Govt Regulation thought experiment

[wolverine.ks]

Instead of speculating on what governed regulation might be coming down the line,  I thought maybe we should start from the other direction.

What is the most govt  regulation you can imagine?

Would that much regulation destroy bitcoin? crypto currencies in general?

Would bitcoin and is economy be able to handle that?

What would the response be from the bitcoin economy?

Would the outcome be acceptable?

If the bitcoin economy is so sure that bitcoin is indestructible,  should regulation and government acknowledgment be desirable,  if not forever at least in the short term?

additionally,  the bitcoin economy is not a unified collective.  perhaps only some of it should embrace regulation while other parts do not.

thoughts?

[FoBoT]

if bitcoin is regulated, then i don't see the point

cannot Citi Bank or any large Corporation spend $XX million and use the open source bitcoin technology to create CitiCoin or BoACoin in short order? if they do it, it must of course be completely regulated by all the existing laws

would entities not associated with CitiCorp or BoA have any incentive to use it?

what is the incentive to use BitCoin? i thought it was something like this:

"Bitcoin is open-source. Nobody owns it; the most popular client is maintained by a community of open-source developers."
if it comes under government regulation, then this part isn't really true anymore. as soon as govt makes laws/regulations, they have control even if indirectly

"Bitcoin verifies transactions with the same state-of-the-art encryption that is used in military and government applications."
CitiCoin or BoACoin can do this

"Using the Bitcoin network is free, except for a voluntary fee you can use to speed up transaction processing."
this is already changing with 0.8.2

what do i know, just a skeptical but hopeful n00b

[wolverine.ks]

I guess I should have been more clear.

What I'm really asking is this. ..

If bitcoin and bitcoin businesses were regulated as much as anyone in any government wants,  would bitcoin,  is economy,  is businesses,  it's users,  and is miners be able to deregulate it?

[BitcoinAuthor]

I guess I should have been more clear.

What I'm really asking is this. ..

If bitcoin and bitcoin businesses were regulated as much as anyone in any government wants,  would bitcoin,  is economy,  is businesses,  it's users,  and is miners be able to deregulate it?

Government want regulation, because they want control. VCs want regulation as it raises the barrier to entry for non-VC funded exchanges. And banks want regulation so they can regulate it out of existence.

But because Bitcoin is P2P a black market can always be created.

[SamS]

I guess I should have been more clear.

What I'm really asking is this. ..

If bitcoin and bitcoin businesses were regulated as much as anyone in any government wants,  would bitcoin,  is economy,  is businesses,  it's users,  and is miners be able to deregulate it?

A newbie's $.02:

Theoretically yes as people could pay p2p in an underground economy -- think Zimbabwe, Argentina, and hyperinflation. As a practical matter, I think it's unlikely to appeal to the masses. As long as the local Fiat currency retains its value as you still need a way to get the funds to Fiat. That's the weak link with any crypto-currency that can't be dealt with short of mass adoption. So what solves this chicken/egg problem?

One thing the current system doesn't do at all is micro-transactions. If Btc could carve out a niche here, then it would be serving a useful purpose in expanding the existing monetary system that could be expanded over time. The associated issue is transaction costs generally. Since Btc provides secured non-recourse transmission, any losses due to standard fraud techniques are likely to be minimal -- you can still have wallet theft for example but you won't have the equivalent of CC fraud. Consequently, Btc is able to offer lower transaction fees to merchants. However, in the absence of a sizable Btc exchange system -- billions of dollars of transactions a day spread over millions of households and vendors (?) -- you still need to get back to Fiat to do business. That's going to have a conversion/transaction cost as well. Add the two together and ask yourself, "Is Btc still going to be cheaper?" I don't think there's a clear-cut answer to the transaction cost problem. My gut feel is that there will be a lot of institutional resistance to allowing what is an essentially a hostile takeover of a centuries old institutional and Governmental extended financial oligopoly.
 

[cdog]

I dont think its regulatable. They can regulate exchanges for fiat, but not BTC transactions. Its impossible.

[CanadianGuy]

I dont think its regulatable. They can regulate exchanges for fiat, but not BTC transactions. Its impossible.

This.  How do you go about regulating it?  If they had any power over Bitcoin, they would have shut down Silk Road by now.

[franky1]

OK lets get the facts straight. The government is not after bitcoin!

