An easy way to shutdown Bitcoin?

[kenfitz]

Hello, I am new to the whole Bitcoin experience, but it is very interesting to me.  In response to all of the talk about Schumer and the government controlling Bitcoin usage, I thought of an easy way the US Government (or any governement for that matter) could shutdown Bitcoin. Please let me know if my logic is flawed somewhere.

1. Using massive amounts of computing power at the disposal of an entity like the US Government, start mining Bitcoins and do this until all of the bitcoins have been mined.
2. Using massive amounts of money, like the government already spends on worthless crap, buy all of the bitcoins they possibly can. Heck, instead of spending money for bitcoins, just allow bitcoin users to pay their taxes with them.
3. As they acquire Bitcoins (through mining, buying, or tax revenuw), delete the wallets/private keys so that the Bitcoins are lost forever, never to be retrieved again.

The idea is to acquire bitcoins and then lose them forever so no one can ever use them. If they did something like that (or something more sophisticated), couldn't they almost effectively eliminate bitcoins? The only other result I can think of is that the price of bitcoins would go way up as they became more and more scarce, making it impossible for anyone to buy them.

I don't know, maybe my logic is flawed. I am new to this stuff. It just seemed like something the government could do keep people from using them.

I think it is bull that Bitcoin is being blamed on issues like money laundering and drug sales, it's not the technology's fault. Sounds a lot like blaming guns for killing people instead of the people who are pulling the triggers.

Anyway, just a thought. Let me know what you think.

Ken

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[MoonShadow]

I think that if the government attempted to do all of those three things, I'd be extremely wealthy by 2020 and living on a private island somewhere.  If they just tried to do #3, I'd probably only be able to retire at 50.

[BinaryMage]

Well, your theory is interesting, and not without merit, but I do see a few gaps.

Number one: In order to significantly affect mining, the government would need a lot of computing power. I don't know how much they have, probably enough, but a lot of that has to be devoted to other tasks.

Number two: Because Bitcoins are divisible up to eight decimal places, if Bitcoins are removed from the system, it just makes the value of the others go up.

Number three: The US government is VERY unlikely to accept Bitcoins as tax payment, and if they did, I don't think many people would choose to pay with them. The government certainly can't tax Bitcoins.

Who knows, though, it might be possible, but even if they did find some way to break through, I think the Bitcoin community would be able to outsmart them.

[kjj]

If you think any of those options is easy, I'd hate to see what you think is hard.

[MoonShadow]

If any government were to begin to accept Bitcoins directly as payment of taxes, this would be a defacto legal tender declaration; thus putting Bitcoin on par with the nation's own fiat currency.  If the US were to ever do this, it would be an admission of the declining nature of the US $ as an international reserve currency.  They are never going to do this.

[YoYa]

Gotta keep it in perspective....Bitcoin as it stands is just the first iteration/implementation, also it's the idea that carries it, not necessarily how this first run will work out. Any government attack will lead to further branching in to other bitcoin networks which will run independently. The genies outta the bottle, almost makes it pointless attacking, and that's not lost on the people in Govt who know their shit. The CIA are having Gavin over not to attack bitcoin, but to get their heads around it as fast as possible so they can follow the BlockChain for real illegal transactions and not the sort of the silk road variety. Also, it's not public implementations of Bitcoin that need be what they worry about, private implementations would allow organised crime groups a secure means of transacting across national boundaries for internal purposes. The same could be said for other large organisations.

Govt is going to be more worried about getting any exchanges within their jurisdiction enforcing tax collection.

[yk]

At the moment I do not see the motivation to try to destroy bitcoin for a government. And even if they would try such a stunt, I doubt that mining all bitcoins is a reasonable strategy. Much easier would be to attack either BTC users directly (Bitcoin is P2P, so a modified client can log IP adresses in the network) or manipulate the market such that it would seriously suppress the acceptance of bitcoins. 

[MoonShadow]

At the moment I do not see the motivation to try to destroy bitcoin for a government. And even if they would try such a stunt, I doubt that mining all bitcoins is a reasonable strategy.

It's also impossible.  The Us government could throw all their capacity at Bitcoin and either attack it or participate in it, but they cannot just mine all the remaining coins and hoard them.  It would still take till about 2129 to mine all the coins no matter what they threw at it.

[Coma]

2. Using massive amounts of money, like the government already spends on worthless crap, buy all of the bitcoins they possibly can. Heck, instead of spending money for bitcoins, just allow bitcoin users to pay their taxes with them.

In this case US goverment would be buying us all out. And we set the price.
I'd takethe NASA for 5BTC and, FBI for 10BTC and a some Sarah Palin's private time for the spare change, thank you.

[djproject]

As long as even 1 bitcoin survives, it can be split into 10^{-8} parts, meaning there are 100,000,000 units...  which, admittedly, isn't enough pieces for a real economy, but in that drastic case, it'd be straightforward to modify bitcoin to divide into 10^{-16} parts, giving 10,000,000,000,000,000 units.  TL;DR: Uncle Sam would be graciously making everyone on this board into multibillionaires.  Come at me, bro!

[Rob P.]

1. Using massive amounts of computing power at the disposal of an entity like the US Government, start mining Bitcoins and do this until all of the bitcoins have been mined.

If they can get 5830s and 6990s I'd like to see it!   

Seriously, they cannot mine any faster than anyone else.  Block mining happens at a controlled rate.  They'd also still be competing with independent miners and pools to find blocks, so they wouldn't be able to find them all. 

It would be much easier for said entity, if they can amass (today) > 7 thash/second of computing power to just begin forging blocks on the block chain.  If they did that with the sole desire to destroy Bitcoin, I suppose, they could get away with it, as they would be able to validate bad blocks on the chain containing transactions allowing double-spends.  If they did it enough, people would lose confidence and leave the network/economy.  Of course, if they ever quit doing it, it could simply reform.

