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NutAgain!
Trad climber
South Pasadena, CA
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Dec 11, 2018 - 01:16pm PT
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The problem with a currency not sanctioned by a government is that governments can declare them illegal and ultimately use military, police, cyber-force to shut them down or render them to the dark black market fringes.
Fighting for the success of bitcoin is akin to fighting against governments. Historically that is not a high probability winning position.
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Rudder
Trad climber
Costa Mesa, CA
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Dec 11, 2018 - 01:20pm PT
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Explain Bitcoin Please
Over the last year Bitcoin has been a great place to get rid of all your excess cash. ;)
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Banks
Trad climber
Santa Monica, CA
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Dec 11, 2018 - 01:32pm PT
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The problem with a currency not sanctioned by a government is that governments can declare them illegal and ultimately use military, police, cyber-force to shut them down or render them to the dark black market fringes.
This is one of the main reasons for the existence of Bitcoin. No government can seize it or shut it down. It is a benefit, not a problem.
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Reilly
Mountain climber
The Other Monrovia- CA
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Dec 11, 2018 - 01:34pm PT
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No government can seize it or shut it down.
Do you believe in the Tooth Fairy too?
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Jon Beck
Trad climber
Oceanside
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Dec 11, 2018 - 02:12pm PT
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Banks, you seem to be pushing Bitcoin kinda hard, you holding?
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Banks
Trad climber
Santa Monica, CA
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Dec 11, 2018 - 02:39pm PT
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Jon,
I've been holding for years. Just like when the media writes about climbing and we laugh and cringe at all the stuff they get wrong, Bitcoin is kind of the same. So I respond from time to time.
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Banks
Trad climber
Santa Monica, CA
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Dec 11, 2018 - 02:40pm PT
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Reilly: I don't believe in the tooth fairy. And I don't believe the government can stop Bitcoin. Any country that has tried to ban/outlaw it has just created a black market premium for it. It is supported by a global network. Just how is a government going to shut it down?
DMT: Great photo, great song. Bitcoin is in part a fight against the government and its monetary policies. And we don't want a sanctioning authority. My Bitcoin, my responsibility.
Rudder: You know you can short Bitcoin if you want.
SteveP: You almost hit Bitcoin Bingo with the tried and true complaints. Money laundering, speculation, energy usage, high fees, slow transactions.
Money laundering: Biggest money launderers are the banks and they are using good old cash. Don't see many people crying to outlaw money.
Speculation: Might as well shut down Wall Street.
Energy usage: Overblown and highly inaccurate. Most mining is done where energy is dirt cheap and in excess, like at hydro dams. More energy is spent on X-mas lights than Bitcoin mining, but again, nobody is complaining about the energy usage of X-mas lights.
High fees: Fees were high for a short time because wallets and exchanges were estimating fees incorrectly and the exchanges were not batching transactions. These issues have been fixed. I just sent some Bitcoin for less than $.01.
Slow transactions: Its a feature, it provides security to the network. Lightning network and other scaling solutions will provide instant transactions, while using good old slow Bitcoin as the settlement layer.
People tend to overestimate the effects of new technology in the short term and underestimate the long term implications. I'm betting that this is the case with Bitcoin. Only time will tell. I hope we all live long enough so that I can tell you all "I told you so". :P
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NutAgain!
Trad climber
South Pasadena, CA
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Dec 11, 2018 - 04:53pm PT
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This is one of the main reasons for the existence of Bitcoin. No government can seize it or shut it down. It is a benefit, not a problem.
Elaborating on Reilly's retort to the above response....
1. While the technology of Bitcoin does in fact bypass banks and governments for price setting, it cannot bypass the realities of our world
2. One of those realities is that Bitcoin operates on a finite network of physical and or virtual machines, each of which is ultimately tied to a physical machine in a physical location that can be searched and destroyed.
