[anonporridge]

There's game theory at play here that transcends the legal system.

Yes, the US and the EU could deem these cryptocurrencies to be illegal. However, as we saw in China, all that accomplishes is squeezing it out of your borders, or squeezing it to the black market. Making it illegal would also be an insanely strong signal to the entire world that this thing actually is uncontrollable by our current governments, and that they're scared of it.

Knowing they can never actively kill it, just drive it elsewhere, these societies have to take a gamble. Either assume it's eventually going to wither and die after they ban it, thereby protecting their citizens from wasting time and money on the system, or assume it's going continue to grow into being the foundation of a new global monetary system that's going to automate and consume everything that's existed before, and severely miss out on being at the vanguard of that industry.

[Macha]

A currency that is not usable in China _or_ the West is inherently less valuable. Most of the bitcoin users are speculators, not people enamored by its value as a currency, and if they need to go to Lebanon to withdraw their gains in a fiat currency, then that is a serious negative.

[__MatrixMan__]

We don't consider dollars less valuable if they're paid via American Express, even though it's less accepted than Visa.

As long as there's a critical mass of users somewhere, the "who accepts what" problem reduces to a software problem that most people will ignore.

[Macha]

No, but in this analogy, bitcoin is american express, not USD. American Express cards are definitely considered less valuable to potential customers here because they're only accepted in ~70% of stores. It's been a bone of contention at my current employer as our corporate cards are American express but they consequently can't be used semi-frequently

[__MatrixMan__]

I'm not saying that the government can't ruin your day if you're trying to buy things with bitcoin and they ban it in your country. I just don't think that doing so will have much effect on its perceived value, globally speaking.

Consider BTC-backed debit cards, which give the illusion of paying in bitcoin where only fiat is accepted by converting the tokens at transaction-time. For a government to prevent things like that will require that government's citizens to bear costs that other citizens don't:

- pay the regulators to keep crypto disconnected from fiat

- pay the payments companies to hire people to comply with the regulators

- tolerate the necessary censorship and subsequent unrest when it is abused

This kind of nonproductive spending will hash out as a drag on that government's currency. It wouldn't be crazy for its citizens to start stocking up on crypto (perhaps illegally) as a hedge against local fiat-collapse. Surely a downward spiral for the local crypto user experience, but a problem for BTC as a whole? I don't think so.

[anonporridge]

This is not the right way to look at it though.

Bitcoin is not an alternative payment system. People keep getting confused on this point, partly because of how bitcoin was marketed in the early days (there obviously is no marketing team, just passionate people telling their stories about what they thought it was).

Bitcoin is the bedrock of an alternative monetary system. Visas and AmExes will be built on top of it, just like they are built on top of dollars.

And the analogy is not Visa competing with AmEx. It's the dollar competing with the Renminbi or Euro.

[__MatrixMan__]

If only it were in fact an alternative. If only you could look at a BTC-rich person and conclude from their wallet balance that they've made meaningful contributions to society and are therefore deserving of whatever they're trying to pay you for in BTC. That would be cool.

But that's no more likely to be true than for a USD-rich person. Whatever ill-gotten USD gains have occurred in the past are easily transferrable to BTC, which means that its really just an alternative portal into the same monetary system, or perhaps the next evolution thereof. The only difference is that this time it doesn't have anybody behind the monetary-policy steering wheel.

[webinvest]

That’s entirely too pessimistic to assume most rich people gained their riches through ill-gotten means.

[wruza]

As long as there's a critical mass of users somewhere

All that mass lives in EU, US and China, and nowhere else, that’s where the argument breaks down. You can buy a nice rc toy with bitcoin, but some day you may need a place to live in and they will ask you where you got the money from. And you’ll say, ah, that’s from that illegal btc exchange.

[__MatrixMan__]

Do you think that there will be some kind of fiscal big bang in the future where all legitimate money stops being fungible? A point after which holding a dollar means holding something that can be traced back to that moment and shown to be held by one of the good guys? Because that's what it would take, and I just don't think the governments can pull it off. To say that one group of people's money/saleable property matters and the other group's doesn't--it smells too much like the creation of an aristocracy to get the masses to put up with it.

As long as you're willing to pay taxes on it as income when you bring it back into whatever system banned it, or whatever system replaced that one, you're going to be able to do it.

[snarf21]

Serious question: Can't a government block it at the ISP level? They could also make out of country VPN illegal. How would BTC work in practicality under those conditions?

[ulzeraj]

Then we go to spaaaaace https://blockstream.com/satellite/

Semi-serious jokes aside (the block stream satellite can receive blocks but not broadcast), the protocol can operate under Tor in which the bitcoin core daemon is very well integrated. If worst come to happen, sneaker net is somewhat popular (https://opendime.com) and people have transacted using radio waves as a proof of concept (https://satoshi.radio.br/wp/).

[Hjfrf]

Peer to peer on-chain transactions seem unkillable at this point.

Surely governments would target exchanges instead?

Without the dollars coming from retail investors, the value proposition for speculators disappears.

You could still trade bitcoin (slowly) at that point, but converting to fiat would be difficult.

[anonporridge]

The question for me, is if I can no longer legally sell my bitcoin for dollars, then that implies that bitcoin can't be legally valued.

Does that mean I can then exchange it directly with others without incurring a capital gains tax event?

Point is, shutting down legal exchanges won't happen in the US. Since you can't kill the underlying system or stop people from using it, you only make it impossible to tax.

[anonporridge]

It's just information.

You could broadcast it on any communications medium. You could theoretically run it over a global ham radio mesh network.

Lots of the network is already running on Tor, so you'd also have to shut that down.

You could embed the information in the pixels of cat pictures and broadcast it via instagram posts.

Unless there exists a global, horrifically authoritarian constriction on the information we are allowed to share, it's not going to happen.

[aftbit]

That becomes a cat-and-mouse game. See the Great Firewall of China.