amounts to about the same thing.
It wants to do the right thing, but usually since that means not doing anything, it gets that part wrong and does something anyhow and poorly.

China all the way!

I think you are forgetting china is a communist country with high inflation and various bubbles.  The government also isn't big on individual liberties.  They got pretty pissed off with qq coin so assuming china will be super cool with bitcoins isn't a given.

I think that you're forgetting that China is much better than the USA in every possible way, else Satoshi would be an American.  :D ::)

True but it seems that they have very much differentiated Bitcoin from QQ coin (which was really just one company printing its own money).

Not sure it's on their radar yet.  But a recent china btc exchange that ran off with 4 million will wake them up.

They are forgetting also another thing , the most important. China is keeping their yuan undervalue to help their exports. A global currency in which they can't keep the value incheck is the last thing they would want.

A large proportion of miners use linux.  :)

The bitcoin infrastructure is vulnerable to an attack. It's centralised.

I read on another website that the government can confiscate the domain, mess with the dns servers, shutdown the hard coded nodes. You won't be able to rollout new updates because they have the main website. Note: All this infrastructure is located in the United States. I'll try find the site, but it's a really popular forum. It's as easy as shutting down a botnet. They will destroy confidence. Furthermore, the wealthy elites don't have their money in bitcoin. Warren Buffet, George Soros, and other billionaires aren't moving their money into bitcoin. Even a small guy like Peter Schiff says it's stupid.

Furthermore, no wealth is destroyed if bitcoin disappears, because it never existed. Value is only transferred when a transaction against fiat or another commodity takes place. You can't argue that it will destroy value if it never existed. There is still the same amount of USD out there in the market. It's like the stockmarket, you gambled, you played, you lost. A Zero Sum Game.

Why any anti-government person would risk all their life savings in bitcoin is beyond comprehension. Even Alex Jones says to tread cautiously.

That's why bitcoin should only be used as a temporary medium of exchange. It might pay to use one of the altcoins instead as a result of this. Which really leaves bitcoin without it's clothes.

It's greatest strength is that it's decentralized, there is no issuing authority i.e. no top banker pressing a button creating more bitcoins.


Bitcoin is a p2p network... meaning you can hack/takedown as many pieces of the network as you want but as long as one survives the entire network survives.  Obviously the billionaires aren't moving their money into bitcoin!  When you have offshore bank accounts, stocks, investment funds, etc etc why the F would you start putting your money in a brand new uncertain digital currency?  Furthermore, it's not just about where you put your money, it's where you put your faith.  These guys would be betting against their own country if they moved their money outside the dollar.  It's like if they were to start buying Chinese bonds: that's borderline treason.  Not gonna happen.
On the subject of China: has anyone considered that China's interest in bitcoin could be in part an attack on the dollar's supremacy?

Also Schiff is one of the most respectable economists out there but there's some stupid s**t that comes out of his mouth.  He has a vested interest in the system, keep that in mind.

I'm pretty new here and to bitcoin so anyone please correct me if I'm wrong.  The above post just 100% contradicts everything I have learned so far.

Very interesting discussion.

Really, to totally kill Bitcoin they need to break the encryption. Instead of spending billions to buy all the bitcoins and make you all rich, or passing laws that they can't enforce, they would spend their time/money on efforts defeat the encryption. This would send their message that cryptocoins are inherently unsafe. Their ability to defeat the encryption (if they haven't already) should only increase over time.  If they break Bitcoin, then no typical altcoin is safe and we would looking and needing start over with something magnitudes of orders stronger, and not based on a standard where NSA has had any working-group influence.

Will Bitcoin's encryption be safe 5 years from now? 10, or even 20?  Cryptography thought to be impenetrable during WWII can be broken by your android phone today. At some point, SHA256 will not be enough. I don't know when that will be, exactly, but it makes me curious about what options their will be, if any, to migrate the value of our btc to a stronger SHA512 algorithm, or to a different currency altogether.  

One realworld parallel would be the arms race between governments and counterfeiters with paper currency, requring special papers, inks, serial codes, etc.  It's naive to think that SHA256 is the strongest algo that the world will ever need, for all time.

Perhaps this problem has already been solved by btc deep thinkers and I'm late to the party.

"...monopoly on the right to kill, steal and imprison and impoverish."  
Lol, i take it you'd rather have everyone kill, steal and impoverish?  What a wacky, wonderful world that would be!

