[fizbin]

Why on earth would they do that? Making bitcoin illegal would be the biggest action the US Government could take to get bitcoin to flourish.

Right now, bitcoin is like a country with a minuscule GDP ( * ) and absolutely no currency controls (and no possibility of such, ever). As many small countries have learned the hard way, the worst thing for your economy's and currency's stability is US and Euro-based foreign currency traders deciding that your currency is a "hot" one to trade in.

When history looks back on why bitcoin failed, I suspect a big part of it will be the SEC's decision to allow large Wall Street firms to speculate in BTC as much as they wanted to.

Now, a robustly anonymous exchange network with value pegged to something external - say, a cryptocurrency backed by EUR, USD, or actual grams of gold - that would be something different. That would likely be made illegal, either explicitly or by having nearly every transaction run the risk of a federal money laundering charge.

( * ) The GDP of bitcoin-land would be the sum total of all goods and services bought and sold with bitcoins in the course of a year.

[copsarebastards]

> Now, a robustly anonymous exchange network with value pegged to something external - say, a cryptocurrency backed by EUR, USD, or actual grams of gold - that would be something different.

This statement demonstrates that you have no idea how cryptocurrency works. As such everything else you say on the subject is pretty suspect.

Also, complaining about speculation-caused instability and then claiming that pegging the value of Bitcoin to gold would solve it is hilarious. You do realize that people speculate with gold, right?

And finally, cryptocurrency isn't currency. Making assertions by analogy is at best an educated guess.

[fizbin]

Yes, it is hilarious that even compared to gold, bitcoin manages to look unstable.

[copsarebastards]

That would be a very nice cheap shot if it had responded in any way to my criticism.

You were describing an idea for minimizing the role of speculation on the value of cryptocurrency, and your proposal was to peg the value of cryptocurrency to something which is valued largely on speculation. If you wanted to say that tying the value of cryptocurrency to gold would stabilize it, then you should have said that instead of saying the stupid thing you actually said.

[hellbanner]

How do you define currency?

[copsarebastards]

That's a hard question that misses the point.

If you're comparing cryptocurrencies and currencies issued by nations you're comparing apples to oranges. You can't make realistic assertions about bitcoins based on currency--they're just too different.

[hellbanner]

You're saying that cryptocurrencies aren't issued by nations and thus are different.

But most nations use electronic currency with digital ledgers and new currency is generated whenever a certain cryptographic function is made - namely, a messaged signed with the key of the central bank.

[copsarebastards]

This really isn't that difficult to grasp.

Can you show me any graph of the value of a nationally-issued currency that behaves like Bitcoin's? The most stable currencies show <10% volatility, while Bitcoin shows volatility of >100% over a given year. The most volatile currencies are almost entirely inflationary, while Bitcoin can be deflationary a great deal of the time (even counting the drop from $1000+/coin, I'd be still up more than 1000% from when I originally bought Bitcoins). Not a single government-issued currency in the world behaves like Bitcoin.

If you want to talk about the technical implementation details, fine, there are some vague similarities, but those are not by any means the defining characteristics of a currency. Currencies predate computers, so computer implementation arguments about what a currency is are pretty obviously bunk.

[hellbanner]

Ok, that's a good argument for their differences (volatility).

[maxerickson]

Most of the usage of bitcoin has been by people obtaining it on the commercial dollar exchanges.

I don't buy the idea that it would flourish without them.