What if receiving payments in bitcoins is made illegal?

[Steve]

One thing that has not been mentioned in this thread is the first amendment defense.  To spend bitcoins, you basically announce to the world that you have done so.  To restrict bitcoin is to limit free speech.

[robm]

I've thought about this some more.

There's another linked problem. Every day companies are striking contracts with employees, customers and suppliers. They promise to pay or receive an amount of money in return or with a promise to deliver a good or service.

These are documented contracts enforced in a court of law, and often very complex and in place for many years. Government has nothing to do with it. It's just a system for active agents in the economy to know where they stand, and know they have recourse if the other side breaks the agreement. Both sides benefit in other words.

Of course in very small companies (say family owned stores) more can be done for cash and on a word of mouth and trust basis. But for large and complex businesses this would never work.

So if governments move to ban the receipt of payments in bitcoins, chances are it will work. Bitcoins would become significantly less valuable, maybe  worthless. Relegated to a small niche of small transactions. The bulk of the economy would move on and ignore it in future.

Even in a hyperinflation, a return to gold backed currency is more likely than adoption of bit coins. Gold has a long history and is deeply ingrained in many cultures of the world (such as Asia and Middle East). If this was a horse race, I'd back a return to gold over bitcoins at this point.

Maybe I don't get it. But then I didn't get the "new paradigm" of the dot com bubble either. And I didn't lose money as a result.

I wish bitcoin luck because the idea is genuinely innovative and thought provoking, and will watch with interest. But I doubt it will be more than a short term fad in the real world.

[marcus_of_augustus]

bye, bye troll ... c u in another nym?

[robm]

bye, bye troll ... c u in another nym?

bye bye moabbels.

[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.

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

Because you were attacking his character by referencing a Nazi propagandist.  Disrespect for his viewpoints are fine, disrespect for the person is unacceptable behavior.

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

Notice, if you will, that it was just a warning; and you have not been censored so far.  You have a less than a dozen posts on this forum and you are already sideways with part of the existing membership.  That is not a good sign.

[Timo Y]

[...]
Maybe I don't get it. But then I didn't get the "new paradigm" of the dot com bubble either. And I didn't lose money as a result.
[...]

Bitcoin has applications for which it is uniquely suitable. There lies its potential IMO, not in competing with existing currencies and payment systems.  It will enable new business models that could not have existed without Bitcoin and that will depend on Bitcoin.  I agree that it may remain a niche currency, but I don't think it will ever disappear completely. Or a least it will be replaced by another p2p cryptocurrency.

It is very hard for us to imagine today what those business models might be, just like people could not have imagined in 1990 that Facebook is a viable business model.  Perhaps Bitcoin will even evolve into something whos prime use isn't a currency at all.  

As for the dot com bubble, the "new paradigm" did create real added value, this just took a longer time than most people expected, and the added value was grossly overestimated.

If you had invested in the right companies you would have made money.

[uniman]

Here's a better question:

What if we make governments illegal?

Excellent idea!  I can no longer kill natives, own slaves, or beat my women.  Why is this last bastion of abusive behavior (government) still tolerated? 

[mewantsbitcoins]

Here's a better question:

What if we make governments illegal?

Excellent idea!  I can no longer kill natives, own slaves, or beat my women.  Why is this last bastion of abusive behavior (government) still tolerated? 

Did you mean you can not name your child whatever you want except from the government approved list, walk in cities without being watched all the time and travel without being ass raped  at every airport?

I too often wonder..

[robm]

[...]
Maybe I don't get it. But then I didn't get the "new paradigm" of the dot com bubble either. And I didn't lose money as a result.
[...]

Bitcoin has applications for which it is uniquely suitable. There lies its potential IMO, not in competing with existing currencies and payment systems.  It will enable new business models that could not have existed without Bitcoin and that will depend on Bitcoin.  I agree that it may remain a niche currency, but I don't think it will ever disappear completely. Or a least it will be replaced by another p2p cryptocurrency.

It is very hard for us to imagine today what those business models might be, just like people could not have imagined in 1990 that Facebook is a viable business model.  Perhaps Bitcoin will even evolve into something whos prime use isn't a currency at all.  