Soapbox rhetoric aside, governments have pretty lousy monopolies on murder, as anyone on the receiving end of "stand your ground" laws would tell you if the sucker could talk.
Some governments are so bad at killing they don't even kill murderers -- the free market killing entrepreneurs.
Some monopoly :-\

As far as wholesale theft/impoverishment goes, i'd say folks here are doing just fine without any government help.  Check the securities subforum.
Money-revolutionary known as DPR tried to do some murdering too, but he botched that up.  Oh well, maybe next time :-\

Incompetent and archaic as nation-states may be, they appear to control approximately 100% of this here planet Earth, while neo-anarco-capital-libertarian-whatevers control exactly goose egg.
Go figure.

Looks like we agree then.  Despite having the franchised monopoly power on all those, they are incompetent at enforcing it.

"Franchised monopoly"?  Lol, a government in this case is both the franchisor & the franchise.  You got to stay away form them soapbox words :D

The proof of nation-state success is success itself -- the fact that our entire *planet* is controlled by nation-states.
Thus far you're yet to show any product, regardless of the Liberstriation you subscribe to.
All you have done thus far is critique.  As they say, the most dispensable person in the theater is the critic :)

They will do it in two ways.  The velvet glove, and the steel fist.

The velvet glove is that they will tempt greedy bitcoin users, developers, entrepreneurs, and spokespeople to acquiesce in the formation of a "safe" bitcoin, which allows them influence and control through requiring their blessing, and giving assurances that all government laws will be followed, from those relating to child porn to drug smuggling to tax evasion.  The general public (sheep) will heave a big sigh of releif, and mass adoption will follow.

This will provoke a response by those bitcoiners who refuse to participate, develop their own clients, or even a forked blockchain.  After some time, users of this "dark, unregulated, anonymous, and illegal" bitcoin will  suddenly start having their front doors kicked in by SWAT teams, and will be charged with enabling all manner of horrific crimes.

Then the real revolution begins.

north？iran？china？

i think it will  push up price

The economic for freedom，The government for management

i think this is a pretty good analysis in one sense, and it may be accurate, but i think it overlooks something important. The government isnt ACTUALLY concerned about child porn or and less than you might imagine about drug smuggling and tax collecting. the real threat that bitcoin represents to them is its potential for undermining their monopoly over the issuance of currency. this is where they get the vast majority of their power. taxes are a drop in the bucket compared to the power the get from the printing press. what you have outlined above does not solve this problem, it does not allow them to reclaim their monopoly over currency issuance. What ever solution they attempt will probably have to be ultimately aimed at reclaiming their most important monopoly.

I agree they are not sincerely concerned about drugs & porn, they use those issues to elicit a knee-jerk compliance response from the masses.  

But taxes? Yes, that is their bread and butter.  And there are many people here who would go along with complying with the IRS.  It's a problem of "creeping regulations" that Bitcoin will face.  They will not ask for the whole pie at once, they are much too cunning for that!

The salient thing is that it will divide the community along lines which are already beginning to form, with the BTF  on one side, and unSystem on the other.  As the stakes get higher, the pressure to sell out will increase.  Soon, the official protocol may be shot through with compromises, and BTC v1.0 may become their tool, not ours.

EDIT: These guys will give the USG a big helping hand, IMHO
https://robocoinkiosk.com/compliance

Nice avatar, by the way, I'm a big fan of Hoppe  ;)

Taxes are no longer their bread and butter.   They used to be when people used gold since it physically had to be taken from the population and into the government coffers but that's no longer needed with the advent of a central bank printing press.  Bitcoin is no different.  ASICs are still bought with fiat and bitcoins still get exchanged for fiat.  Government doesn't need to take down bitcoin since it is not a threat in any meaningful way.

Buying, selling, trading, or accepting Bitcoin or doing business with a foreign Bitcoin-affiliated company becomes a Federal crime in the USA.

The punishment for violating the law in any way whatsoever is life imprisonment.

I think people in the USA would stop using BTC pretty quickly, and its value would drop close to zero if all NATO countries followed suit.

If Bitcoin ever becomes big enough to actually threaten the hegemony of the dollar, I expect to see these types of laws.

Totalitarian law and draconian punishment is possible, and history is rife with examples, but it's not something that is possible to flip on like a light switch.  Nor is it without it's own whole set of problems.  If you punish to many people, you will be pissing of a much larger portion of society who has a friend or family member who was unfairly treated.  At that point you lose the cooperation of society and losing control is only a matter of time.

The 'powers that be' are, I believe, perfectly capable of making rational and far-sighted policy decisions.  They will typically choose the least bad course of action.  It is a mistake to underestimate one's adversaries, and generally speaking the people who are in positions of power did not get there by being stupid.

