At the early stages Russia ruled it as illegal, China outlawed all withdrawals and some other country also spoke against it. But now everything seem to be smoothing up at least on the government side. Surely Bitcoin must be seen as challenging their authority. Is there something I am failing to see? All it would take is a 51% attack or a new law.
Simply, Bitcoin is currently a
decentralized open-source voluntary p2p network.
Each of the above terms prevents specific legal actions from occurring to the network.
For example:
(1)
decentralized: since the validator node network is decentralized among thousands
of individuals in thousands of locations, it is not possible to shut down each one in all
jurisdictions at the same time without shutting down the internet for the whole world (Miner
nodes are no longer decentralized and are now majority controlled by state actors, such as
in China). This vector of regulation is only effective if the validator node network is disbanded
or becomes too burdensome for average people to maintain in diverse locations, otherwise this
regulation vector is not effective.
(2)
open-source: since the code for Bitcoin is open and not considered proprietary,
anyone can copy and implement the code anywhere at anytime for free and anyone could
participate with code changes. In this way, the code is not controlled by any one person or
entity, and the only entity that could be legal regulated is where the code is maintained
(currently GitHub). There are many copies elsewhere and this vector of regulation is not very
effective, especially with decentralized nodes who also maintain this code.
(3)
voluntary: since the network and developers are not paid by a "Bitcoin Development
Group" and all aspects are basically voluntary, there are no legal "responsible parties". This
means that there is no single person that a government could fine/compel/imprison/torture in
order to change or control the network/protocol. All parties from the developers to the users
(no longer true for miners), in theory are voluntary participants who have no liabilities nor
guarantees. This vector of regulation is not effective as long as developers (and users) are
voluntary individuals who are not associated with a company or regulated group and that the
open-source and decentralized node aspect is maintained.
(4)
p2p: since the network communicates with decentralized independent nodes
throughout the world and that the token, through the blockchain system, can transact without
trusted parties, individual people are able to perform exchanges without regulatory oversight or
institutions blocking or allowing that transaction. Since Bitcoin was designed to be P2P, it allows
for and sidesteps this vector of regulation of transactions from user to user. This vector of
regulation can only occur on regulated/licensed exchanges.
Ultimately, Bitcoin challenges governmental authority, as designed, and there is nothing they
can currently do about that. But if majority of the decentralized aspects of the system was
destroyed (besides mining) then Bitcoin will fail since it becomes extremely simple to regulate
directly into the protocol itself. There are many areas where Bitcoin could be regulated from, but
only the Miners due to the centralizing and financial aspects of that subsystem, have already or
will soon be fully subject to governmental regulation (when that occurs we leave them behind
with PoW changes to prevent the total destruction and anticipatable oppression that will follow).
What many members of this forum and in the Bitcoin community in general do not understand
(or do not care) is that governments do not support Bitcoin at all. In fact, it is seen as something
that will eventually erode their power and control in many different areas. It blatantly violates
many laws which is only possible due to its design and decentralized independently voluntarily
maintained system. Users/members who argue that governments allow it now or like it because
it improves technological innovation or for tax collection purposes do not understand what is
actually occurring in some governmental circles. Within specific circles, mostly associated with
intelligence groups, Bitcoin is either a threat to themselves or a weapon for themselves.
Most simply, Bitcoin only exists today because Satoshi created a near perfect system designed
to anticipate and outmaneuver vectors of attack or regulation that powerful entities could use.
In this light, Bitcoin really is a masterpiece. An almost near perfect system that makes the current
world system, whether in law or finance, scratch their heads and say "Now what do we do?".
The answer, if decentralization is maintained, is nothing. There is nothing they can do but accept
its use over time and act like they allow us to use it.
The biggest threat to Bitcoin is not high fees or low user adoption, it is the law and regulation.
Users who think it is vice versa are not followers of Satoshi, the Whitepaper, Cypherpunks,
freedom, or anything. They are destroyers of masterpieces, like fundamentalists who destroy
ancient statues and art. They are ignorant of the actual feat that has been performed here as
well as where its true value originates.
Edit: spelling and some lines.
