Bitcoin Forum

What will happen if bitcoin becomes illegal? Is this kind of currency is protected by law in most of occidental countries?

If I'm not mistaken, a currency can't become Illegal.
It just wont be allowed in certain places to be publicly trade-able.

It WILL become illegal. Sometime, somewhere, it will eventually pose a threat and begin to eat away at someones bottom line. The question is not "if" it will happen, but how will the users and the network respond.

I'm thinking the same thing. Bitcoin is a real threat for the banking system and they won't like it if it becomes very popular. We must be prepared legally for this or we will be screwed. Is there specific laws ALLOWING such currency actually?

They will demonize it by associating it with drugs/terrorism/child exploitation/human trafficking and turn the general public against it. That seems to be the common way of killing something like this.

Then some special interest group will probably release their own centralized version of digital currency by promoting it as "progressive" etc etc...

That's what Bitcoin will be up against.

Yep.
I hope there is some lawyer pro bitcoin in this forum that can gives us good advice... 

That's illegal.

Do you mean like when gold was illegal in the United States in the past? http://en.wikipedia.org/wiki/Executive_Order_6102 (http://en.wikipedia.org/wiki/Executive_Order_6102)

By which law?

http://skeptics.stackexchange.com/questions/6852/is-it-illegal-in-the-u-s-for-legal-professionals-to-answer-legal-questions-on-p

It's only illegal under some circumstances, but I think moreso than illegal it could ruin their career and get them debarred.

An interesting link - reminds me of the job I was doing during April/May where in the vast majority of cases (over 80%) people consulted non-lawyers about the full range of legal problems someone might encounter.  The most common source of legal advice - family and friends.  (Not sure if the report we produced is public.)

And, if bitcoin becomes illegal, then I'll have to pay for my BTC magazine with Neopoints or some MMORPG- thing gold (if I ever bothered).  And yes Mathew, I did get my magazine yesterday 26th June.

Sweet! Good to hear

There are plenty of pro-bitcoin lawyers (http://www.billroundsjd.com/) accepts bitcoin for legal services and some have plenty of products available for sale for bitcoins (https://www.coindl.com/page/author/61).

Stop the FUD...

http://en.wikipedia.org/wiki/Cocaine#Prohibition
http://en.wikipedia.org/wiki/Harrison_Narcotics_Tax_Act

History is interesting.

No one will use it anymore, it'll be like marijuana. 

"Stop that! It's illegal."

http://images2.fanpop.com/image/polls/422000/422603_1271525854721_full.jpg

If you live in a democracy where there's more people than bankers, why would it be voted illegal?

We are not in a democracy. Central banks run the government from behind. Democracy is an hoax to hide this system.

You guys do know the difference between illegal and unlawful, don't you?

I think it's a race against the time. If bitcoin becomes accepted by millions of people, it will be hard to sue them all.

I think you're probably right but bitcoin need to spread out faster than this. How to do so?

I don't know. I have a feeling that he will continue to grow at this pace and one day BANG he will suddenly spread around the globe, just as, for example, Android did.

By using it every day or talking about it with friends and family, it doesn't matter if they start calling you names. Bitcoin is sound money.

If "Bitcoin" once become illegal, we start dealing with "Bacon (Bcon)":
https://bitcointalk.org/index.php?topic=86276.msg949677#msg949677

There are several levels of "bitcoin becoming illegal".

1 - Developers banned from working on the satoshi client.
2 - Distribution of satoshi client banned outright.
3 - Owning copies of satoshi client banned outright.
4 - Owning and distributing of the Chancellor block chain banned.
5 - Owning and distributing of any block chain banned.
6 - The entire Bitcoin protocol becomes illegal.
7 - ALL crytocurrency and Bitcoin-like protocols become illegal (including Namecoin, Litecoin, etc.)
8 - ALL virtual currencies and currency-like systems not approved by government become illegal.

Level 1-6 laws would not put the genie back in the bottle. People would simply work on new clients, start new blockchains, or continue paying with Namecoins or Bitcoins v2.

Level 6-8 laws would need to be extremely overreaching in order to work, and would cause a big disruption for already existing industries.

Even the banning of an entire communications protocol would be unprecedented, let alone an entire family of protocol. 

If laws become too overreaching, people start to ignore them.



Most occidental countries guarantee Freedom of Speech in their constitution. Some European countries guarantee Secrecy of Correspondence. In principle, those two should make Bitcoin safe.  In practice, governments shamelessly ignore those protections.   

I always thought that simply because pgp signed messages are being passed, that the currency itself is not currency but merely free speech.  Any attack on running nodes or initiating transactions should be defended as a matter of free speech, like banning email, an attack on free speech.

Damn, so Atlas was right then... bitcoin is free speech

(thinking out loud here)

Yes and when you buy coins on Mt. Gox, you are basically buying advertising.  You sponsored some code in the public ledger which is distributed to all clients.  I almost hate the concept of calling this a currency or a "coin".   Its not, its an interactive information ledger, which is modified by account holder wiht their secure logins (priv keys).  Smells more like a distributed message board than a currency. 

Correct me if i'm wrong, but by legal definition a currency is issued by an authority, no.  It either has or has not a legal tender status in the court.