They are after lazy, amateurs that want to open exchanges, but don't want to pay the licence and regulation fee's to handle the FIAT side.

Banks and government love their FIAT, after all FIAT is the government and banks property, so if your worried about regulations then at least read them and realise that a MONEY transmitter is a FIAT transmitter.

if you don't want to abide by regulations then simply don't touch FIAT

[Elwar]

They can regulate it by banning any transactions over the Internet.

Such a government would have full control over ISPs and force them to block bitcoin traffic or face fines or imprisonment.

The way around this would be mesh networks, which would transmit Internet traffic wirelessly. These mesh nodes would also be illegal and anyone caught putting one up or broadcasting from their property would be considered criminals.

[franky1]

They can regulate it by banning any transactions over the Internet.

Such a government would have full control over ISPs and force them to block bitcoin traffic or face fines or imprisonment.

The way around this would be mesh networks, which would transmit Internet traffic wirelessly. These mesh nodes would also be illegal and anyone caught putting one up or broadcasting from their property would be considered criminals.

block bitcoin transactions? well thats ok, as a new version of bitcoin-qt that transmits data on a different port number or a different method can take maybe 5 minutes to implement and then publicise.

it would take a total internet blackout to stop transactions. but even then people will start using cell phones and satellite internet methods to connect together. so bitcoin is diverse enough to survive government attacks.

why else do you think the Tor project has not been taken down.

[Elwar]

They can regulate it by banning any transactions over the Internet.

Such a government would have full control over ISPs and force them to block bitcoin traffic or face fines or imprisonment.

The way around this would be mesh networks, which would transmit Internet traffic wirelessly. These mesh nodes would also be illegal and anyone caught putting one up or broadcasting from their property would be considered criminals.

block bitcoin transactions? well thats ok, as a new version of bitcoin-qt that transmits data on a different port number or a different method can take maybe 5 minutes to implement and then publicise.

it would take a total internet blackout to stop transactions. but even then people will start using cell phones and satellite internet methods to connect together. so bitcoin is diverse enough to survive government attacks.

why else do you think the Tor project has not been taken down.

I am thinking some place like North Korea that likely already blocks most Internet traffic (if they have Internet at all..)

[waxwing]

why else do you think the Tor project has not been taken down.

Actually the Tor project was created by a government agency (the  US Navy) and is still financially supported by the US Gov, so..

[lettucebee]

Wolverine, is your avatar Freddie Mercury or Dan Severn?

[Mastergerund]

why else do you think the Tor project has not been taken down.

Actually the Tor project was created by a government agency (the  US Navy) and is still financially supported by the US Gov, so..

That's an interesting point, as pertaining to bitcoin. Has anybody seen the theory that Satoshi Nakamoto was a code-name for an NSA task-force that created bitcoin?

[franky1]

why else do you think the Tor project has not been taken down.

Actually the Tor project was created by a government agency (the  US Navy) and is still financially supported by the US Gov, so..

That's an interesting point, as pertaining to bitcoin. Has anybody seen the theory that Satoshi Nakamoto was a code-name for an NSA task-force that created bitcoin?

LOL i love all of your government fearing mindsets. mostly trained by you all watching too many illuminati videos and conspiracy theories on youtube.

how about make a phone to government agencies and talk to them. they are human too even if they do have scripts they read from. atleast you will know what their thought plan is, instead of using opinions from others like the game of chinese whispers.

and for the satoshi being related to government agencies such as NSA. Actually do some research. one of Satoshi's last conversations with Gavin andresen was where Gavin informed Satoshi that Gavin was invited to do a presentation at a CIA conference. then satoshi rage quit.

if satoshi was NSA/CIA owned code-name they would have had private conferences, and not asked Gavin to come along because satoshi would have informed NSA CIA everything they needed to know, if satoshi was a government owned entity

[lettucebee]

First, they attack the exchanges.  They over-regulate the ones that they can.  Then, they set up exchanges acting as good guys, get a lot of community trust, and then steal all the stuff.  This is a psychological op to get people to not trust bitcoin exchanges and hurt its reputation.

The IRS will start going all out to match bitcoin addresses with real people.  They will also demand the bitcoin addresses for any bitcoin activity reported on tax returns.  Then, government will develop the most sophisticated blockchain analysis tools to be found anywhere.  IRS has already said they are going to start focusing on web information to squeeze more taxes out of the "small people".

