Comment by mycroftiv | Hacker News Reader

Comment by mycroftiv | Hacker News Reader

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I think it is entirely possible Bitcoin will provoke the mother-of-all battles for control over communication networks and how people use them. The outlines are very clear: Bitcoin allows nearly complete escape from the current financial regulatory systems that control currency movements and taxation. Trying to prevent people from moving money from one country to another or using Bitcoins for buying drugs, weapons, whatever is impossible without a truly draconian censorship and control regime in which private citizens are more or less forbidden from using encrypted communications.

I see government control over money as basically an immovable object - I don't think so-called constitutional protections mean anything when it comes to governments doing what they feel is necessary to maintain control. Internet freedom and encryption are not as much of an irresistible force as net-romantics would like to think.

If anything can force governments into legislating backdoors into all encryption systems and creating a clearly established set of "choke points" for control of data flows, it is the possibility of Bitcoin and other crypto-currencies to render basic imperatives of the modern nation state impossible to enforce.

It is more or less infinitely depressing to me, because as much as I would like to believe that the "good guys" are going to win, I doubt it. People generally don't realize how much we are already living in a dystopian panopticon, and Bitcoin is one of the rays of light shining through the cracks in the prison walls.

What is even more depressing to me is my own cowardice. I am too scared of the US government to even try to resist in any way, no matter how trivial. I would like to participate in Bitcoin and other projects, but I don't want to end up in a federal prison for conspiracy to assist in money laundering and tax evasion, as I imagine that any participation in Bitcoin will be interpreted by government prosecutors of the near-future.

It seems like it would be a lot easier to just shut down the USD-BTC exchanges. If people can't get money in or out of the system they don't need to worry about what happens inside the system. (I'm ignoring mining, since there's a serious limit on how large that can get.)

And yet, just yesterday I met with someone and sold him bitcoins for cash. Anyone can be an exchange.

Not necessarily. If it became apparent that people could pay each other in bitcoins without being taxed, there would, eventually, be no point in have USDs at all.

>I see government control over money as basically an immovable object

Fyi, governments don't control money, the international reserve banking system does, centered on the Bank for International Settlements (BIS.org). Governments' enforcement arms are just their proxy. They'll be even less likely to tolerate an upstart competitor like bitcoin.

Awesome observation.

Another interesting tidbit. Imagine that bitcoin became the de-facto currency. Not only would the government be unable to tax, it would also be unable to control the financial systems it uses to affect markets. For example, the government can print a small amount of money for itself without causing hyper-inflation. This "inflation tax" would also be noncollectable. Further, the federal funds rate would be useless.

The government will always be able to tax its citizens. Even if all money were transferred anonymously, the government could tax you based on the value of the land you own.

You touch on one of the important reasons why fiat money maintains its value. You can always use it to pay your taxes.

This is a bit like saying in the 19th century that slavery is inevitable and that slave owners will do anything to stay in control.

Not really. You're not accounting for technological progress. The "reach" of governments (and other entities that hold the power) has expanded due to the technology. Communication was a lot slower and a lot less reliable in the 19th century. So was transport, for that matter.

Wait, doesn't that actually support what I'm saying? I recall a shooting war in which a lot of people died as part of the process by which slavery stopped being a reality in the USA. Or is that your point?

Which kind of slavery? Wage slavery is alive and well. It is the slavery of the 21st century, and continues today. Or can you quit your job without going bankrupt due to debt unlike me and millions of others like me?

Hmm, perhaps you should consider a few differences between so called wage "slavery" and chattel slavery as practiced in pre-civil war US:

1) Modern workers are not owned from birth.

2) Debt is not forced upon you against your will, debt is a choice.

3) The alternative to choosing debt is not getting whipped nor killed.

4) Bankruptcy is neither getting whipped, nor killed.

One small note:

Debt for an individual is a choice. However our monetary system mandates that some people or entities must always be in debt. If there were no debt there would be almost no money in circulation.

So while you say that debt is a choice, it is impossible for everyone to be debt-free. If everyone stopped borrowing (consumers, industry and government) in this country, we would have a complete economic breakdown.

This is like saying smoking is a choice: from the perspective of the single potential smoker, it is. From the perspective of the marketer this is unimportant as they don't need you to smoke, they just need some people to smoke.

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