Taxes are still pretty important to governments :)
Taking your money removes it from circulation and keeps the whole tax service industry productive & contributing to your country's economy.

Taxation also appeases the folks who think printing money is wrong.  Imagine the grumbling when your government announces "Don't worry about taxes any more!  From now on we're simply printing moar money to pay for everything :P"

Finally, if bitcoin does get used as money someday, the government should become concerned.  Since bitcoins can't be printed, government printing presses would become obsolete, making them difficult to sell to dumber governments on EBay.

Yep, i brain about this stuff all the time  8)

sell sell sell sell sell.

Wait for price to stabilise after two months...buy back in.  Enjoy price rise and then sell before rest of the world follows the US Govt.

Ought I leave that role to you alone?

The notion that something is perfect, or even best, simply because it succeeded is the death of innovation.

Government can kill bitcoin in a 2 pronged attack in conjunction with other governments acting simultaneously (the EU would be very happy to help for one).

done at the same time by multiple governments, this will be a bitcoin death blow:

1) kill and ban all the exchanges, this blocks fiat getting in and out of BTC
2) use Deep Packet inspection to block all BTC related traffic at the major internet traffic hubs.

One problem with this strategy is the rule of law.
First the activity would have to become illegal for law to be enforced against it.
Governments could adopt totalitarianism and dispense with law, substituting martial law, thus dispensing with the illusion of the consent of the governed.  But Bitcoin is much less any government's problem than it is the central banks.  Governments may just as well want free of the debtor's prison into which they have been conned.

only white list trading legal would all the govt needs to do if transfers not anon.

They certaibly have the resources and the funding to launch a 51% attack if they wanted to. :/

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The notion of success being an indicator of worth is the fundament of every attempt to validate the unregulated free market & similar socio-Darwinian baloney :-\

What about fed created the bitcoin system itself. Being promoted as anonymous but instead can be tracked easily by them with their own ready tracking system. Bitcoin use SHA256 which is endorsed by NSA. What a stupid move by satoshi to create currency that would revolutionize world from banking slave but using algo that been control by fed gang.

This is why we have alts.

Even if your goal were validate the unregulated free market & similar socio-Darwinianism with your fundament, the panglossian monadology of "it is, therefore it is good", is thin gruel.

Of course it is.  What survives is what survives  "What is best" is a predicate without a subject (Best for (what???)).
The free market is guaranteed to give us simply that which survives (succeeds), nothing more or less.

"Panglossian monadology"? Leibniz's "everything that is, exists according to reason, and thus this world is the best of all *possible* worlds"?  The sage words of Killdozer further clarified that metaphysical stance for us, the modern scholars:

Let me tell you something my friend
In the best of all possible worlds
That is to say
In this world as well as all other worlds
Why i'm the best of all short-order fry cooks!

Is your premise that the free market produced all the governments, and because they are here is why they are good?  Or is this a reductio ad absurdum of someone else's straw man?

Lol no.  I simply pointed out that your claim of governments having "...monopoly on the right to kill, steal and imprison and impoverish" (https://bitcointalk.org/index.php?topic=331506.msg3580331#msg3580331) is absurd. 

If you would like me to take a position on this, i'd point out that "the governments" may be good for some (things/people) and bad for others.  The word "good" needs context, or at least a subject to be meaningful.
(Is killing "good"?  A meaningless question.  It's good for the killer, ideal when there's killing to be done.  For the victim, not so much.)

The people with the brightest ignore buttons are the most interesting to read.

OK, I'll bite.  Maybe today is the day you teach me something.  Who besides the governments have these rights?  Or is it that governments don't have them?
You have heard of Max Weber, yes?

government isn't incompetent. those politicians and bureaucrats know exactly what they're doing - it's just that they don't care enough to do anything about it.. because they are self serving sycophants.

they have all these "backdoor" deals with corporations and interest groups, all while smiling in front of the camera, espousing how they are such willing "public servants."

the difference between a politician and a prostitute is that.. the prostitute can still have some dignity.

You have a curious way of misunderstanding things.  Possibly due to getting wasted on your own Kool-Aid.  Not sure how much good my teaching would do in your condition, but i suppose it doesn't hurt to try, so here goes:

No one has the right to kill*, steal** or impoverish***, including the government.  That's where your logic begins to stray.

Let's take killing.
By killing, i assume you don't mean poisoning rats or slaughtering cows, but rather unjustly murdering human beings.  Why "unjustly"?  Simply because, under many circumstances, in my beloved land of the free, *you* have the right to murder people.  You know this, and own guns designed specifically for that purpose.  You have bragged about it on this forum.  So i'm surprised you would ask me now who else has the right to kill.  *You do.