3. Governments will have a large incentive to prevent the loss of their power to regulate currencies, manage taxation, etc. It is a national security consideration to prevent stuff like this from being too successful. That justifies:
 ordering all ISPs/telcos that want to continue operating in USA to block traffic on TCP port 8333 or perform other deep packet inspection as needed to isolate and drop Bitcoin traffic.
coordinating with other countries that will order similar things within their own national boundaries for the same reason that USA govt wants it, and using sanctions, withholding support, or other diplomatic solutions to get other countries to cooperate
planting viruses, rootkits, corrupting video card hardware manufacturing, etc. to corrupt the servers operating on the bitcoin network
make a DDoS attack (distributed denial of service) against hosts that maintain the blockchain ledger.
use threats and follow through to deadly force through official and unofficial channels against individuals who run systems that support Bitcoin or other electronic cash systems that may become popular
cut off power, fuel, EMP pulses, etc. to disable datacenters that continue to harbor Bitcoin servers
In short, Bitcoin or any other e-cash system has an uphill battle to become a viable competitor to government-sanctioned currency. When people say a dollar or another country's currency is a "Fiat" currency with no underlying real value so it shouldn't be different than a Bitcoin, well that doesn't take into account the threat of physical violence that is the seat of power for every nation on Earth. We are a world ruled by a series of gangs, the most successful of which in the past formed countries, but are now formed as nested corporations to exert power beyond national borders in a virtual world.
Until Bitcoin can hang together as an institution capable of directing physical warfare (either through manipulation of the politicians of a legitimate government or simply hiring a mercenary military replete with modern weaponry) and engaging in full scale cyber and physical warfare with USA, China, Russia, etc... then it can't succeed in the long run.
It might succeed in the short run if other countries that hate USA want to just screw with us and prop it up for a while as a way of financially harming USA. Not many countries have the power to do that and survive. In any case, it will still be a criminal enterprise in USA, and have an economic impact similar to Silk Road. Not enough to derail our economy.
Now, if all the countries of the world got together without the USA and decided that Bitcoin as a global standard for currency was a good idea, then it would stand a chance. But notice how the USA spends as much on military as all the rest of the world combined? That is in part to not have to compromise on stuff like this.
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Banks
Trad climber
Santa Monica, CA
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Dec 11, 2018 - 05:58pm PT
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Excellent post Nut. I appreciate you putting together your own thoughts on the subject and looking at the big picture. I'll put together a post addressing your points specifically.
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Banks
Trad climber
Santa Monica, CA
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Dec 13, 2018 - 12:00pm PT
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Nut: I agree that Bitcoin is a threat to banks and governments, but it may be too late to do anything about it. Bitcoin is becoming more mainstream and becoming a part of the "traditional" financial system. You can buy options and futures on the CBO and Merc. NASDAQ will be offering futures in early 2019. Fidelity has been mining Bitcoin for years and offers exposure to Bitcoin for its clients. There is a decent chance of an ETF getting approval in Feb. If the gov't really wants to get rid of Bitcoin, allowing it to become a part of the financial system is a strange way to go about it.
As for actually physically shutting it down, that's a long shot at best. First you would have to make it illegal in every country. The legislative and legal battles will be a nightmare. Even if the U.S. bans it, I don't think getting the rest of the world to go along with the wishes of the U.S. is feasible. Besides some countries wanting to stick it to us, it may be in the best interest of some countries not to play along. Political pressure, economic pressure, physical force will not be enough.
Even if you get a coalition of countries who what to destroy Bitcoin, actually doing it is another matter.
First you will have to locate roughly 10,000 nodes spread across the world, many of which are private citizens using TOR and VPN, and simultaneously cut off their internet access. Not going to happen. BTW, there are also satellites orbiting the earth transmitting the blockchain. Going to have to disable those as well.
Viruses, malware. The code and transaction scripts are purposely limited. A virus on the blockchain isn't going to infect your computer. If you do manage to infect a node through other means, the rest of the network will just ignore it. The biggest threat of viruses is to Apps running on top of Bitcoin, not the protocol itself.
DDoS. Could work against a certain number of nodes, but again, you need to take down the whole network.
Power supply. You might be able to get big mining farms to shut down, but finding and targeting private citizens around the world? That is a logistical and legal nightmare.
What is the end game in all of this? Are we really going to go around the world threatening, coercing, arresting and possibly killing people for running a computer program? I think the powers that be realize that this is not a winnable strategy. There is no CEO to arrest, no physical asset to confiscate, no central database to infiltrate or destroy, no reasonable means to stop communications. Instead I think they have decided to try to control Bitcoin by having it become a part of the financial system like any other asset class. Kind of like a "keep your enemies closer" type of strategy. Anyway, it will be interesting to see how this all shakes out in the coming years.