2. Using massive amounts of money, like the government already spends on worthless crap, buy all of the bitcoins they possibly can. Heck, instead of spending money for bitcoins, just allow bitcoin users to pay their taxes with them.

Everyone reading this would like that to happen, as has been stated earlier.  We'd set the price they acquire them at.

3. As they acquire Bitcoins (through mining, buying, or tax revenuw), delete the wallets/private keys so that the Bitcoins are lost forever, never to be retrieved again.

See above, but they wouldn't have to destroy the wallet.  No one could spend them without the private key, they have it, so they are effectively lost.

The idea is to acquire bitcoins and then lose them forever so no one can ever use them. If they did something like that (or something more sophisticated), couldn't they almost effectively eliminate bitcoins? The only other result I can think of is that the price of bitcoins would go way up as they became more and more scarce, making it impossible for anyone to buy them.

IF that happened, we'd just start a new block chain.  Bingo, new coins.  They'd have to repeat the process.  Anyone can start a block chain, the trick is getting people to accept it.

[Gabi]

If they do 2 or 3 we will be very very RICH, so hope they do it 

[anu]

I think it is bull that Bitcoin is being blamed on issues like money laundering and drug sales, it's not the technology's fault. Sounds a lot like blaming guns for killing people instead of the people who are pulling the triggers.

Most illegal stuff is material. Makes no sense to use bitcoins for this kind of OTC. Cash is way better. So why not banning cash?

[sunyag]

I do think the government takes Bitcoin very seriously. To understand Bitcoin is to see a fundamental threat to the entire power structure. So if they can control/manipulate the currency, then they certainly would. Though I don't know that removing coinage from circulation would accomplish their mission (because of the decimals option). I think that, in that government mining scenario, they would be more interested in manipulation. So the more miners we have, the more protected the system. In any case, I think it is very important for Bitcoin to be moving in the direction of namecoin and Tor. Bitcoin is a revolution.

Silverbugs have long felt that we held the standard for monetary revolution, but now I can see tremendous overlap.

[CaseyHeinzism]

One thing I keep reading is how people want to see BTC accept as a real currency, if that is so.. Then like other Local Currency Laws, People DO have to pay the cash equivalent of taxes on those currencies... And if people really want to see BTC kept legal.. They will encourage each other not to use bitcoins for illegal activities.. But as far as who would benefit the most from use of bitcoins.. low income people.. as well as computer processing wizards who mine them, and another group of tiny unrecognized entities.. Micronations. If micronations were to accept bitcoins as to be like their form of global currency between eachother within and outside of the nation BTC really could grow into being something globally awesome . Also think about the good practical things that can be done worldwide if the bitcoin was used the right way it could save the global economy.. as well as bring tiny bits of money to areas that are drying up .. and get the economy moving again. But, the question is.. Are people using the BTC with good intentions or bad intentions? .. All the bad stuff will be heard before the good stuff because this is a totally new thing out there.. .. I was surprised to see people are making really good money selling their BTCs on ebay..  - Casey

If your are not sure about the currency things.. Look up Local Currency laws..

[Rockford99]

Not really a valid point, imo.  If the government destroyed bitcoins, it seems that the smaller float of the existing ones would be much more valuable - so it wouldn't matter.  People would just use smaller fractions of bitcoins and be able to transact for the value as previous.  The value of the aggregate float would still be about the same.

[darkskypoet]

There are other methods that would effect the value of BTC far more negatively then by trying to outmine everyone else, or utilizing some of the methods mentioned above to attempt to destroy it...

1. Attack liquidity... If you cannot get global currencies in or out easily.. as in w/o requiring many layers of laundering, or tech savy above a certain level... then it kills the useability by merchants. In the end run merchants / service providers/ etc require the ability to pay their workers / suppliers / costs / etc with BTC to see it flourish as more then a side game.

2. Attack the pools. far more easily then attempting to leverage standard CPU based compute power to out mine the legions of GPU using gamers that will be / are mining BTC would be to attack the pools and exchanges with DDOS attacks. These would greatly hurt the ability to mine, and to continually regenerate the encrypted transaction logs required to sustain the currency / add bitcoins / protect against hijacking or counterfeiting.



Also, watch for IRS audits in the cases where major coin (pun intended) is made from BTC speculating, as in the US I believe they can tax you for any money made, even that made outside the US, unless you have offsetting tax credits from paying foreign taxes. Thus they can tax you if they can find it. And if your silly enough to spend the "insert global currency here" in a traceable manner, and the IRS decides its outside of your means, they will audit you, and audit you again, and again if they really feel you are gaining money that has not been taxed. Again, this brings us nack to liquidity. The Porsche 911 you buy with BTC isn't a traceable transaction... until you go to register and license said car. Then the IRS might be interested to know where the money came from, when you make $14/hr at your day job...

[c0rbin9]

Targeting the BTC trade websites seems like the easiest way to me...

Rest assured no amount of computing power will ever be able to "mine all the bitcoins." That's why the difficulty increases.

[duckfeet]

Ron Paul must love this stuff...in the U.S. anyway, liberty has just about been totally outlawed, and--as has been pointed out--the whole con of modern money, backed by...what's it backed by?  Hahaha...bitcoin is just taking it one step further, as the whole statist repression finally comes crashing down...anarchy, but keep the electricity on, and we'll survive

[kjj]

Ron Paul must love this stuff...in the U.S. anyway, liberty has just about been totally outlawed, and--as has been pointed out--the whole con of modern money, backed by...what's it backed by?  Hahaha...bitcoin is just taking it one step further, as the whole statist repression finally comes crashing down...anarchy, but keep the electricity on, and we'll survive

The IRS mostly.  No, really.