[jfim]

Keep in mind that the US government has an incentive to keep the US dollar as the currency used for most of the international trade.

If Bitcoin would become a risk to that status, would the US government just give up and admit defeat or would it outlaw usage of it?

[nelsontodd]

I doubt they would just roll over yeah. If you consider the dollar as a weapon/tool for US hegemony, bitcoin functions as almost like a terrorist entity. Not clear what to do with this information

[jfim]

It's just a risk that the value of it drops to near zero if it's outlawed.

Or it could become highly regulated and be much less useful for trade due to onerous compliance requirements. For example, how do you prove that wallet X that one is sending money to isn't going to someone who's in an embargoed country?

[nelsontodd]

It's a big risk. But, to answer your second question, its a public ledger. Its significantly more conducive to surveillance than cash. Just punish people if they send money to an unverified address.

I think that's a gross possibility, and I hope no governments take this measure, but I don't think it would be difficult.

[jfim]

I don't disagree with you, I just don't personally believe that it will become a major instrument of trade due to it removing a major component of economic policy. I believe that most countries would rather have their citizens use their national currency as opposed to a foreign or electronic one, since that allows them a lot more control on inflation.

From that perspective, it seems to follow that most governments would want to regulate cryptocurrencies, and probably not in the way that Bitcoin bulls would like it to be.

I could definitely be wrong on this though. I thought in the past that the ad model of Facebook and Google would go nowhere, and look where they're at now.

[nelsontodd]

I don't really know either. Maybe you're right, but as a (maybe ridiculous) counterpoint, what benefit does it give a government to have their own currency? I think the main benefit is not having to rely on another government to keep it stable... or to avoid the subservience that follows from having to rely on acquiring said currency from another government. For most countries now practically I think this means 'not giving the US complete control over our politics and not having to buy USD from them'.

Are there any other benefits? If not, wouldn't adopting bitcoin be an easy solution to monetary policy while avoiding this issue? Or am I missing something?

[jfim]

This would be a pretty long topic to discuss, but in general monetary policy is something that governments really do want to control. If a national economy is not doing well or there is little demand for their goods or currency, the value of their currency is lower, making their exports cheaper and allowing them to participate in the global markets.

One example of having monetary policy out of a country's control is the EU, which has both strong economies (eg. Germany) and weaker ones (eg. Greece). A strong Euro works well for Germany, since they get more effective purchasing power out of their trade surplus. For Greece, a strong Euro means that their exports are probably not competitive price wise.

If these countries had their own currency, the Deutsche Mark would be a strong currency (making their exports relatively more expensive) and the Greek Drachma a weaker currency (making their exports relatively less expensive), giving them a push towards a more even trade balance. As citizens tend to transact in local currency, this also encourages Greek citizens to seek more local goods (eg. Greek tomatoes grown on Greek soil with Greek labor) as foreign goods are more expensive, hence further stimulating their economy.