Preparation for the inevitable

[lebing]

Who said anything about one government acting alone?

They can't even shutdown Pirate Bay. Bitcoins will be hard for them to stop without shutting down the entire internet.

Should a government act against bitcoin, it would drive the price through the roof.

How would prices go up, if the infrastructure which supports these prices was removed?

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[lebing]

I think this issue is blown out of proportion. If certain exchanges are shut down, there will be others. There will be classifieds, craigslist, etc. for in-person exchange. Besides, shutting down exchanges would likely drive up adoption of btc as direct medium of exchange, without intermediate conversion to government fiat. Finally, more and more people - including smart individuals in governments have vested interest in Bitcoin. They see its value for personal reasons, but also in the bigger picture.  Bitcoin in itself is not that big of a danger to anyone, it is more of an opportunity. Think Internet.

It is an enormous danger to any nation state. If you dont control the currency, you dont control the country.

[lebing]

2. Wire transfers and other traditional forms of transferring (large amounts) of money to such services becomes prohibitively difficult and adds yet another layer blocking user adoption.

Not if they use a trading system like bitcoin.de: buyers transfer money to sellers directly.

Obviously this requires users trusting eachother (the site works with a trust / rating system, which works pretty well btw) but there are no fiat transactions to or from the service provider anymore. Their fees are entirely paid in bitcoins. The sire could operate completely anonymously.

bitcoin.de... is also hosted on a domain by the largest economy in europe. This will clearly also be on the list of sites to take down (once they decide that is necessary).

[lebing]

If not, what is the contingency plan for when this happens?

The sites move to TOR. Problem solved.

See my earlier response. User adoption suffers tremendously as a result. This is not a scaleable solution.

[niko]

I think this issue is blown out of proportion. If certain exchanges are shut down, there will be others. There will be classifieds, craigslist, etc. for in-person exchange. Besides, shutting down exchanges would likely drive up adoption of btc as direct medium of exchange, without intermediate conversion to government fiat. Finally, more and more people - including smart individuals in governments have vested interest in Bitcoin. They see its value for personal reasons, but also in the bigger picture.  Bitcoin in itself is not that big of a danger to anyone, it is more of an opportunity. Think Internet.

It is an enormous danger to any nation state. If you dont control the currency, you dont control the country.

Can you be more specific? How exactly does Bitcoin present danger to a nation state (more than cash or gold or paypal or dwolla)?

[Etlase2]

Can you be more specific? How exactly does Bitcoin present danger to a nation state (more than cash or gold or paypal or dwolla)?

If, for example, the US government can no longer entice people to its military machine via worthless US dollars, people will not enter its military machine and the US will get very angry. The only way for bitcoin or any cryptocurrency to really succeed is to eventually start removing significant value from existing fiat currencies to itself. It will cause inflation above and beyond standard inflation and people will stop wanting the currency. It is a clear and present threat to the establishment.

[justusranvier]

If, for example, the US government can no longer entice people to its military machine via worthless US dollars, people will not enter its military machine and the US will get very angry. The only way for bitcoin or any cryptocurrency to really succeed is to eventually start removing significant value from existing fiat currencies to itself. It will cause inflation above and beyond standard inflation and people will stop wanting the currency. It is a clear and present threat to the establishment.

Military spending is bad, but it's not what's making fiscal sanity impossible - it's transfer payments, especially transfer payments to retired public sector workers.

Nearly all pension funds are insolvent because they promised benefits which required mathematially-impossible returns to fund. The degree of insolvency seems to be directly proportional to the policial clout the constituency of these funds represents - California, Illinois, UAW, etc. The stock market is being kept propped up by unbacked credit emissions to delay the time at which these funds must confess that they won't be able to pay out what was promised.

[Etlase2]

That is not a threat that bitcoin has anything to do with though, that is a threat all by itself.

[justusranvier]

The ability to print new currency (or unbacked credit) at will only delays the inevitable as long as people can't flee to another currency. Mass acceptance of Bitcoin would bring the sooner than it otherwise would happen.

[stochastic]

If the amount of people using bitcoin continues to go up as it has along with corresponding increase in services, at some point it will become an honest threat to the sovereignty of the state. At this point, the states (the powerful ones anyway) will have no choice but to intervene and shut down all of the services (mtgox, glbse, bitinstant, this forum etc) that users depend on in order to facilitate exchange within and between currencies. My question is: Is it possible for this decentralized currency to build out an equally robust and decentralized service infrastructure? If not, what is the contingency plan for when this happens?

