Why should governments hate Bitcoin?

[keelba]

So I've been lurking around this forum for several weeks. I finally had something I wanted to say but couldn't post it in any of the other boards so I put it here.

I've noticed many people saying that governments fear Bitcoin and they will want to fight it. I don't see this as a completely accurate statement. It is the central banks around the world that should be fearing the potential of Bitcoin. A government should not fear Bitcoin, unless it fears its own bankers. If you look back through history, you will see that around 1100 King Henry I  implemented tally sticks in England. Tally sticks have a number of similarities to Bitcoin, most importantly taking away the supply of currency from the goldsmiths. The tally stick system remained for over 700 years. England did quite well for itself during this time.

The point is, if only our political leaders could see the value of taking away the supply of currency from the central banks, they would not fear Bitcoin but embrace it. The government would still easily be able to collect taxes in Bitcoin. When an employer pays its employees with bitcoins, it will withhold the income tax as it does now. When goods are sold, even on the Internet, taxes could be applied to the purchase. Nothing has to change for the government as far as its ability to collect revenue from its citizens. It is only the central banks that should fear. We need our politicians to wake up and realize there is another way, a way in which the government would not have to borrow from a private institution and then impose ever increasing taxes on its citizens just to pay back the interest on that debt.

The government could, if it wanted, stop paying the interest on that debt. That reduction would be a direct reduction in taxes its people. Just like we learned from Reaganomics, the best way to stimulate an economy is to lower its taxes. Almost sounds utopian doesn't it? But it could become a reality in our lifetimes, if only our elected leaders (the ones we put in power) would wake up.

[drjekl]

When an employer pays its employees with bitcoins, it will withhold the income tax as it does now.

I see an easy work around to that....

[Birdy]

But governments cannot tax bitcoin and they cannot control it  

Governments can tax shopping with cash, why should'nt they be able to do this with Bitcoins?
Sure they will not be able to tax every single transaction, but it's the same for cash.

[zeeshanblc]

If goverment cannot control it they hate it and it will became a threat to them.

[Kohloe]

It's a bad thing for poor countries which does not have a valuable currency. Bitcoin could become more trusted then the local currency and the government can not control their own country anymore.

[Dasneko]

First of all 99% of people who is going to answer here is wrong and the last 1% will have a message 99% wrong as well. Mostly because they got too big of an opinion regarding themselves and bitcoin as well as a gripe against the government.

Ill try give you a few actual reasons but remember that a currency is very complicated and there are allot of pros and cons however you manage it.
In no particular order:
They can not print more money. Most countries use their power to print money to balance the economy. Countries that have adopted the Euro also suffers from these problems but its not an absolute bad thing. Just a different way things are handled that requires a country to find new methods.

Its not bound to an Identity so the government can't keep track of your money and hence can't tax you on it. Especially dangerous in combination with criminal groups or terrorists like Al Qaida.

Its an experiment and not designed to be sustainable in the future or distant future.

[drjekl]

First of all 99% of people who is going to answer here is wrong

Are we part of the 99%?

[Dasneko]

First of all 99% of people who is going to answer here is wrong

Are we part of the 99%?

Most likely... yes.

[scab]

Governments hate Bitcoin because we are a VERY big danger to their monetary system.

[keelba]

Governments hate Bitcoin because we are a VERY big danger to their monetary system.

Whose monetary system? That's a very important question to answer.

[chchch]

I think the most they hate that they do not have the control, like they have with fiat money.

[keelba]

I suppose I could understand how the United States is different but the original question was directed at all countries in the world. The United States is different in that the USD is the country's number one export. A move to bitcoin would end the monopoly of the dollar. Bitcoin would create an even playing field for ALL countries around the world. This could scare the US but if the rest of the world started using it, I don't see how the US could stop it and would eventually have to join the party.

[Endlessa]

Blows my mind that peeps think it can not be taxed or monitored by a government.  It can be taxed by regulate any point of sale on a countries soil.  It can be taxed and monitored at any exchange on their soil.  It can be taxed and monitored when transferred to any bank on your soil.  See dwolla/Mt. Gox.  They can and will control it within their borders and it's a necessary step for widespread adoption as a payment and an investment. They only way it can't happen, is if you never spend it on a service or good and you never exchange change it for local currency.  In which case, your just sitting on a number that makes you happy.  It's going to be a quite a while before you can do end to end BTC, if ever.

[Dasneko]

I suppose I could understand how the United States is different but the original question was directed at all countries in the world. The United States is different in that the USD is the country's number one export. A move to bitcoin would end the monopoly of the dollar. Bitcoin would create an even playing field for ALL countries around the world. This could scare the US but if the rest of the world started using it, I don't see how the US could stop it and would eventually have to join the party.

It would not matter if the rest of the world used bitcoin because a currency is intended to be used internally first. Trying to force someone like that is just pointless.

Blows my mind that peeps think it can not be taxed or monitored by a government.  It can be taxed by regulate any point of sale on a countries soil.  It can be taxed and monitored at any exchange on their soil.  It can be taxed and monitored when transferred to any bank on your soil.  See dwolla/Mt. Gox.  They can and will control it within their borders and it's a necessary step for widespread adoption as a payment and an investment. They only way it can't happen, is if you never spend it on a service or good and you never exchange change it for local currency.  In which case, your just sitting on a number that makes you happy.  It's going to be a quite a while before you can do end to end BTC, if ever.

Bitcoin by design cant be monitored and if you exchange in your wealth with services that also cant be monitored they are essentially gone. After that you can use your separate ID (your bitcoin wallet) as your identification for buying goods or perhaps currencies without ever using your actual identity.

This is exceptionally easy to do since Bitcoin is an internet based currency not limited or defined by country borders.

One example is if i went to a bar and then payed them with a fraction of a bitcoin. Nowhere does my identity get recorded and the transaction is keept anonymous. Btw there are bars like this already.

[OnlyC]

because it's anonymous, no one can trace a transaction.

[keelba]

Blows my mind that peeps think it can not be taxed or monitored by a government.

And that right there is a part of the problem. If our politicians think that too, they will attempt everything in their power to stop it. But it can be taxed very easily. When you go to the grocery store and buy $200 worth of groceries using cash, non-traceable dollars, don't you still pay tax? Where does this fear of not being able to collect taxes come from?

[Birdy]

because it's anonymous, no one can trace a transaction.

It's less anonymous than cash.

[Endlessa]

Blows my mind that peeps think it can not be taxed or monitored by a government.

And that right there is a part of the problem. If our politicians think that too, they will attempt everything in their power to stop it. But it can be taxed very easily. When you go to the grocery store and buy $200 worth of groceries using cash, non-traceable dollars, don't you still pay tax? Where does this fear of not being able to collect taxes come from?

Exactly,  there are already monitoring and taxation systems in place that deal with both commodity exchange and currency exchange.  As we are seeing now with Fincen, the IRS, and law enforment, they are already being applied to BTC.  It's not even that difficult to do.  Unlike cash BTC does have a fully traceable chain of ownership in the blockchain.

[Dasneko]

Blows my mind that peeps think it can not be taxed or monitored by a government.

And that right there is a part of the problem. If our politicians think that too, they will attempt everything in their power to stop it. But it can be taxed very easily. When you go to the grocery store and buy $200 worth of groceries using cash, non-traceable dollars, don't you still pay tax? Where does this fear of not being able to collect taxes come from?

And you think its impossible to buy something without the tax? Its surprisingly easy to do actually.

[Vantix]

governament cannot control the transaction and applicate fee