This is starting to prove -- the hard way -- why regulations, certifications, and all that other stuff that feels like meaningless overhead the majority of the time has become a grudgingly accepted part of our lives. It comes back to the most difficult problem: you inevitably need to trust someone, so how do you minimize your risk in that trust? I always thought the Bitcoin trust issues would revolve around the inabi…
If a taxi company or a pizza company goes belly up, people shake their heads sadly and move to a competitor. The free market is the best arbitrator.
If a chain of banks goes belly up and people's life savings are gone, you get rioting in the streets. That's the kind of situation that let Hitler into power. For the sake of preserving civilization, governments act as the de facto underwriters of bank deposits. This free insurance is an effective subsidy, and people don't give you free money without demanding control to go with it, so it's inevitable that governments end up having a say in how the banking business is carried out.
People put their fucking life savings into Bitcoinica. If that starts happening on a large scale - if Bitcoin becomes a major currency, and people have the opportunity to put their life savings into bitcoin banks - then bitcoin banks will start being regulated, just as fiat currency banks are. As a libertarian, I'm not entirely happy about this, but we have to deal with the world as it is, not as it should be.