What if receiving payments in bitcoins is made illegal?

[robm]

Thanks very much for the first round of thoughts and ideas on this. I can see that people interested in this project range from the idealistic,  through sensible and pragmatic, through the very technically minded, and into the possibly well meaning, but incoherently ranting anarchist types (in my experience, usually the first in line for government handouts).

Anything new should be approached with a critical mind, especially if it involves handing over money you have earned and saved. I actually think it would be quite simple for a government to block payments with any new currency. The concept (and the debate) might exist in cyberspace, but we all have to actually live in the real world. That's the place where we shelter from the rain, drink coffee, have parties, listen to music or whatever. Any functioning currency has to work where we live. And we can't all live in Brazilian favelas (nor would we want to) or remote tropical islands (much as we might actually want to).

I come from the UK, which is one of many wealthy countries that is driving itself into the ground with excessive debt and money printing. The process is slow, but the end point is likely to be disaster. I emigrated to Argentina in 2008, permanently. If you want to learn about financial crises and weak money, this is the place to be. This is a cash economy, with a huge black market. One third of all employees are off the books (at least), tax dodging is the national sport, and physical paper currency is actually constantly in short supply on the streets. At one point last year the central bank had to buy in supplies from neighbouring Brazil to cover a shortfall, as the printing presses weren't whirring fast enough.

That said they are printing it pretty fast. Price inflation is 25% plus per year (when compounded, that's a doubling of prices roughly every three years). No doubt the next major financial crisis here can't be far away (last time in 2001, the currency lost about two thirds of its value against the dollar in a short time).

Argentina has many financial and social problems, but I feel lucky to live here compared with the alternative at home or in Europe and the US. (At least I have day to day freedoms due to fewer rules. Quite something for a place that was a dictatorship until mid 1980s when I'm comparing it to the supposedly liberal democracies of Europe and the US.). I've also lived and worked in Asia, mainly China, so have seen a bit of how things work over there too.

I suppose I would LIKE something like bitcoin to work, but I'm also naturally sceptical about everything new and try to be pragmatic. If you have an ideology, put it aside and think how things work in the real world. Businesses need to handle payments, pay suppliers, produce accounts and pay taxes. If their income is in bitcoins but their costs are in dollars, they need to transact between the two. This is a complex topic, but basically I think it would be easy to monitor and hard to hide. And if you live in California, you can't pop out for pizza in the Cayman Islands.

So my guess is that if anything like bitcoin was ever successful, governments would clamp down on it. This kind of concept threatens the very root of modern government: being able to finance vote buying and empire. That is likely to attract kickback. Laws, taxation, international treaties, and of course media smear campaigns all feature in the armoury (see the treatment of Julian Assange for evidence).

I remain sceptical that bitcoin can ever really get off the ground, other than in a niche way. But I'll drink a toast if it does.

Looking forward to your additional thoughts in the meantime.

[marcus_of_augustus]

Troll. (as I suspected from the first)

Someone should close this thread down, post haste.

[marcus_of_augustus]

The asking of the question is more instructive of the wider society's statist mindest surrounding financial affairs that the banksters have brain-washed everybody into. It is a ridiculous question asked by slaves to the current facist financial-political structure.

Isn't it an oxymoron to call the current financial-political structure fascist and yet state it is ridiculous question to ask whether bitcoin might be made illegal?

No, because the the slaves think they live in a free system, so why would they ask a question like this?

(I should have called it a crypto-facist financial-political, I suppose.)

[Timo Y]

This is a cash economy, with a huge black market. One third of all employees are off the books (at least), tax dodging is the national sport, and physical paper currency is actually constantly in short supply on the streets. At one point last year the central bank had to buy in supplies from neighbouring Brazil to cover a shortfall, as the printing presses weren't whirring fast enough.

If the Argentinian government can't even stop a black market running on cash, how is it going to stop a black market running on Bitcoin?

Bitcoin is easier to conceal than cash, and harder to detect.

[marcus_of_augustus]

It's just ridiculous to think of the big brave govt. thugs showing up with the machinery of the state, paid for by the tax-payers, raiding the homes of gamers living in their mom's basement, to cart away their "illegal video game rigs". Who would even think to ask such a question, govt. paid foil, statist troll, failed bankster .... I wonder?

But there you go anything is possible in a crypto-facist state, I suppose. Banning on-line video games for trading tokens.

[robm]

This is a cash economy, with a huge black market. One third of all employees are off the books (at least), tax dodging is the national sport, and physical paper currency is actually constantly in short supply on the streets. At one point last year the central bank had to buy in supplies from neighbouring Brazil to cover a shortfall, as the printing presses weren't whirring fast enough.

If the Argentinian government can't even stop a black market running on cash, how is it going to stop a black market running on Bitcoin?

Bitcoin is easier to conceal than cash, and harder to detect.

