Upped.

Thanks. That was an interesting read.

That may be so, but for the sake of argument assume that it isn't.

If the bitcoin network splits into two disconnected components, and their blockchains evolve independently of each other, can they be merged back together once the two components are reconnected, or do the two networks become incompatible?

Assuming that the bitcoin network spreads to China, and at some point China decides to block all bitcoin traffic through the great firewall, one will end up with a completely independent bitcoin network operating inside china that will be isolated from the outside world by the great firewall. As the bitcoin network is decentralized, the two resulting networks will continue to function, and each will continue to add new transactions to their own blockchain, which will share the history up to the split, but will diverge afterwards.

Now, suppose that after 2 years, a person in China succeeds in smuggling his bitcoins outside of the firewall either by storing his wallet.dat in a tiny flash drive, or by memorizing it in his brain and leaving the country. Will that person then be able to spend his bitcoins by connecting to the network in the outside world? Will his wallet.dat be still considered valid? His wallet will probably now contain transactions that have never been seen in the outside world.

On the other hand the dollar is perceived as a safe haven by the rest of the world, especially in times of crisis, so the demand for dollars is growing as well. It is true that the Federal Reserve has increased the money supply dramatically, but the rest of the world acts like a sponge that absorbs the newly created dollars pretty well.

Given how eager some supposedly liberal western governments (like Britain and Australia) are to push for internet filters, I don't see how they would uphold internet freedom. They can simply say "child pornography", and the masses will support any action they might take to curtail internet freedom.

The US has already been quite successful in pushing the rest of the world to adopt legislation to curtail p2p file sharing. It would probably be able to achieve the same with p2p currencies, unless the other states support bitcoin. But what incentive would they have to support a currency over which they will exercise absolutely no control, and that will compete with their own national currency? Unless a major nation state steps in to support bitcoin, I don't see how it will be able to withstand the pressure from the American government.

If bitcoins truly become competitors to the US dollar as a global medium of exchange, it is quite certain that the US government will not be too happy about that. I am opening this thread to explore possible scenarios of hostile action by the US government against the bitcoin infrastructure. After all, the US economic supremacy is partly based on the American monopoly on the supply of dollars and their use as a global currency. The status of the dollar as a global reserve currency allows the United States to simply print paper dollars in exchange of real goods and services from the rest of the world - and that ability is something that the government will probably defend at any costs, including through military means. For example, many believe the war in Iraq was provoked by Saddam's decision to sell Iraqi oil in euros, rather than dollars.

If bitcoin were to become sufficiently popular, I think the US government will likely adopt an extremely hostile position against it. The government can use the experience gained from the RIAA and its attacks on p2p file sharers. Agents of the government may simply join the bitcoin p2p network as regular users, and then record the IP addresses of all the peers that connect to them. Once they have those addresses, and proof that the user is using Bitcoin, it will be very easy to persecute the person behind the IP address - charges can range from money laundering to engaging in trade with enemy states (since the bitcoin network will probably have nodes in Iran). Such actions will either devalue the bitcoin currency, or reduce the bitcoin p2p network to such a small size that it will be easily overwhelmed by a brute force attack of government bots.

Do you think I am being overly pessimistic in contemplating such a scenario? Does bitcoin really stand a chance of becoming a major currency competing with the dollar? Or does it always have to stay under the radar to avoid the wrath of the US government?

And then when something hacks into my computer and steals my wallet.dat, or by computer's hard drive accidentally fries, I will lose all my life savings

I am planning to diversify some of my savings with bitcoins though. 

Are you from Guatemala?

I could also buy gold, but since I don't have millions, I don't want to have to deal with the question of storing it and trusting a third party to do that safely for me.
I think putting money in treasuries is the safest bet. The US government is unlikely to default with all the military power backing it - it's always going to find a way to get money.

Hello,

I would like to get some advice on where to keep my savings. I currently have all my savings in a credit union which has an APY of 1.11%, which as far as I know is even lower than the inflation rate itself.

So, I decided to open an account at
     http://www.treasurydirect.gov/
and now I am considering what percentage of my savings should I move there.

What would be the equivalent APY that the treasury bills will yield? Will they compensate for inflation?

Thanks!

Russia Today is an international channel that tries to give the Russian perspective on foreign policy and news. It broadcasts mainly through satellite and via youtube. In that respect it isn't really mainstream in the United States, but I think it has quite a substantial following internationally.

The Kaiser report touches upon the topic of cyber currencies, and p2p currencies in particular:

http://www.youtube.com/watch?v=VMngK0t5WkY

I wonder if the report was actually inspired by Bitcoin? I am currently watching the show, and they haven't talked about the cyber currencies yet.

EDIT: Yes, they are talking specifically about Bitcoin. I guess this is the first mention of bitcoin on mainstream media.

Thanks for the suggestion. I am not very clear on how the semi-autonomous system works though.
Once I send the cash, how is it known that the cash was sent by me? Do I need to include any reference information in the letter itself?

XIP ID: alkor

1GD7jEE17Q7bgbusGvwCEVkEMiDX8XrFLK

I am new here, and I am looking for ways to obtain bitcoins without having to divulge any credit card information.
I am looking to purchase bitcoins by sending cash in the mail.

I just created an auction over here:
http://www.biddingpond.com/item.php?id=176

Would anyone be willing to exchange their bitcoins for cash in the mail? If anybody is in the LA area, I may also be willing to meet you.