After watching the Channel 4 news report on the "underground web" I was very interested by Bitcoin and how it functions. Here is a copy of the report for all interested:http://www.youtube.com/watch?v=lJ4w-hLz9pw&feature=player_embedded#!
The report made a spectacular misrepresentation of Bitcoin associating its use with criminals, drug dealers, terrorists and sex perverts. The anonymous nature of Bitcoin was also attacked.
The irony we are witnessing here is unbelievable. I could take the ferry to Guernsy tomorrow and anonymously buy a £38'000 gold bar (VAT free) and then ask somebody to store it for me in a secret vault under a front company owned by an unknown man registered as a director of a low tax IBC in Belize (who is actually me). People may laugh but this is true.
What needs to be asked is: Why is the Government so afraid of Bitcoin?
What Bitcoin allows is anonymous transactions. Governments have always been interested in transactions because they can tax them and maintain their burdensome bureaucratic systems above us all. If Government loses its ability to tax it loses its ability to rule - except in a few situations like the Middle East where oil revenues replace taxation. If Bitcoin were to seriously to catch on the Government would take all possible measures to either ban or destroy Bitcoin unless it could find a way to effectively tax our Bitcoins. The real problem is that in order to tax Bitcoins they have to accept that Bitcoin is a currency - and in doing so they shot themselves in the foot by destabilising their own currency.