Government "Regulation"

[DullJack]

I am fairly new to bitcoin economics and need a few more posts in the newbie section, so here goes:

 I was looking for opinions on something I was thinking about earlier today. This is all hypothetical, I don't see this actually happening any time in the foreseeable future, but it still seems like a possibility.

The majority of people seem to think that governments will never be able to control/regulate/shut down bitcoin.
From what I can tell if a single entity controls a majority of the overall mining hashrate, they can reverse/block transactions and generally wreak havoc on the community as a whole, undermining the system and destroying consumer confidence in the currency.

If the US government didn't approve of bitcoins, they wouldn't be able to bring down the system with laws/regulations or going after individual bitcoin users. But what is to stop them from allocating enough resources to bitcoin mining that they essentially control the system?

Would this bring about a doomsday scenario for bitcoin?



Again, I am fairly new to this whole thing, just wondering if this is possible and hoping to start a discussion on the topic.

Please keep trolling and ad hominem attacks to a minimum.

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[ChanneledDan]

I doubt the general public would approve of a budget for buying thousands and thousands of AMD video cards. I'm not so sure that would get past any budget hearing.

[Duffman]

I think if they start to get annoyed by bitcoin, they'd just shut down the pools' servers like they do w/pirate sites.

[Hebination]

I doubt the general public would approve of a budget for buying thousands and thousands of AMD video cards. I'm not so sure that would get past any budget hearing.

I'm sure the government has enough computers that they could pull a big enough hash rate to seriously cripple the system if the wanted.

[compro01]

I'm sure the government has enough computers that they could pull a big enough hash rate to seriously cripple the system if the wanted.

i rather doubt it.  you'd need several Jaguars to even make a dent in things.

[Duffman]

I doubt the general public would approve of a budget for buying thousands and thousands of AMD video cards. I'm not so sure that would get past any budget hearing.

general public has no say; I think it depends on what district its affecting.  if Boehner can get a local PC store from his district to sell the govt the hardware + assembly, and electricity payments to the district's local supplier, etc he'd sneak it in to some unrelated bill.

/kidding

[TerraformProjectAlpha]

I doubt the general public would approve of a budget for buying thousands and thousands of AMD video cards. I'm not so sure that would get past any budget hearing.

I'm sure the government has enough computers that they could pull a big enough hash rate to seriously cripple the system if the wanted.

By the time the government has to take this extreme of measures to control bitcoin, it will already be so huge that it will be uncontrollable.  For this to happen, the government would have to allocate all of it's computing powers RIGHT NOW in order to take down bitcoin, but with the growth in terrahashes that is now being seen, soon it will be impossible instead of just extremely extremely unlikely

[FredericBastiat]

I have a question regarding the way the pools work. I understand why we have them (reduce variance) and thus share a 50 BTC reward, but I wonder why variance should be the issue in the first place.

It seems a little late in the game for changing the protocol, and it might break things badly so maybe it isn't a good idea, but here goes. Suggestions welcome:

1) Governments, who have a lot more resources than we do, can attack the centralization that the bitcoin network is going thru, i.e. two pools such as deebit and slush would cause havoc. So can we remove the need for pools? Why don't we leave the difficulty fixed to a nominal "computational processing unit" of hash-rate capability and just split the reward based on contributed processing power amongst the shares committed. This allows those who still have the most processing capability to acquire the most shares (score based or whatever) based on effort, but still allows the little guy a piece of the action without having to wait days/months/years for any kind of reward. So the reward could be anything from a nanocoin up to the maximum coin per hour (5 BTC/min). This effectively consolidates all pools into one, with maximal transparency and contribution. No centralized pools for attackers to DDOS or hackers to compromise.

2) Anyone can, and has, attacked any of the exhanges (Mt. Gox). I'm not sure what one can do about this one. This reduces, or disrupts exchange flows. Encourage more exchanges, I guess. Maybe someone could make an open source exchange website everybody could use, thus creating a similar result to the way real commodities would be exchanged from person to person a la the "diaspora" project (a sort of social network monetary exchange). Can this be built into the bitcoin protocol without bloat, or would it be a separate project?

3) Nefarious spooks and ner-do-wells could acquire more processing power. This was feasible, but is quickly becoming more difficult. Of course, a few 100 million dollars well spent, could net some interesting results. This is nothing to a government. They spend that in a few days or less. Maybe a different algorithm that produces a similar difficulty on varying machine types (i.e. an algo for Nvidia chips, x86 processors, and ATI cards). This way we can get as many processors involved as possible, and stave of any pinpoint attempts from our "friendly" government overlords.

Any suggestions, research, projects, or other cause and effects?

[DullJack]

I doubt the general public would approve of a budget for buying thousands and thousands of AMD video cards. I'm not so sure that would get past any budget hearing.

We already let them get away with $100,000+ expenditures for "toilet seats." They would just bundle the cost of the cards or whatever in with something else and then call it something bullshitty. That's assuming that they even use cards, with their resources, I'm sure they have something that could be made much more efficient and scaled up as big as they need.

The money will definitely be available to them one way or another.

By the time the government has to take this extreme of measures to control bitcoin, it will already be so huge that it will be uncontrollable.  For this to happen, the government would have to allocate all of it's computing powers RIGHT NOW in order to take down bitcoin, but with the growth in terrahashes that is now being seen, soon it will be impossible instead of just extremely extremely unlikely

I agree with this statement, the government would probably ignore bitcoin until it stopped being a niche, and by then it would probably be too late to do anything about it. I believe that hash rate (and difficulty by that token) will only go up from here, and at greater rates than anything we have seen thus-far.


I think that if the government decided to take over the majority today though, they wouldn't even break a sweat. They'd just call up China and be like "Hey, want us to owe you some more money?" 

Here is some math someone can do if you are as curious as me, how much money would it take to double the network's current Ghash rate using standard mining rigs. By this, I am wondering how much money it would cost you to build a 1 Ghash rig (or 2 or whatever setup is most cost efficient per Ghash) multiplied by the current hash rate. For example, if it cost the government $1000 to produce 1 Ghash then today they would need between $11,000,000 and $12,000,000 to take a majority. That's about how much money the government uses to wipe its ass after a morning shit. So if something made them want to take bitcoin down now, I think it would be very doable. Of course, by the time the government does see bitcoin as a serious "threat" and jumps on the bitcoin mining boat, they will likely be toooo late, just like most of us that are still slumming around in the newbie section.

Keep in mind that the government would more than likely have a much more efficient method of hashing. (massive FPGA arrays?)

Again, I am fairly new to bitconomics so these posts of mine are just me thinking out loud.

[Tango88]

They cannot shut a server down if they are not located in US.

[zenmetsu]

They will never be able to effectively regulate or shutdown bitcoin due to its decentralized nature.

The real question is whether or not bitcoin will grow to the point that the government gives a damn about it.

[Gabi]

I doubt the general public would approve of a budget for buying thousands and thousands of AMD video cards. I'm not so sure that would get past any budget hearing.

I'm sure the government has enough computers that they could pull a big enough hash rate to seriously cripple the system if the wanted.

i rather doubt it.  you'd need several Jaguars to even make a dent in things.

Pffft... Jaguars are supercomputer

With 15 millions $ it is possible to have more than 51% of the network hashrate.

It doesn't even require the general public to approve the budget and blablabla, 15 millions are nothing for the government (or for the banks)

[whenhowwho]

Yes the gov't could easily shut it down. Yes the US gov't can shut down any server any where at anytime. The US gov't does whatever it wants whenever it wants regardless of what the world thinks or what its people actually want.