From: http://legal-dictionary.thefreedictionary.com/currency

CURRENCY. The money which passes, at a fixed value, from hand to hand; money which is authorized by law.

And because its in Legal-Dictionary.com it must be correct, everything on the net is correct and factual afterall.  This is how the SCOTUS will vote when the case comes before them:  Mt. Gox v US Secret Service.

Illegal means "against or not authorized by law." Unlawful means "contrary to, prohibited, or unauthorized by law...while necessarily not implying the element of criminality, it is broad enough to include it." (Black's Law Dictionary) So, for example, you could unlawfully stay in your apartment after your lease is up (unlawful detainer) but that's not a crime against the state, it's a civil wrong (tort) against your landlord. If the landlord then took you to court and had you properly evicted, and you then returned to the premises, you might then be guilty of the crime of trespassing. Trespassing is illegal.

nice article on this topic
https://bitcointalk.org/index.php?topic=77591.msg862515#msg862515 (https://bitcointalk.org/index.php?topic=77591.msg862515#msg862515)

Awesome.

Now I have another question for you.

What happens if The Congress passes a law saying that 2+2=5 ?

Everything would suddenly become legal (ex falso quodlibet)!

Seriously though: unlawful is also understood to mean not morally right. While usually illegal things are also unlawful and vice versa, this is certainly not always the case. The problem is of course, that moral is even more subjective than the legal system. Your understanding of unlawfulness might be vastly different from mine and while I think it's important for people to follow personal moral principles, I'm also glad we have laws which codify something like a common understanding of moral and justice of a nation's people.
Sure, both laws and morals can be used to justify great misdeeds, but I'd argue that individual morals go even more often wrong than nation's laws.

ad Bitcoin becoming illegal: not gonna happen! You will always be allowed to mine and exchange Bitcoins (what's there to forbid?) - it's the interface points to the fiat world that will become targets of increasingly strict regulations. In fact, that's what we're seeing already (stricter policies at Dwolla/Mt. Gox, the statement of the German financial supervisory authority).
If you want to know what will happen when Bitcoin becomes illegal, ask yourself what would happen if Mt. Gox was shut down - because IMHO that's about as bad as it could realistically get.

Essentially already this has been done when the French government decreed pi = 4

It would be great if Bitcoin would become legal tender in certain US states that have also made gold legal tender. This way BTC and Gold are interchangeable.

Stealing is unlawful
Laundering money is illegal.

I'm not worried about the government deeming bitcoin illegal.  i expect that.

i AM worried about the US gov seizing mtgox.com like they seized the poker sites.  should Gox move to a different TLD like piratebay/demonoid?

i am worried about the US gov freezing Gox's bank accounts like they froze >70 banks accounts related to PokerStars, Full Tilt, and Cereus.

Bitcoin is math. How do you make math illegal? They can freeze all the bank accounts they want for all I care. I'm sure the banks won't care about losing the revenue from the gambling industry.

Lol is this true? (source please). I knew the French government was stupid, especially the latest one with their 70% income tax and plans to expropriate Total (http://finance.yahoo.com/q?s=tot&ql=1) but actually stating pi=4 is beyond stupid. We should invent a new word for that. 

The more illegal they try and make it, the more people will use it.

I don't expect bitcoin itself to become illegal; it's not even clear what that would mean (private keys banned when they correspond to bitcoin addresses?).

More likely the exchanges would be walled off from receiving/paying fiat. That would be a serious problem.

Maybe it did centuries ago (at the end of the 18th century reforming everything was fashionable) but I couldn't find a reference. A more recent attempt in Indiana (at the end of the 19th century) is the best I could dig up :
http://en.wikipedia.org/wiki/Indiana_Pi_Bill
http://www.straightdope.com/columns/read/805/did-a-state-legislature-once-pass-a-law-saying-pi-equals-3

Each time US people criticize French people I think of this :
http://en.wikipedia.org/wiki/Statue_of_Liberty
and that we still like you today even if you forget our long friendship to focus on some old stereotypes :)

Thanks for the sources!

I am Dutch btw (not US) and our government is socialistic as well (although this is least left government in a long time, to bad it already fell) but the decisions made in France are just horrendous (imo of course, but that speaks for itself).

Look at prohibition for insight on how people will react. Opportunists will be opportunists.

I think that the legalization of Bitcoin could become a bigger problem than becoming illegal. Legal using of bitcoin will result end of anonymity. Without it bitcoin is less attractive than LR, because it requires additional software.

Bitcoin is by far the most anonymous form of electronic payment because it is decentralized. LR is IP based and easily traced and blocked.

I don't see any reason that it will become illegal in a tax free land like Bahamas

The main reason BTC could be a headache for government, is because they could not collect tax on BTC transactions, and there is no way to map the account to physical person/institute

And I think central banks don't really care about it either, what they need is a currency that they can control the money supply, in this way they can affect the macro economy the way they want (price stability and low jobless rate). A currency with a fixed supply is totally useless for them from modern economy point of view, since it neither can bring price stability nor lower the jobless rate

Actually the later could be true, if BTC price increased so much that it created another bubble, it might create many jobs, mining companys, BTC exchanges, client developers, online wallet institution, same as those gold buyers recently. In that case, if it is also good for economy, and can achieve what they can not achieve with normal monetary policy, why claim it illegal?