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Comment by weavejester | Hacker News Reader

There are lots of examples of governments or large organisations taking down networks with single points of failure, but far fewer examples of taking down highly distributed networks like Bitcoin.

I don't think this fight is a foregone conclusion. I think it would be difficult to write a law that would make Bitcoin illegal, without making things like MMO currencies or SSL certificates illegal.

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One guess is they might write a law that requires U.S.-based online businesses to collect certain information about the transactions they accept that would make accepting bitcoins illegal.

This is called a 'know your customer' plan, and it's already in place and the law for all banks and money transfer businesses.

Accepting BitCoins won't be illegal if you have a know your customer plan. Of course, it won't be pseudonymous at that point, either.

Exactly. The choke point is the same as it for poker: you need the retail banking system to convert your bitcoins or your poker chips to and from something ordinary people can actually spend. Underneath every technical system is other ordinary people who need to pay their bills and mortgages and taxes - you can't not have this capability. And the banking system is highly regulated and will do whatever the govt requires it to do via the regulator.

That wouldn't necessarily make accepting bitcoins illegal, it would just make accepting bitcoins from anonymous sources illegal. I think they'd also have a hard time justifying why I can buy a product anonymously in cash (or with a pre-paid VISA), but I can't buy a product anonymously using bitcoins. Particularly since bitcoins have less anonymity than cash, because a history of all transactions is maintained.

From a practical standpoint, Bitcoin has other problems for using it in a real business -- mainly the fact that taxes are only payable in the coin of the realm.

If you are a real, legal business, do you want your entire personal and business future contingent on the ability to exchange bitcoin with dollars?

You don't have to put all your eggs in one basket. You could accept payment in dollars and bitcoins, and exchange the bitcoins for dollars the day you receive it. If the bitcoin market suddenly crashes, you'd only lose the amount you hadn't managed to exchange for dollars.

If you do that, what's the advantage of bitcoin?

Currency Diversification. The point being that at the end of each day/week/month you can cash it out for dollars/euro/yen.

That's the idea anyway. I'm not sure how practical it is!

You can send bitcoins directly to a person's account without going through an intermediary, such as Paypal or a bank. This means that it would potentially be cheaper, but more importantly it would be easier to automate, and easier to start up interesting financial web apps.

Exactly. The vendor wouldn't be paying the tithe to the credit card processor.

You're just shifting from the credit card processor to the dollar/euro/bitcoin exchange person.

I'd imagine there's more scope for competition. Setting up a new credit card takes a lot of money, whilst exchanging dollars for bitcoins is essentially free (so long as you have enough bitcoins).

That said, I don't think this is the most interesting part of bitcoins.

I can already do free transfers to anyone's bank account: it's called BACS, every UK bank account supports sending and receiving BACS transfers, the vast majority through a web interface. Takes 3 days, but who cares?

"Takes 3 days, but who cares?"

Who wouldn't care? At 3 days, you might as well just mail around cash.

You can do it faster if you're willing to pay a fee, whether that's to Paypal, or to do a CHAPS transfer. If the point is avoiding paying to move cash around, it's already perfectly do-able.

And how exactly would you exchange bitcoin for dollars? Presumably, you'd have to go through a bank, or PayPal, or a regulated brokerage house of some kind. To keep bitcoin from taking off, all the US government would have to do is pass a law or put pressure on the financial industry to not allow that exchange.

That's a valid strategy, and one the US government may even employ. However, other countries would have to agree to similar restrictions, otherwise you could trade dollars for euros, then euros for bitcoins. It also wouldn't prevent over-the-counter exchanges between individuals.

The US government would also run into opposition from groups like the EFF, and I think it would be difficult to word the law to ban bitcoins specifically, and not other similar mathematical activities (like issuing SSL certificates).

That's completely unrealistic. There is very tight cooperation between the major currency blocks when it comes to the crackdown on anonymous payments and on everything anonymous for that matter.

No there isn't. Anonymous paper money is still used in every country in the world, anonymising P2P networks like Tor and I2P have not been outlawed, you can buy pre-paid VISAs and pre-paid phones legally and anonymously and many people send routinely anonymous donations to political organisations.

you can buy pre-paid VISAs and pre-paid phones legally and anonymously

I thought legislation had been passed stating that purveyors of pre-paid debit cards and cell phones had to ask for ID and keep records so that, if the cards or phones were used in a crime, the purchaser could be traced. I do know that legislation to that effect was introduced. I'm not sure if it was ratified, but even if anonymous cards and phones are legal now, I have no confidence that they will continue to be legal for the foreseeable future.

I don't believe it was. At least, when I was in the states a few weeks back, I wasn't asked for ID when I bought a cheap pre-paid cell phone.

There is a tendency to be pessimistic about the place of anonymity in the future, but I prefer to look on the bright side. The US government doesn't win every fight it enters, and there is a long-term trend toward more freedom and openness, rather than the opposite way around.

In Australia you need ID to get a pre-paid phone or SIM. Organised crime just imports their mobile connectivity from Mexico - the roaming fees are nothing to them. http://www.theage.com.au/national/bikies-trafficking-in-data...

Some things are still possible for now. Others were banned internationally (e.g anonymous savings accounts) by exerting great pressure on countries that had these things. I think the direction is clear. My prediction is that in 10 years we will not be able to even connect to the internet without authentication.

From a practical standpoint, the Dollar has other problems for using it in a real business -- mainly the fact that it is controlled by a centralized, and potentially incompetent, bureaucracy.

If you are a real, legal business, do you want your entire personal and business future contingent on the ability to exchange dollars with goods and services?

>far fewer examples of taking down highly distributed networks like Bitcoin.

There are plenty of examples of the reverse, however. Bittorrent continues to thrive.

there is ONLY one money-printing machine in USA, it is a privately owned entity called "Federal Reserve", dont get fooled by "Federal" in the name (Federal Express is private company).

everyone else coming up with more or less sophisticated machine to print money, or exchange money, or any form of transaction that Federal Government is unable to track/monitor/accept or deny WILL get hurt very badly. It is just a matter how popular your machine is and how much traction it is getting. But rest assured, once you turn it on, you have your own chart in the FBI system.

It is not useful to argue that the Fed is private, nor is it useful to argue that it is public. It is both and neither depending on which stance will serve its interests at the time.

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