Bitcoin Forum

Let's assume that Bitcoin catches on in the future and is used for all kinds of online payments by a huge number of legitimate businesses. What happens when a large political power, like the USA or EU, decides to regulate Bitcoin within their borders by regulating the rules used by clients?

Merchants and traders would have to adhere to the new rules, which I'm guessing would make Bitcoin fall out of favour or fork the block chain dividing the currency into regional networks. At this point we'd have lots of local currencies depending on regulations enforced by local government.

Anyone care to speculate on what would happen in this case, or why it won't/can't happen?

Watching!

I love the way you posed your question(s), bitplane.

~Bruno~

Well, that is just it. People who use BTC do not have to adhere to the rules. The money is not the property of the politicians, it belongs to those who use it.

If you live in a communist country it could become a problem, though. I can imagine Castro making up some crazy rule and trying to kill those who break it. Liberty is a powerful thing and the wrong people do not like it.

No government can simply decide to insert its own rules or restrictions into Bitcoin as it exists today and a fork different enough to allow it would be almost unrecognizable as related to the original client. It would be much easier for them to simply follow Canada's example and issue their own digital currency and then outlaw the use of Bitcoin. This wouldn't necessarily cause it to "fall out of favor" but would force legitimate businesses already accepting it to decide whether or not they wanted to fight or flaunt the applicable laws. If anything, I think this would increase Bitcoin's appeal as an underdog/Robin Hood player although one would have to use more discretion with transactions.

Bitcoin would not have to fork for its users to become subject of heavy law enforcement. I imagine it much like the current situation where currency transactions of any kind are already regulated and enforced, even face to face transactions are subject to law enforcement once they reach a significant amount. So, if any gov decides to monitor bitcoin transactions, all they have to do is to make identification and use of traceable addresses compulsory for the users in their jurisdiction.

The politicans decisions apply only to those who obey them :)

And the bitcoin economy that is currently emerging is an economy where politicians and governments and their corporate allies have not role to play.

EDIT: All the wonderful tools that emerge nowadays thanks to internet are tools that allow people to organize themselves without the State. So yes, expect the State to fight back. But its fight is doomed to fail.

Assuming it works and people actually run the fork, then it would be incredibly easy to exchange Statecoins for Bitcoins online. The exchange is our biggest weak point, so as long as a decentralized irreversible system exists, we benefit.

I can imagine the U.S. Congress passing a stupid law and trying to kill (or at least imprison) those who break it.  Liberty is a powerful thing, and U.S. politicians do not like it being in the hands of the people.

Yeah and as holders of Bitcoin today, we'd own shares in each of the block chains that came after the fork. Hopefully they will be worth more than the originals in the long run.

It's simple: those who want to, can follow their rules and those who don't want to, need not follow their rules. Besides there are enough tools available to hide your "illegal" use of Bitcoin that I think no one will ever follow any rules other than the agreed upon Bitcoin rules they have to follow if they want to use it.

I do think if they ban the use of Bitcoin in a certain country people in that country will have a slightly harder time getting some which may result in a price drop due to a diminished demand especially if that country is one where most of the current demand comes from.

The government can easily get away with calling things by their wrong name (defense, lol), but it won't change the fact that the 'bitcoins' the government sends you won't work.

I said assume it catches on and replaces PayPal or Visa. At this point governments will regulate it, and they *may* do this by adjusting the rules of the network. For example they may publish a blacklist of known money laundering accounts and say that a valid block must not contain transactions from accounts in that blacklist, or maybe they'll go for a whitelist approach and force people to register their addresses for tax reasons, maybe they'll put some central override in for returning stolen coins. Whatever those rule changes it will create a regional fork the block-chain, legitimate merchants in the affected region won't be able to accept vanilla BTC and this will fuck with the economy.

What happens when bitcoin forks the government ?

;D

Lol, best thing I read all day!

As with any changes to the bitcoin protocol, you have to have more than 50% of the hashing power accepting those changes, otherwise you're just wasting electricity...

That's not true. The 51% hashing power attack allows only to carry out the double spend attack.. Anyone with a single CPU miner can fork the chain with different rules.