The government will create several highly publicized stings using bitcoins that were obtained using services like "localbitcoins.com" and bitcoin will be associated with terrorism, kiddy porn, and drugs.  Bitcoins will be banned.  The bitcoin price will, of course, plummet as all the statist pussies wet their pants and flee.

Then, they mandate that ISPs report on anyone using bitcoin web sites and trafficking in bitcoins.  Then they bust people using bitcoin based on increasingly sophisticated Orwellian surveillance methods, such as network analysis and data mining.  (People's associations together are tracked by their cell phones, for instance.)

All of these methods are brought in not to focus on just bitcoin.  Rather, bitcoin is but one good reason that will be used to continue building the most fabulous and effective police state that has ever existed.  Bitcoin will smolder underground for years.

[franky1]

bla blah blah post by a conspiracy theorist

the government are not over regulating anything. the regulations have been the same for years, the only thing they are now doing is trying to tell it in laymens terms for the lazy people that don't want to read the regulations. in the hope that people wanting to start up exchanges atleast have half an idea what they are obligated to do to play with large amounts of other peoples money, or atleast what to avoid if they want to live a 100% bitcoin existance

[Elwar]

bla blah blah post by a conspiracy theorist

the government are not over regulating anything. the regulations have been the same for years, the only thing they are now doing is trying to tell it in laymens terms for the lazy people that don't want to read the regulations. in the hope that people wanting to start up exchanges atleast have half an idea what they are obligated to do to play with large amounts of other peoples money, or atleast what to avoid if they want to live a 100% bitcoin existance

So MtGox could have been robbed by DHS before FinCEN released their regulations?

[franky1]

bla blah blah post by a conspiracy theorist

the government are not over regulating anything. the regulations have been the same for years, the only thing they are now doing is trying to tell it in laymens terms for the lazy people that don't want to read the regulations. in the hope that people wanting to start up exchanges atleast have half an idea what they are obligated to do to play with large amounts of other peoples money, or atleast what to avoid if they want to live a 100% bitcoin existance

So MtGox could have been robbed by DHS before FinCEN released their regulations?

the only reason mtgox got hit now 4 years after bitcoin was released to the world is because of these 2 reasons
1) there was a confidential informant that spotted a bank account which was not linked to a money transmitter licence.
2) fincen a majority of the time only get information from SARS reports and information of crimes, issues. meaning they are re-active, not pro-active.

the money transmitter licences have been a regulatory requirement for many years. its nothing new. the only difference is that the regulations have been posted on youtube instead of only a government building, so it just seems new to many people afraid of talking to government agencies.

and now for the 3 possible answers to why
1) it took so long because only one year ago bitcoin was not on every news station every week for jealous people such as gold hoarders or other exchanges to think that bitcoin as a threat, for them to then think of ways to harm it.
2) it only takes 1 scam artist to try asking their bank to reverse a bank transfer calling it fraud, which would start bank investigations into the legality of the business receiving funds.
3) a burned customer that lost their life savings betting at the wrong price,

i think that it was a personal attack on mtgox, not bitcoin. due to the DDOS and the warrant. a little strange how the other exchanges have not had much attacks.
It could be said that the personal attacks were due to mtgox's size as oppose to personal reasons such as a jealous competing exchange but thats speculatation..

but getting back to the point. if your not fully regulatory compliant to handle fiat. it is not IF you will get caught, it is WHEN you will get caught.

having happy customers that wont stab you in the back reporting you, due to offering good customer service or guaranteed steady and safe price movements so that no one loses out, will not protect you. it will only delay Fincen finding out your not regulated.. especially around the time of year tax returns are filed.

[benjamindees]

the only reason mtgox got hit now 4 years after bitcoin was released to the world is because of these 2 reasons this 1 reason

1) The emergence of a US-based, licensed and regulated exchange.

FTFY.  Really, you're generally on the right path.  But before denouncing others as "anti-government" "conspiracy theorists", it might be a good idea to have at least a basic understanding of the concepts of standing, jurisdiction, and crimes against the state.  Just because most of those participating in the faceless system of government don't actually understand how it works, doesn't mean that it isn't a system, and that it doesn't act with a single, overriding purpose.  The FED is called the "shadow government" for a reason.

i think that it was a personal attack on mtgox, not bitcoin. due to the DDOS and the warrant. a little strange how the other exchanges have not had much attacks.

See above.