I am being SATIRISTIC

[Severian]

How would prices go up, if the infrastructure which supports these prices was removed?

How is the infrastructure removed? Who's going to shut the net down?

Investing in bitcoins is merely making a bet that the internet will still be functioning in three, four, five years or more.

[hashman]

Can you be more specific? How exactly does Bitcoin present danger to a nation state (more than cash or gold or paypal or dwolla)?

Thanks for bringing this up OP.  Certainly a contingency plan should be on the table. 

More specifically coins are not a threat to a nation state but rather to those that control and profit from control of fiat money supply.  Indeed gold is an apt analogy, as if people started using gold as transaction currency the money masters would be no longer able to take as much value from the people as they wished.  A brief review of the banning of gold ownership is merited. 

https://en.wikipedia.org/wiki/Executive_Order_6102

Wow, 1933 to 1974. 

Simply put, the money printing press is a valuable asset.  It earns some folks on the order of 10 trillion $ per year (good luck figuring out just how much it really makes).  That's big business so you might expect these players to try to squash something like gold hoarding or bitcoins which threaten it. 

On the other hand, these folks have another option.  They can run with the money.  Buy gold and bitcoins with their infinite dollars, and retire in comfort.  Its been a good run, and that is probably the best option on the table for them now, introduce a relatively massive inflation and run.  The cards were already on the table before Satoshi threw the aces down.

But I'm sure glad to see some improved TOR integration in the latest release anyway.     

[istar]

I think this issue is blown out of proportion. If certain exchanges are shut down, there will be others. There will be classifieds, craigslist, etc. for in-person exchange. Besides, shutting down exchanges would likely drive up adoption of btc as direct medium of exchange, without intermediate conversion to government fiat. Finally, more and more people - including smart individuals in governments have vested interest in Bitcoin. They see its value for personal reasons, but also in the bigger picture.  Bitcoin in itself is not that big of a danger to anyone, it is more of an opportunity. Think Internet.

It is an enormous danger to any nation state. If you dont control the currency, you dont control the country.

Well, people will need to pay tax with the countrys currency.
So there will be a need and use of that countrys currency and I dont think citizens of a country would want to totally get rid of their own currency.

Its also an opportunity for any country. Like the internet. Creating jobs and getting millions in money.
The countries first to adopt new technology will earn most on it.

In fact if I where a government I would like my citizens to hold highest amount of Bitcoins possible as it might be the currency of the future on internet. It can be regulated by random inspections.

Though .com, .net, .org should be avoided at all cost.
They can be pulled away.

I´m not sure they will bother that much right now either.

Bitcoin needs to grow to $150 to be more than a tiny tiny problem.
Its so small it would be allmost embarrasing right now for them to care.
Thats what I think, but I might be wrong. They might not have to much to do.

Though in reality Bitcoin benefits every single human in the world. Except the 100 bankers who own the majority in the big banks.

[ElectricMucus]

I believe the touted solution is Mesh Networks

yes, and it's even more important than the success of bitcoin that this happens. Not only as means of resilience against an attack but also as a motor for a less hierarchical society.

Look into using http://projectmeshnet.org/ a Bitcoin Blackjack site can be accessed through it at http://[fc9e:a3c:7e4a:91f2:38fe:9968:d637:2620]

That's the wrong answer.

We don't need an alternative to the Internet. At least not at this stage, if it becomes nessecary to fork the network that decision can be made on an individual basis.
But the opposite is happening. THEY are leaving. The Internet is here to stay, and so are we.
If this one is played out right we will inherit all the existing infrastructure (including the power over ipv4 space) in addition to the list of community networks  (google that one).

But that's not enough, the next logical step is to decentralize power and production which will be a colossal task even compared to running the whole internet.

[lebing]

Can you be more specific? How exactly does Bitcoin present danger to a nation state (more than cash or gold or paypal or dwolla)?

More specifically coins are not a threat to a nation state but rather to those that control and profit from control of fiat money supply.  Indeed gold is an apt analogy, as if people started using gold as transaction currency the money masters would be no longer able to take as much value from the people as they wished.  A brief review of the banning of gold ownership is merited. 

