[tabsa]

I'm sorry but this is silly. What you are suggesting has been already tried in prohibition of alcohol, in war on drugs and now in a more civilized way in a "war on car downloaders".

The main outcome was that black markets flourished. If people want what Bitcoin provides, they will get it in one way or another.

[sorbus]

> If people want what Bitcoin provides.

That's the key point. There is a huge demand for alcohol, for drugs, and for cheap/free content. In the first two cases, this means that there is real profit to be had in selling it, and the illegality means that prices can be hugely inflated due to risk. For free content - "car downloaders" is a really nice way to describe it - I haven't yet figured out the economic motives, but it seems to be a mixture of selling ads (for the people running the sites), sharing/giving back to the community (especially on private, invitation-only trackers), and just because of how easy it is.

Is it possible to make money or karma off of bitcoins in a similar way? Well, you can sell them. If you have bitcoins, you can make a profit of them that way - you can sell them for above value, or charge for the service as well as the coins. You can also buy them, hoping that the price increases, which ends up as selling them.

So, answer this: if bitcoins were made illegal, what monetary incentive would there be to use them? Their price certainly wouldn't go up - it would plummet as all the legitimate traders tried to get out.

[knieveltech]

Hate to burst your bubble but comparing demand for alcohol during prohibition and demand for quasi-anonymous online value transfers is what most folks would call an obvious strawman. What percentage of the population of the US do you think has even heard of bitcoin, much less understand the underlying concepts?

Everyone I know that's even aware of (much less involved with) bitcoin atm falls under the following demographic: young technophiles. A small minority of these are buying up more GPU's and giggling about the "free money" they're making.

It's a mistake to confuse speculation on the part of some early adopters with actual broad public demand. Expect popular demand for bitcoin about the time that credit cards stop working on Amazon.com.

In the mean time the IRS has every reason to stomp on this before it gets any bigger and all the excuses legislators need have been laid out on a silver platter.