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Reilly
Mountain climber
The Other Monrovia- CA
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Dec 13, 2018 - 01:27pm PT
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Governments will have a large incentive to prevent the loss of their power to regulate currencies
Hell, in Europe they’re actively working to abolish cash in order to shut down black markets and loss of tax revenues. Hardly anybody carries cash in Scandinavia. So if you don’t think they’re gonna crack down on Bitcoin if they deem it a threat to their tax revs then you definitely believe in the Tooth Fairy. Hell, those Sacramento libtards want to start taxing texting!
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Banks
Trad climber
Santa Monica, CA
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Dec 13, 2018 - 02:48pm PT
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Reilly, I have stated many times that I believe Bitcoin is a threat. My point is that the government can try to crack down, but it will be very difficult, if not impossible to do so. China tried to do it and all it did was create a booming for the OTC desks and P2P transfers. If a surveillance state like China can't do it, good luck to other countries.
Now, if you'd like to actually put forth some arguments on how the great crackdown could happen, like NutAgain did, we can continue the discussion.
And I'm still waiting on your Reuters ETF Intel.
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perswig
climber
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Dec 13, 2018 - 02:56pm PT
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Nut and Banks, thank you for taking your time to lay out thoughts and positions, enlightening!
Dale
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Reilly
Mountain climber
The Other Monrovia- CA
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Dec 13, 2018 - 03:54pm PT
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Nutagain covered the technical side quite well.
So if cash becomes passé then how you gonna use yer Bitcoins? The gubmint will make it illegal for anyone to give you cash or credit for them and since no reputable businesses will be able to provide you with their services or products what good will yer Bitcoins be? You ain’t gonna be able to pay yer rent, food, or taxes. It’s not enough of a threat yet for them to invest the energy/money to shut it down but they will. Oh, sure, you’ll be able to buy Venezuelan or Argentine pesos but nobody will take those either.
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Banks
Trad climber
Santa Monica, CA
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Dec 13, 2018 - 06:23pm PT
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What legal argument are you going to use to ban it? But even if it is banned, you can give me US dollars and I can send you Bitcoin from my anonymous wallet to your anonymous wallet and the govt has no clue. Enforcement is impossible. How has Prohibition worked out for any govt in history? When there is a will, there is a way. Kathryn Haun, former Federal Prosecutor who founded the governments Digital Currency Task Force has said that there is no way that the government can stop Bitcoin. I'll take her legal expertise over yours.
As for your point that Bitcoin is not a big enough threat for the govt to do anything about it, I don't buy it. Sure, let's let this thing grow into an actual threat, then we'll try to take it out. B.S. As I said earlier, the govt is providing regulatory guidance and helping it become a part of the financial system. Why would they do that if they want it gone?
Nice punt on the technical questions.
And about that Bitcoin ETF? I'm still waiting. Or you could just admit you were wrong.
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Reilly
Mountain climber
The Other Monrovia- CA
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Dec 13, 2018 - 06:31pm PT
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DOOD! I’m not justifying it! Slavery was legal at one time, too. I’m just telling you the way it is. I quit trying to fight the gubmint a long time ago - waay too much pain!
Who the phuk cares about a Bitcoin ETF? Might as well have an ETF about Cosa Nostra futures. All cryptos’ market cap is now well below .002% of extant currencies. Yawn. If you have more than a few percent of yer net worth in that crap then you have a gambling problem.
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Reilly
Mountain climber
The Other Monrovia- CA
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Dec 13, 2018 - 06:41pm PT
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I type slow - time is munny.
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Banks
Trad climber
Santa Monica, CA
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Dec 13, 2018 - 07:20pm PT
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Who cares about an Bitcoin ETF? You're the one who made the claim that the SEC denied it and that Bitcoin was toast. I corrected you about the ETF and you doubled down that I didn't know sh#t and that Reuters and Kiplinger knew better. I asked for proof and you ignored it like you often do when people call you out. And now you want to deflect and say it's no big deal anyway.
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healyje
Trad climber
Portland, Oregon
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Dec 14, 2018 - 10:57am PT
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The main problem with bitcoin as a technology: 300kWh of electricity per bitcoin transaction.
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