As for the dot com bubble, the "new paradigm" did create real added value, this just took a longer time than most people expected, and the added value was grossly overestimated.

If you had invested in the right companies you would have made money.

Yes you're probably right. There might be some new business models that spring up. I just think its likely to stay in a small niche. And as for other p2p cryptocurrency, that might happen too. But people will only be able to deal with so many of these things at one time. Most people need simplicity in their lives, not dealing in 10 or 20 currencies.

Put another way, good money will drive out bad money. But  to be good, money has to be usable when exchanging goods.

As to the dot com bubble, the value added came much later in most cases. A lot of money was squandered early on. (Not to mention the rank fraud of a lot of it.)

It's not much different to physical infrastructure. Someone invests in building a bridge, they often lose money. But the people living each side of the valley benefit from being able to visit each other. For most innovation and investment to happen, the people putting the money up need to have a decent likelihood of reasonable profit. There will always be exceptions of course.

And for every Facebook there are probably thousands of failures. Buying bitcoins is like buying stock in one of those thousands of startups. You might get a Facebook, but chances are you'll get a fat zero.

[xc]

These are documented contracts enforced in a court of law, and often very complex and in place for many years. Government has nothing to do with it. It's just a system for active agents in the economy to know where they stand, and know they have recourse if the other side breaks the agreement. Both sides benefit in other words.

Of course in very small companies (say family owned stores) more can be done for cash and on a word of mouth and trust basis. But for large and complex businesses this would never work.

Actually, contract law is a perfect area for Bitcoin to expand into.  Read up on Smart Contracts (http://en.wikipedia.org/wiki/Smart_contract).  Because Bitcoins, which are subjectively valuable, can be so easily manipulated at the program level, it's only matter of time before we have easily accessible contract enforcement outside of the traditional state court system (advanced escrows, specialized arbiters, self-enforcing contracts, penal bonds....). 

These implementations may occur both at the Bitcoin scripting level or through third-party providers (e.g. ClearCoin).  Indeed, the simple act of sending/receiving Bitcoins already represents a simple, self-enforcing smart contract (a transfer of property rights in Bitcoins).  Think of how many middlemen (banks, payment processors, government regulators) and costs are cut out just through a bit of Satoshi's code.

I anticipate many businesses (large and small) will start giving strong consideration to adopting the Bitcoin ecosystem when they realize that they can conduct business more predictably and cheaply without inefficient state courts and lawyer overhead.

[error]

Wait....what? Facebook is a viable business model?!?

[marcus_of_augustus]

but chances are you'll get a fat zero.

... a finance writer huh? So you probably spend a lot of time apologising to the public punters for the monumental feck ups on Wall St. and The City and then spend the rest of the time schmoozing and kissing ass with them.

... big fat zero for vision I'm afraid.

[robm]

but chances are you'll get a fat zero.

... a finance writer huh? So you probably spend a lot of time apologising to the public punters for the monumental feck ups on Wall St. and The City and then spend the rest of the time schmoozing and kissing ass with them.

... big fat zero for vision I'm afraid.

Sorry but your prejudice has clouded your own vision here.

In my group we spend most of our time advising people how NOT to get ripped off by Wall St. That is when we're not criticising Ben Bernanke, the Federal Reserve and most governments.

Our aim to it help people to hold on to what they have. Hard money is a big theme in that. Gold is the usual reference point. Therefore bitcoin is something new in this direction, and of interest.

Hard money needs hard rules for it to work. So it's incompatible with anarchy.

The alternative is that we all go back to a barter economy and living in mud huts. But given the mass famines that would be required first, I think even I would prefer a hyperinflation as the alternative.

And of course, in that system, we wouldn't be able to engage in this light hearted internet banter that you enjoy so much.

[robm]

Actually, contract law is a perfect area for Bitcoin to expand into.  Read up on Smart Contracts (http://en.wikipedia.org/wiki/Smart_contract).  Because Bitcoins, which are subjectively valuable, can be so easily manipulated at the program level, it's only matter of time before we have easily accessible contract enforcement outside of the traditional state court system (advanced escrows, specialized arbiters, self-enforcing contracts, penal bonds....). 
 

thanks. i'll look into this.

[ribuck]

Hard money needs hard rules for it to work. So it's incompatible with anarchy.

