Shutting down bitcoin … is simple … It doesn’t matter what the plumbing is. Here is the law that could be enacted:
“The government hereby makes it illegal to conduct transactions in bitcoin.”
This instantly eliminates the ability for bitcoin to be used in retail transactions or in banking — or for an individual to be paid wages in bitcoin. If there are severe penalties, and there would be, what retailer or bank or cafe or other business is going to accept bitcoin in a transaction? …
Making bitcoin illegal would push bitcoin into the shadows, uncensorable or not. What are you going to do with bitcoin if it is in the shadows? Being a bitcoin dealer would be an extremely high-risk business. Transaction costs would soar. Indeed because of the nature of bitcoin transactions, the risk on any given exchange being exposed would be a lifetime proposition.
It’s being discussed. Powerful people can profit from it. So it may happen:
In a discussion I had just yesterday on another topic with some Silicon Valley people, we talked for a bit about bitcoin. Our thinking went this way:
There is a massive amount of money to be made in shutting down bitcoin.
If you short it before the shutdown, you could make a lifetime-size amount of money that puts you on easy street if you are leveraged.
When the major league insiders are ready, this is what will happen.
Right now the more buying of bitcoin, the better for them. The more liquid the market, the more bitcoin can be shorted when the time is right. And the time will eventually come.
It is a rigged game in favor of the insiders and you are not one of them. There is no way that the Fed is going to want to compete with bitcoin and other cryptocurrencies when the Fed is ready to introduce a Fedcoin.
I don’t doubt the Treasury and Fed are polling right now to test and see what story the public finds as the most acceptable justification for shutting down cryptocurrencies.
Maybe. Owning gold was illegal in the US from the early 1930s until 1975, for similar reasons — banks and governments hate competition. And the US Government under Roosevelt made a killing by forcibly buying the public’s gold for $20 per ounce and then immediately devaluing the dollar to $35 dollars per ounce.
Bitcoin might now be viewed in much the same way as collectibles of rare items, such as paintings (one of which recently auctioned for over a billion dollars, I hear). Such markets take on a dynamic of their own, driven primarily by the availability of money and by momentum. The profits are real, but so are the dangers.