The federal bitcoin reserve.

[YoYa]

There's been a lot of thought around government reaction to bitcoin, with most people expecting a negative reaction that still doesn't imped people using bitcoin ala torrents etc.

But there's another way to think of it, Bitcoin is an opensource currency protocol, as such Govt's could chose to implement their own versions to represent their currencies on the web. They could change the total supply available, undertake the mining themselves, impose traceability, but as long as bitcoin retains it's inherent properties of being a unique secure transaction based commodity(read currency) then there's a slim, slim chance that one Govt, might just run with it.

Even for libertarians who hate fiat currencies, this would enable a more competitive and fluid market for online currencies.

My bets are on Iceland to go first

[cindylove]

I think that could be the very worst thing for govts (from their perspective) to do in response to BitCoin. Firstly, it will lend credibility to the idea and the protocol which will result in boosting BitCoin more because it has the advantage of a head start. Secondly, one of the primary motivations behind this currency is to wrest fiscal control from huge collectivist institutions and give it back to the individual. Thirdly such a move would undermine confidence in paper money. There is no real reason why anyone would use IceCoin or BitDollars or BitPounds because it's just BitCoin without the advantages.