Hard rules are compatible with anarchy when they are voluntarily accepted (because they are useful) instead of being enforced by violence. That's why Bitcoin can work.

[bittersweet]

To be honest I think it's only a matter of time. You will know that it started when you will see "PEDOPHILES USE BITCOIN CURRENCY" headlines in mainstream media. Politicians and bankers will not give away their power over money just like that. But I don't think they are able to destroy Bitcoin, just like they can't get rid of other P2P networks.

[tomcollins]

To be honest I think it's only a matter of time. You will know that it started when you will see "PEDOPHILES USE BITCOIN CURRENCY" headlines in mainstream media. Politicians and bankers will not give away their power over money just like that. But I don't think they are able to destroy Bitcoin, just like they can't get rid of other P2P networks.

They don't need to stop it, they just need to scare a lot of people from using it.

[robm]

Hard money needs hard rules for it to work. So it's incompatible with anarchy.

Hard rules are compatible with anarchy when they are voluntarily accepted (because they are useful) instead of being enforced by violence. That's why Bitcoin can work.

Well we're getting a bit off topic here (my fault), but history suggests that if you overthrow one bunch of tyrants that a new bunch pretty soon spring up. Usually the same freedom fighting revolutionaries that were supposed to deliver the lumpen masses from serfdom.

Bitcoin can work because it has rules. I just don't think it would even be allowed to work in a big way, because it threatens the whole Western democratic political system. Namely being able to buy votes with borrowed or printed money. And I don't suppose autocrats in China and elsewhere would be super keen either.

It's just looks too easy to control in other words, despite what many of you might think. Plus any large system has massive inertia. Even if bitcoin did get off the ground and into the real economy in a big way, you're probably talking about decades to get real traction. Who knows what can happen over such a long period of time.

Bitcoin is just a product like any other. It is seeking to replace the most widely used products in the world. Achieving that is going to be like inventing a new artificial food with health benefits, but then trying to get everyone in the world to stop eating everything else. Might happen. Probably won't.

But I'm still open to suggestions on how these issues can be overcome.

[stillfire]

It is seeking to replace the most widely used products in the world. Achieving that is going to be like inventing a new artificial food with health benefits, but then trying to get everyone in the world to stop eating everything else. Might happen. Probably won't.

I think that is overstating it a tad. It is sufficient for Bitcoin to have marginal utility for it to establish itself as a valid currency. It does not need to take over the world in one fell swoop, or even at all. If it becomes the major internet currency, used for micro-transactions, MMO money, pay-to-read newspapers and so on, that will be fine.

In the future when a new generation grows up with it they might start wondering why these old fashioned paper monies are so hard to use, lose their value so fast and are so bloody expensive to transact with. They will never be convinced of their utility and eventually shed today's currencies like an inherited dank smelling old coat.

All truly new innovation is resisted by the old guard, entrenched and made wealthy by the status quo. But the old guard has one fatal flaw: they die.

[robm]

It is seeking to replace the most widely used products in the world. Achieving that is going to be like inventing a new artificial food with health benefits, but then trying to get everyone in the world to stop eating everything else. Might happen. Probably won't.

I think that is overstating it a tad. It is sufficient for Bitcoin to have marginal utility for it to establish itself as a valid currency. It does not need to take over the world in one fell swoop, or even at all. If it becomes the major internet currency, used for micro-transactions, MMO money, pay-to-read newspapers and so on, that will be fine.

In the future when a new generation grows up with it they might start wondering why these old fashioned paper monies are so hard to use, lose their value so fast and are so bloody expensive to transact with. They will never be convinced of their utility and eventually shed today's currencies like an inherited dank smelling old coat.

All truly new innovation is resisted by the old guard, entrenched and made wealthy by the status quo. But the old guard has one fatal flaw: they die.

Yes you might be right about room for an internet currency. But if that was an important part of the economy then governments would get involved. Maybe a transaction tax. Maybe a ban. Maybe something else. In the end the people running those businesses have to live somewhere. Maybe we get new bitcoin tax havens. Who knows. But it still points to niche uses.

You say: "But the old guard has one fatal flaw: they die."

I say: "But the new guard has one fatal flaw: they overestimate their abilities."