If my goal was to simply win an argument, the above would be enough.  But my goal is to educate and enlighten, so i will address your other claims.

Stealing.
Let's google us up a definition:
"Take (another person's property) without permission or legal right and without intending to return it."
By "stealing," i assume you are referring to taxation, a subject addressed by a large body of law & to which your government has explicit legal rights.  And which you have explicit legal duty to pay.  **Taxation is not theft, it is your government's legal right and your legal duty.

Impoverishment.
Your government wants to impoverish you as much as a cattle rancher wants his cattle to get skinny & sickly -- not at all.
Just like the rancher, you government wants you to be fat, happy and healthy.  It wants you to be fruitful and multiply, giving it moar willing milkers to milk and plump beefs to slaughter.  If you become impoverished, the whole subject of taxation becomes moot -- collecting taxes on nothing is a fool's errand.  ***Your government loves and protects you silly bovines.

The Government is your shepherd; you shall not want.
I make thee to lie down in green pastures:
I leade thee beside the still waters of Money River.
I restore thine credit rating:
I leade thee in the paths of sound business practices for fair taxation's sake.
Yea, though thee walketh through the valley of scammy BTC-denominated securities,
Thee shall fear no evil: for thou art with me;
My rod and my staff they comfort thee.

/lesson :)

So on crumb world, no one has these rights, except that everyone has them, and they are administered by the psalm 23 government?
Your Kool-aide is very strong stuff my friend.

This world is your world, NewLiberty.  I don't wish you to feel left out.
Drink deep of sweet nectar that is my prospectus.
I anoint thine refineries with light sweet crude; thine tank runneth over.

Actually the internet can be taken down, it is very unlikely but it is possible even by a small group of hackers. There is also an interesting TED talk where one of the early adopters of the internet was warning of a potential take down, and the need for a backup options.

Nay, that drought is too strong for me, it has you imagining me bragging about my owning guns and the right to kill, I suspect hallucinogens or some other paranoia inducing substance.  You might want to get yourself checked out before you get checked in.

You do not own a handgun?

I have never said whether I do, or do not, and with great certainty have never bragged about it either way.
Seriously, seek therapy. Trying to make this about me is not going to help you find yourself.

Cant buy a handgun in my country.....

After i have refuted each one of your claims, point-by-point, on this very page, you *tried to make this about me* by derailing this thread and suggesting i seek therapy.  One notch above "NO U!"

Refusing to be educated, ignoring facts, flinging ad hominems after being corrected by your betters and then forgetting to thank them ... Why, that's what brought about your sorry state in the first place.  I'm afraid therapy can't help you now.
Not even industrial strength Obamacare.

Regarding the handgun tangent:  I was confusing you with the user MoonShadow (https://bitcointalk.org/index.php?topic=210802.msg2533246#msg2533246).  The two of you, posting in the same thread, were difficult to distinguish for those unversed in the finer points of teabaggery.

Hey, come on over to ours -- we got enough for everyone!

This site always shows the 51% attack costs:
http://coinometrics.com/bitcoin/brix (http://coinometrics.com/bitcoin/brix)
but part of the ASICs they could acquire for free by seizing them.

At this point, this could be done by controlling two largest pools.

Yes, this is a serious risk.  If the pool members were blind followers, or individually feel that they have something to gain by sticking in the pool and didn't break off.

Then we all lose.  Even them.

Search for Transactions Withholding Attack. BitCON is designed to go to the government.

Also Martin Armstrong picked up on most of the points in my recent writings (except he missed my reasons why BitCON is a ponzi scheme):

http://armstrongeconomics.com/2013/11/19/congressional-hearings-on-bitcoin/

See also this related thread:

https://bitcointalk.org/index.php?topic=331325.msg3572508#msg3572508

Currently USGovt is holding some 180K bitcoin from just silk road?  That's more than the Winklevoss ETF.

Pool members especially casual ones are generally blind followers.  If not by ignorance then mostly by time constraints.  Small miners don't watch the pool nonstop.  The solution is to solo mine but most people don't do it.

The biggest problem is the mistake that was made not to allow normal computer processors to mine efficiently.  If this was made, then millions of people would have their miners running.  With millions of users mining, you could never easily take over 51% of the market.  But instead, the mining is designed in such a way that you can develop specific cards that make normal computer invalid.  What happens then?  Well, all the mining is centralized to those few who have these cards.  And it's much easier to target.

You do realize that a 51% can be fixed?