It's a fair question. But this place is so far gone, it's almost beyond redemption. The black market IS the economy to a large extent. So it would be deeply politically unpopular to clamp down too hard. And the politicians are corrupt, populist and incompetent even by global standards. I suspect the US would do a much better job of clamping down, for example, due to much more sophisticated state apparatus (despite its many flaws).

[robm]

Troll. (as I suspected from the first)

Someone should close this thread down, post haste.

Thanks Moa. This made me laugh. I've never been called a troll before.

Especially not by an aspiring Joseph Goebbels (Hitler's propaganda chief) such as yourself.

I assume that's where you're aiming, given your desire for censorship and complete disrespect for anyone that doesn't agree with your dogma.

[Shortline]

p.s.  Those of you who are filling up the thread with your personal hobby horses aren't being very helpful.  These forums are getting too swamped for every thread to get hijacked like this--try to take a little time and think through a careful response to the OP.

Quoted for truth, glad I'm not alone in this sentiment.

[stillfire]

...physical paper currency is actually constantly in short supply on the streets.

I went to Argentina a few times in the last years, and I found this particular fact rather astonishing. It was a real struggle to pay for anything because people often don't have change. So you have to be careful to break your bills in larger stores so that you later can afford to pay for the taxi home.

One more advantage of BitCoin. You will be able to pay for something in 0.05491 BTC and get exact change every time. (This is not quite the case yet as to reduce spam the client restricts transactions below 0.01 BTC.)

Businesses need to handle payments, pay suppliers, produce accounts and pay taxes. If their income is in bitcoins but their costs are in dollars, they need to transact between the two.

Indeed. I wrote up a doomsday scenario based, in part, on this idea (perhaps with a touch too much sensationalism in my tone): http://bitcointalk.org/index.php?topic=6007.0 In the scenario a government co-opts the BitCoin infrastructure by mandating their own technology at points of sale.

It will be quite interesting to see how the network adapts to the first legal and social attacks upon it. I believe the result will be very much controlled by the effectiveness of the propaganda that will go with it. BitCoin is, unfortunately, rather easy to paint in dark colours for a crafty state. Add to it that the initial supporters could be seen in the public eye as 'just a bunch of anarchists'.

The one thing that stood in BitTorrent's favour was that file copying was widespread and well liked by the people before the media industry turned the spotlight of the law against it. Maybe BitCoin too could establish a wide and well liked ecosystem before it comes into the crosshairs.

[marcus_of_augustus]

We clearly already have govt. employed cowards posting amongst us. Why don't they just come out and say that they are paid for by us to post in on-line forums? Yeah, I wonder why not.

Statist cowards protecting us from ourselves because we are too stupid to see the benevolence of their bankster masters.

Tellingly they have showed up at the same time as PayPal crapped its panties and Mt. Gox was DDOS.

I predict their next trick will be to start posting abusive and/or inflammatory material at an ever increasing rate to make the whole forum look like a an obscene war zone to scare off legitimate noobs and mainstream adopters ... seen it all before on the gold/silver forums about 4-5 years back. They are above nothing and they passed all the laws they need to do this under guise of anti-terrorism,

[FreeMoney]

If the old men write it down we'll all obey and bitcoin will go the way of alcohol and marijuana.

[robm]

We clearly already have govt. employed cowards posting amongst us. Why don't they just come out and say that they are paid for by us to post in on-line forums? Yeah, I wonder why not.

Statist cowards protecting us from ourselves because we are too stupid to see the benevolence of their bankster masters.

Tellingly they have showed up at the same time as PayPal crapped its panties and Mt. Gox was DDOS.

I predict their next trick will be to start posting abusive and/or inflammatory material at an ever increasing rate to make the whole forum look like a an obscene war zone to scare off legitimate noobs and mainstream adopters ... seen it all before on the gold/silver forums about 4-5 years back. They are above nothing and they passed all the laws they need to do this under guise of anti-terrorism,

Still making me laugh. You have no idea how far you are from the truth.

The deep irony of this is that you don't need "government employees" to "make the whole forum look like a an obscene war zone". You're kind do a great job of that already.

Or maybe this is a double bluff.

Is there something you should be telling us about who is paying you to discredit this project? Ha ha ha!

[MoonShadow]

Especially not by an aspiring Joseph Goebbels (Hitler's propaganda chief) such as yourself.

@robm

This is pushing it.  Don't cross this line.

[MoonShadow]

In an attempt to return back to the question posed...

If governments succeed to ban the use of Bitcoin within their realms, as I'm sure that some will, so what?  Has the illegality of contraband actually stopped it's trade in meatspace?  By what method would the government actually be able to stop Bitcoin's trade in netspace?

[stillfire]

If governments succeed to ban the use of Bitcoin within their realms, as I'm sure that some will, so what?  Has the illegality of contraband actually stopped it's trade in meatspace?  By what method would the government actually be able to stop Bitcoin's trade in netspace?