Yeah. There have already been forks with little power or interest. They could have stupidly called themselves Bitcoin also. 

Also, even a majority of miners playing by new rules won't change the fact that merchants will still want the real thing. Bitcoin isn't valuable because miners burn up energy mining it, it is valuable because merchants will give you something you want for it.

As I understand the protocol (pls correct me if I'm wrong), if a mining node or group of nodes decide to change bitcoin rules, the blocks they submit will be rejected by genuine bitcoin nodes, right? So these guys will be trading something, but it won't be bitcoin... If they want to join back the genuine bitcoin blockchain, they have to throw away all their effort (the alternative chain), unless they have more than 50% of the hashing power, in which case the alternative chain will win.

If they really want to, they'll have that 51%, "it's to protect the public", so they'll say.

Someone posted that the Canadian government was launching digital currency and couldn't believe it ... so I googled  it and, yes, sure enough, there it was .. http://www.thestar.com/business/article/1159513--royal-canadian-mint-to-create-digital-currency

Now, this would be a typical way a government could react so I took a couple of quotes from the article to "amplify" what they are REALLY saying  :D




should read "And unlike BitCoin, a peer-to-peer hosted digital currency with a fluctuating value and that has a self adjusting system to limit the production of new currency,  MintChip is simply a new way to exchange Canadian dollars. Plus, it’s backed by the Canadian government who can create as many of the currency it wants (just like it does now) and destroy the value of the currency ;D


Ok, so they are proceeding to create money out of thin air and wonder "how the Mint will make a profit from this". Are they retarded? LOL

All a fork would do is create a less attractive version of Bitcoin. And once the fork happens how do they control it? How do they enforce it? And which government?
If every government created their own fork with their own rules then inevitably market forces would kick in and the best fork would win - and the best fork would be the one that was most independent of government control and we already have that.

Short of going into peoples home, checking their client version and killing them if its wrong you can't control BTC.

Even in a dictatorship the regime would likely loose too much public support and waste too many resources attempting this.

51% attack:
Only lets you obstruct payments, NOT change the protocol as has been mentioned.
Even obstruction only works until everyone blocks all the IPs you have access to.

Tracking:
TOR and mixing services lets people communicate highly anonymously using BTC. See Silkroad for example.

Pushing it underground:
Just forces people to convert to cash in public while converting back to BTC at first underground exchange.

This would basically accelerate inflation into hyper inflation even while the country appeared to be using the state fiat.

At that point the government would HAVE to accept BTC for taxes or collapse.


BTC is THE ultimate weapon in non-lethal struggle against oppressive forces. Its going to be a wildfire at some point.

Whats a strike next making every cop and soldiers paycheck worthless?

The best fork would be the one with coins being accepted at most places for goods being bought most frequently by its users.

Also, it has been mentioned a couple of times in this thred that it would be nearly impossible for any government to enforce usage of "statecoins" due to the abilities of the bitcoin code and network. That may be true for a small fraction of computer savvy users prepared to take risks. But it wont be feasible or appealing for the vast majority of mainstream users. Especially if the level of punishment for non compliance is raised to the level of punishment of, lets say money laundering, which in oppinion is a likely option.

It would be the best fork for transactions, but it wouldn't necessarily be the best place to store your wealth. Gold has proven itself to be a better investment than dollars, but no one accepts gold for payment over the counter. Bitcoin has also proven itself to be a better investment than usd - but few places accept bitcoin.
Digital currencies are potentially interchangeable & transferable immediately.
It wouldn't matter which coin was accepted at the POS if you could exchange them in real time, which is easy with bitcoin like currencies - not so easy with fiat.

Ok, let me specify:
The best fork would be the one containing coins with highest deflation per time interval.

In the world you are talking about capital controls become almost impossible without draconian control of the internet itself.  Any 'island' that forks the chain and imposes unfavorable rules would see capital flee the chain and toward the more desirable chain.  See the Alt. Chains.  We have them already but there is de-minimus actual commerce going on i the alt chain world.   At least BTC has alpaca socks and drugs of all kinds being traded in BTC.  Not super compared to the 50 Trillion global GDP, but you gotta start somewehre.