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Comment by tpatke | Hacker News Reader

The key factor to the success of any currency is liquidity. You are only willing to put money in if you can take money out. If the government of Thailand says it is illegal to transfer money in or out - that will effect liquidity in Thailand. How will this be enforced? First, banks and reputable institutions doing business in Thailand will not be allowed to trade with companies involved in bitcoin exchange. Of course, this will not completely stop currency conversions, but it will act to decrease liquidity which will act to discourage people from putting money into bitcoins – further decreasing liquidity.

This is definitely bad news for bitcoins.

[Edit] Will a down-voter kindly explain to me how this is good news for bitcoins? Maybe liquidity is not important for a currency?

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To the point of your edit, you see identical behavior on Gold investor boards in the typical sites (Motley Food, Seeking Alpha, et al). Everything is good news for gold. If "A" is good for gold, so is "!A". This money flowing in to ETF, inventory levels, chart technicals... almost anything. In the event that something is difficult to justify immediately as good news, it is the product of a malicious conspiracy (market makers, central banks).

I'm only comparing the group dynamic and the hostile reaction to any suggestion that triggers cognitive dissonance. I haven't checked the chart on Mt Gox in ages, last I saw 1 BTC was ~ 125 USD. As a disinterested observer, this Thailand development doesn't seem very important one way or the other, but it's hard to interpret as positive.

Why do you make fun of gold investors?

Given all the financial scandals and outright fraud that have been revealed over the years, you still feel that legitimate concerns of gold investors are nothing more than wild conspiracy theories?

I'm not making fun of gold investors. Why do you feel that I am? Nor did I make any statement about the place of gold in an individual's investment strategy. I'm observing a behavior in a small subset of gold investors, and comparing it to a small subset of Bitcoin enthusiasts.

For what it's worth, I see identical behavior with stock market enthusiasts as well. Good job numbers? Market goes up. Bad job numbers? Market goes up -- clearly Ben Bernanke must keep printing until employment stabilizes. "A" is good for the stock market and so is "!A." It really is a crazy time we live in. Cognitive dissonance everywhere you look.

There's nothing necessarily crazy about what you describe. The markets reaction to news that everyone knows is going to be released (that is, we know job numbers will be published at this time on that day, but not what the numbers will be) won't necessarily track the good-ness or bad-ness of the news, because the market will have moved in advance based on the best estimates of those playing that game, and they might have overshot.

I don't own any bitcoins, nor do I see myself owning any bitcoins for a long, long time, if ever.

Its bad news for bitcoin, but it is very minor bad news. Bitcoin only needs to be legal in the US or Europe for it to work world wide eventually.

Just imagine a time 30 years from now and a company wants to manufacture something in Thailand (lets say it is product as big as the iPhone was in the early 10's.) and that company would like to pay in Bitcoins. Do you think that that government of Thailand is going to keep up their ban?

Of course not, if Bitcoins get big in a few other countries, that is all that matters.

[Edit] Taiwanese replaced with Thailand. Not sure how I made that error.

Thailand != Taiwan

All Asians look the same anyway.

Is US currency legal(not legal tender, but actually legal to use) all of the place's it's used?

Of course, US currency is used because it's more stable than the local currency (which bitcoin probably isn't) and it's physical, you can't block it by blocking network traffic.

Liquidity is obviously a good thing for a currency, and on the surface this is obviously a bad thing (at least for Bitcoin users in Thailand), but it's definitely not the key factor to the success of Bitcoin. In fact, a lot of the driving force behind the Bitcoin community is counter-economics (e.g. black markets) and the desire for an alternative to government currencies. In that context, governments outlawing Bitcoin may very well be a positive thing for Bitcoin, because it could be perceived as vindication of the need for currencies which are free from governments.

Bad news probably for mainstream market adoption, but I don't agree that negative legislation necessarily removes incentives to buy bitcoins/drives the Bitcoin value down. Black market status has increased the price/value of certain goods, such as drugs.

Especially in countries with highly inflatonary currencies, or countries with strong currency controls, the black market demand for Bitcoin could be huge.

My understanding is that drugs are expensive mostly because of the risks involved in drug trafficking. I doubt you'll see the same kind of risk premiums in a bitcoin market.

When a the gov't forbids something that seems victimless it's usually for the the benefit of the few, against the general public. Thais should now have more interest in bitcoin like Americans did for gold when that was illegal to own in the US.

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