It is true there would be a huge problem with enforceability. But if Bitcoin is relegated to only the black market online - you can use it but don't let anyone find out - that would hamstring it. Bitcoin would never reach its full potential. I for one think it would be delightful to be able to pay for goods on Amazon or even the local grocer in Bitcoin.

And there would be a whole economy for micro transactions, impossible with conventional payment processing systems. Perhaps if it grows large enough there will be money for pro-Bitcoin lobbying.

Failing that we should all be donating a lot more to EFF.

[MoonShadow]

But if Bitcoin is relegated to only the black market online - you can use it but don't let anyone find out - that would hamstring it. Bitcoin would never reach its full potential.

The premise in the first sentence above does not lead to the conclusion in the second sentence.  Certainly Bitcoin adoption will be hampered in nations wherein the powers that be can threaten users with real violence for doing so, but this will do little to prevent adoption in locales where this is not so.

[stillfire]

But if Bitcoin is relegated to only the black market online - you can use it but don't let anyone find out - that would hamstring it. Bitcoin would never reach its full potential.

The premise in the first sentence above does not lead to the conclusion in the second sentence.  Certainly Bitcoin adoption will be hampered in nations wherein the powers that be can threaten users with real violence for doing so, but this will do little to prevent adoption in locales where this is not so.

I am not sure what you are trying to say here. All else being equal, less hampering of Bitcoin adoption means it reaches more of its potential. Even if it can survive laws, matters would be better if there were no laws against it anywhere. Resistance, local or not, limits Bitcoin's potential.

Are you saying Bitcoin has no potential at all in countries "where the powers that be can threaten real violence"? In that case I disagree. I think Bitcoin has great potential even in e.g. the western world.

[MoonShadow]

But if Bitcoin is relegated to only the black market online - you can use it but don't let anyone find out - that would hamstring it. Bitcoin would never reach its full potential.

The premise in the first sentence above does not lead to the conclusion in the second sentence.  Certainly Bitcoin adoption will be hampered in nations wherein the powers that be can threaten users with real violence for doing so, but this will do little to prevent adoption in locales where this is not so.

I am not sure what you are trying to say here. All else being equal, less hampering of Bitcoin adoption means it reaches more of its potential. Even if it can survive laws, matters would be better if there were no laws against it anywhere. Resistance, local or not, limits Bitcoin's potential.

Are you saying Bitcoin has no potential at all in countries "where the powers that be can threaten real violence"? In that case I disagree. I think Bitcoin has great potential even in e.g. the western world.

I'm saying that the adoption rate of Bitcoin in some locales does not limit it's future success in those same locales.  If Bitcoin is going to succeed, it will do so eventually regardless of how long particular governments might be able to hold back the tide.  The only way that I can forsee such intervention actually preventing Bitcoin from anything, rather than simply delaying it, is if all the world's governments were to agree to use force against Bitcoin users collectively.  I don't consider such international cooperation likely.

[asdf]

But if Bitcoin is relegated to only the black market online - you can use it but don't let anyone find out - that would hamstring it. Bitcoin would never reach its full potential.

The premise in the first sentence above does not lead to the conclusion in the second sentence.  Certainly Bitcoin adoption will be hampered in nations wherein the powers that be can threaten users with real violence for doing so, but this will do little to prevent adoption in locales where this is not so.

I am not sure what you are trying to say here. All else being equal, less hampering of Bitcoin adoption means it reaches more of its potential. Even if it can survive laws, matters would be better if there were no laws against it anywhere. Resistance, local or not, limits Bitcoin's potential.

Are you saying Bitcoin has no potential at all in countries "where the powers that be can threaten real violence"? In that case I disagree. I think Bitcoin has great potential even in e.g. the western world.

I'm saying that the adoption rate of Bitcoin in some locales does not limit it's future success in those same locales.  If Bitcoin is going to succeed, it will do so eventually regardless of how long particular governments might be able to hold back the tide.  The only way that I can forsee such intervention actually preventing Bitcoin from anything, rather than simply delaying it, is if all the world's governments were to agree to use force against Bitcoin users collectively.  I don't consider such international cooperation likely.

haha! I was just going to post this.

Unless all governments ban/regulate bitcoin, it will be seen as a success in the nations where it is allowed and it's value will be backed by their economies. Also, such nations will thrive on a sound money standard.

The rest of the world will see this and soon governments will be force to come inline and legitimize bitcoin.

Also, to be honest, I think Bitcoin is just the beginning of a paradigm shift. Technology, ideas and social structures are evolving so fast that governments will not be able to keep pace. The rules of the game are changing.

[robm]

Especially not by an aspiring Joseph Goebbels (Hitler's propaganda chief) such as yourself.

@robm

This is pushing it.  Don't cross this line.

Not sure why. It was a response to a request for censorship and a series of posts showing complete disrespect for anyone elses opinion.

It's interesting how freedom of speech so rarely gets a look in these days.