I don't think it's hard to imagine a near future in which the US Government outlaws the use of bitcoin within its borders. In fact I'd almost guarantee that outcome. Bitcoin is far too threatening to the establishment (from the likes of Visa and Paypal to the Treasury and Fed due to the monetary aspects). If they owned it or could control it, that might be a different story.
Indeed, I'll pin a time table on it. At the current growth rate, within 24 months the first calls to outlaw bitcoin will echo from some Senator or House member's office in DC. It'll lead to blanket legislation targeting bitcoin and any similar services that could exist in the future.
Agreed that it'll be discussed, but that's a hell of a precedent: outlawing legal transactions between private citizens in any specific currency.
Given that Citizens United held that money is speech, it seems there would be an obvious first amendment challenge to such a law. Not that I'd expect equal legal treatment for corporate super-PACs and a bunch of scruffy hackers.
Bitcoin is doing very well. MtGox has ~300K USD being exchanged every day - that's at least that much worth of transactions in BTC (might be more depending on the rate bitcoins are recirculated). There are a LOT of different things one can buy with it. There's a real, boring, everyday economy going on. The value has doubled in the past year - there was a 40% drop in Aug12, but it recovered a third of that the very next day and since then has steadily grown back to that high. It's not bullion or anything, but neither is it crazy: in fact it's been a bit boring, and that's a very good thing in a currency.
Smartphones are slowly taking over the world, as once they're as common as featurephones are now - say 5 years tops? - bitcoin becomes very useful in economies without proper banking systems, which is to say a whole lot of them!
Even if the US manages to outlaw it, it's hard to see how they can stop it.
> within 24 months the first calls to outlaw bitcoin will echo from some Senator or House member's office in DC. It'll lead to blanket legislation targeting bitcoin and any similar services that could exist in the future.
To be clear, you're predicting legislation that actually passes, rather than just being thrown around? Suppose that calls to outlaw bitcoin come in the next 24 months, but then it doesn't get put into a bill, or it gets put into one or more bills that don't get passed - how long would it be before you'd say this prediction was wrong?
As all transactions are public, what would stop a government creating a blacklist of bitcoin transactions?
Permanently banning legitimate businesses and bitcoin exchanges/banks from accepting coins from 'tainted' wallets that have received these transactions (as well as parent and grandparent wallets).
I accept that there are use cases when this isn't a problem, but being able to transfer wealth from one currency to another is a feature that a lot of successful currencies have.
Creating a sub network of approved bitcoins who's ownership/lineage could be verified. Perhaps by forcing companies to register their wallet addresses and the details of anyone buying through their bank using a credit card (this is assuming that the company doesn't want to break the law). A 3rd party (government) signed hash could be required for all transaction to prove legality.
Deep packet inspection could be used to locate people who send bitcoin transactions (by default transactions are far from anonymous).
Offline seizure could be used to prove large wallets illegality (e.g. if they tracked down silk road owners). There are plenty of algorithms that can infer people you might know based on your FB friends friends, I'm sure they can be easily applied to transactions.
No. It turns out the EU delegates were more worried about their own governments getting Wikileaked than they were about "payment neutrality," so the proposals were put on the backburner.
People don't seem to understand that it's very easy to kill bitcoin, the same way they killed online gambling in the U.S.: make it illegal to transfer money to bitcoin exchanges or to financial institutions known to violate these regulations. This would kill all the legitimate exchanges and essentially prevent legitimate users from using bitcoin. This solution also has the advantage of being jurisdiction agnostic; the rules would apply only to US banks (or if such laws are issued by the EU, to EU banks) or to other financial institutions operating in the U.S. or with U.S. customers. It's also (relatively) trivial to implement such a blacklist--financial institutions can act on a dime if jail time is at stake.
"People don't seem to understand that it's very easy to kill bitcoin, the same way they killed online gambling in the U.S."
No, online gambling was hardly "killed" in the US: the illegal annual market is estimated to be $4-6 billion [1]! Similarly, Bitcoin would not be "killed" by declaring it illegal, it would most likely continue to prosper like online gambling.
"This would kill all the legitimate exchanges and essentially prevent legitimate users from using bitcoin"
I don't think so. There are many other ways to acquire bitcoins: you can sell goods/services in exchange of coins, you can mine, you can buy them from a friend in cash, etc.
> People don't seem to understand that it's very easy to kill bitcoin, the same way they killed online gambling in the U.S.: make it illegal to transfer money to bitcoin exchanges or to financial institutions known to violate these regulations.
What happens when people don't need to "buy" money with their bitcoins and just use it for goods?
Is it really so easy to outlaw an arbitrary product? Gambling has a history of regulation as a vice. But bitcoin? What about suddenly outlawing trading cards? It doesn't seem that simple.
Unfortunately, Bitcoins are not arbitrary products, they are currency (or at the very least a currency analogue), and governments have plenty of history regulating currency. There are also potential regulations/taxes/inspections of every single arbitrary good entering the country.
Hemp itself isn't outlawed, and the drug law again goes into 'vice'. And alcohol isn't an example of a law at all. Don't even joke about a bitcoin constitutional amendment.
CoinBase doesn't mention it on their site, but in addition to the 1%, you are also paying the bid/offer spread. So if a bitcoin is worth 13.5 US dollars, you will pay 13.6 at CoinBase and only get 13.4 when you change back into dollars.
BitMe.com lets you deposit cash at any Chase branch for free, and you can take money out via ACH for 25 cents.
All of the ways you suggest are fine for small amounts, but if you are trying to move thousands of dollars into BTC, percentage-based fees matter.
I was under the impression that the largest barrier to bitcoins is the inability to get them cheaply. Your link shows it's possible and has gotten better, but is still not as quick as a service like PayPal.
I think it'll get there however, with larger adoption.
There's a bunch more out there (and growing), that's just a starter list.
There's also a whole bunch of gambling sites (surprise) which will take BTC now.
I think Bitcoin will take over all online gambling sites, then all Usenet sites, it will become the go-to currency for all virtual good buying/selling, and now all private torrent trackers, all they need is someone like Wikipedia or Reddit to start accepting BTC and it's game over, I think.
If you used PayPal to accept donations for a controversial / illegal service such as a private torrent tracker you're foolish. It was only a matter of time before PayPal shut down these accounts.
For that matter, anyone who trusts PayPal is foolish. Keeping money in a PP account is a great way to lose it.
Indeed, I'll pin a time table on it. At the current growth rate, within 24 months the first calls to outlaw bitcoin will echo from some Senator or House member's office in DC. It'll lead to blanket legislation targeting bitcoin and any similar services that could exist in the future.