Indeed, gold is the best analogy to bitcoin because it is both scarce and not controlled (in an outright way) by the nation states. However, I am convinced that through the use of the massive reserves that both the IMF and the governments around the world have, they are manipulating the price of gold as they please. The difference with bitcoin is that it has no historical precedent and the governments and other major players have not had the time to invest in it (nor the need to do so... yet).

For this reason bitcoin is actually a much safer hedge against inflation (or global fiat currency meltdown) than gold imo.

[disclaimer201]

Interesting developments, the Cyberspace declaration as well as Internet 2. So, do you think Internet 2 will be something separate from the internet, or is it just a name for a project on the internet? Also, I'm not 100% sure if the analogy to an age old declaration of independence makes sense or is valid. It seems a bit wanted, as in made to fit, and I have difficulties of understanding how a world of thought can or should be disconnected from a world of bodies. Would love to learn more though.

Concerning the topic of this thread: Btc is far from safe imo. Just look at all this crap going on with Megaupload and others, lawyers and courts acting massively against internet users who download copyrighted material. They are of the opinion that yes, thoughts and ideas can be shared with everyone in the world at no cost, but should they? They think ideas are property, and artists, inventors, businesspeople, and scientists need to be compensated because their minds cannot survive without their bodies.

Universities and other institutions,even though they use the net, are de facto separate from the internet already. Thinking about expensive subscriptions like Jstor and locked databases with scientific knowledge. If someone attacked wikipedia the "good old internet" would be left with homepages and blogs and facebook alias myspace pages only.

[ElectricMucus]

Interesting developments, the Cyberspace declaration as well as Internet 2. So, do you think Internet 2 will be something separate from the internet, or is it just a name for a project on the internet? Also, I'm not 100% sure if the analogy to an age old declaration of independence makes sense or is valid. It seems a bit wanted, as in made to fit, and I have difficulties of understanding how a world of thought can or should be disconnected from a world of bodies. Would love to learn more though.

AFIK Internet2 is a genuine separate network, a darknet if you will, only that people behind it are in academia and goverment.

The declaration of Independence of Cyberspace is an old hat, and it doesn't necessarily just apply to the internet as Cyberspace by definition transcends it. It is just, that if going through the hassle of creating a mesh network it should be part of the internet. Creating a physical darknet on purpose is equal to burning bridges which should be avoided if possible.

[Etlase2]

The declaration of Independence of Cyberspace is an old hat, and it doesn't necessarily just apply to the internet as Cyberspace by definition transcends it. It is just, that if going through the hassle of creating a mesh network it should be part of the internet. Creating a physical darknet on purpose is equal to burning bridges which should be avoided if possible.

I don't believe the meshnet behind the freedom box is supposed to replace the internet, but rather a way to get around censorship and provide free internet access to those who can't afford it and so on. But if Big Internet decided to attack something like bitcoin, it would certainly work as a "darknet" around such censorship.

[iCEBREAKER]

If the amount of people using bitcoin continues to go up as it has along with corresponding increase in services, at some point it will become an honest threat to the sovereignty of the state. At this point, the states (the powerful ones anyway) will have no choice but to intervene and shut down all of the services (mtgox, glbse, bitinstant, this forum etc) that users depend on in order to facilitate exchange within and between currencies. My question is: Is it possible for this decentralized currency to build out an equally robust and decentralized service infrastructure? If not, what is the contingency plan for when this happens?

If they attack our infrastructure we attack theirs.  If they take down GLBSE we take down NYSE and NASDAQ.  We can make battle cries that will really be heard around the world.

Yes, yes, and yes!

Viva Satoshi!

[kjj]

Interesting developments, the Cyberspace declaration as well as Internet 2. So, do you think Internet 2 will be something separate from the internet, or is it just a name for a project on the internet? Also, I'm not 100% sure if the analogy to an age old declaration of independence makes sense or is valid. It seems a bit wanted, as in made to fit, and I have difficulties of understanding how a world of thought can or should be disconnected from a world of bodies. Would love to learn more though.

AFIK Internet2 is a genuine separate network, a darknet if you will, only that people behind it are in academia and goverment.

No, internet2 is mostly just a physical network, a subset of the internet, but with faster lines.  It carries same internet protocols and traffic that you are used to.  It just means that nodes on it have reliable high speed links to each other.

For example, Stanford can send data to MIT using private I2 links between universities across the country rather than handing the traffic to commercial carriers.