Bitcoin Forum

What would happen to bitcoin if the US government decided to treat it like the online gambling industry?

1. They precluded banks from making transfers to gambling sites creditcards, bank wire , ach then..
2. The confiscated the domains of popular gambling sites - even though online gambling is legal in numerous countries around the world.
3. Lodged criminal/legal charges against the princicpals of some of the largest sites.

They could potential do the same to bitcoin: restrict the banks and exchanges etc.

Then what?

then bitcoin is pushed underground in the US, and flourishes in other countries.

It's definitely uncharted territory since anything similar seizure or FinCEN wise has been e-currencies versus a new currency with its own set value.

This won't happen. Just like cash can be used for person to person private transactions, so can bitcoin.

http://www.plymouth.ac.uk/files/extranet/images/INT/Changing%20of%20the%20Guards.jpg

External regulation will always occur on the merchant side of the equation. The issue is the internal redlists being now proposed by the foundation. If these measures are implemented and a fork agreed upon, it will mean Bitcoin is worth less than cash for private transactions since a coin's value would become conditional.

There is an altcoin revolution on the horizon and these internal controls will fuel the "changing of the guard".

government hearings this month.

whats better, the Foundation proposal or full on gov intervention?

Govt intervention in the US :). BTC businesses will move to free countries like China and Russia :).

It's not really uncharted territory.  There are countless examples of countries (the more despotic the more likely) outlawing or restricting currencies and precious metal.  In fact we see this to a large degree with bitcoin today.  I imagine the usage, and therefore value, would be a bit higher if you didn't have to worry about having your bank account shut, an audit generated, or $ in your trading platform seized due to govt (banking industry) attempts to damage bitcoin. 

However as someone mentioned, bitcoin is global.  When a govt tries to outlaw a certain currency or metal, generally this only has a very limited effect on the value you can obtain when selling within that country on the black (free) market.  Plus bitcoin is so much easier to transfer out or into a despotic country.  I'm guessing that outlawing in the US would create an almost insignificant value differential compared to the world market.

There is a second half of the equation, since currency has ultimate value because of the user pool and the investment pool.  At the moment I'm guessing the investment pool in bitcoin accounts for far more value than the user pool.  I don't know that "making it illegal" would currently stop too many US investors who wanted to buy, however it would certainly cripple the legal segment of our emerging user pool.  If the entire US commercial bitcoin market were shut down, that might remove 1/3 of the potential worldwide user pool for the next decade.  However I still don't think it would do too much damage because most of the value would still be derived from investors, overseas users, and the illegal user pool in the US.    All it would really do is wake up and piss off a lot of smart people. 

The only thing that worries me is if the govt can crash bitcoin thru some software attack, because I don't know enough to guess at their likelihood of success that way.