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Comment by samsonradu | Hacker News Reader

I think the point is that bitcoin is very fragile and any powerful enough state-actor can bash it to the ground. There are various ways to achieve this, from shorting to propaganda, to attacking (hacking) large exchanges or miner networks and so on. Only time will tell of course, maybe that is already priced in.

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Easier: make exchanging bitcoin for real money illegal.

You’d have to make the inverse of that transaction illegal as well. If you banned me from exchanging BTC for USD that wouldn’t stop he from buying more BTC nor using it to purchase things.

Fail to see how is Bitcoin fragile. It has been running non stop for past 8 years churning out a block every 10 minutes without fail while being under constant attack from hackers, governments, it has its own internal governance issues, hard forks, technical issues, scaling debates. And yet it is growing in liquidity and scale. I doubt state actors can do anything about it.

> I doubt state actors can do anything about it

This attitude is what I see as Bitcoin's primary risk factory. It's a culture of arrogance that reminds me of pre-crisis finance, when it was popular to say things like "the Federal Reserve chairman is more powerful than the U.S President."

He's saying it's fragile in that the US Government could ban it and the value of the coin disappears overnight.

It's very easy to ban - make it illegal to sell Bitcoin, force ISPs to block international sites that do.

Actually it is not that easy to ban.

The Bitcoin code is open source. Anyone from anywhere can download the code and run a local copy. Your coins are securely stored across computers all over the world. Your balance cannot be frozen by any authority. Maybe central exchanges that convert fiat to Bitcoin could be regulated, but mining cannot be stopped, transactions cannot be stopped. Unless governments all over the world shut down electricity and internet.

At that point question mark is on the government that does this rather than Bitcoin.

> Your coins are securely stored across computers all over the world.

Please lets not start this debate. Times and times again it has been proven that software is not secure. OpenSSL was also thought to be secure for quite some time too..

Agreed. In this case there is an implicit, very large, bug bounty that anyone can cash in. So far there has been one creation of new bitcoin bug and zero spending other people's bitcoin bugs.

That does not mean it's secure, but at this point it's looking more secure every day.

The more centralized bitcoin becomes, and it will, the more vulnerable it will be. As time goes by a few exchanges will become huge BTC storage centers. What if it’s an inside attack and someone steals the data from the servers? Is there any insurance/rollback mechanism in place?

Unless you can pay taxes in Bitcoin, people will always need to be able to convert Bitcoin to fiat.

Bitcoin itself cannot be stopped, but it's utility as a currency (or, as it is now, a speculative investment) can be.

The same thing could be/could have been said about the internet as a whole.

Sure, but the internet serves the economic purposes of most of the world. Nobody wants it to go away. Can't say the same about bitcoin however.

And that sentiment towards Bitcoin is changing every single day.

Big difference is that Bitcoin has all the right conditions for a bubble pop. If someone did a 51% attack, this would cause people to lose trust in the currency, everyone would cash out, creating a bank run, which would be a self-accelerating process that drives the price even lower. So even if the network recovered the next day, it would take a long long time to rebuild that trust.

Whereas with the internet, if someone is able to knock out critical infrastructure one day, engineers would figure out a way to fix/reroute it, get it working a few days later, and everyone would happily log back on as soon as it's working. Although maybe they would throw out their "smart" coffee machines and etc.

I disagree that everyone would cash out.

There have been crashes of bitcoin before. None "to zero" but pretty substantial, and not everyone "cashes out" right away.

Sure you're right, some people would stay invested, some people would even re-invest during the price drop (dead cat bounce).

But the previous crashes weren't caused by any real news of a significant weakness of Bitcoin, so if there was news like that, then the crash would be worse than we've seen.

The internet like several large systems people depend on were created by major institutions for major institutions and any attack on them would weaken the institution doing the attacking. Bitcoin however, was created mainly to circumvent major institutions, so they have no vested interest in protecting it unless there exists 3rd party grassroots pressure to do so.

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