The U.S. Government Can Nationalize the Bitcoin Network at Any Time
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Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#2So can China do this as well but instead just kill it off.
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#3This seems highly inefficient - why give money to random people (many of them non-US citizens) when you don’t have to? Here is a much cheaper plan which grants US a lot of control over bitcoins:
- Some US government agency publishes “bad bitcoin address” list - this is initially a list of addresses of clearly evil people, like ransomware attackers.
- The new law is passed, requiring all US-based bitcoin firms to refuse any transactions that derive, in whole or in part, from “bad bitcoin” list. And KYC laws require passing identities of people who use “bad bitcoins” to FBI. All exchanges have to follow that rule or be fined.
- This will kill things like mixers (who wants a part of “bad bitcoin”), anonymous exchanges (if you receive money from stranger and it was “bad bitcoin”, FBI will visit you if it ever touches a legal exchange. Not a very pleasant situation).
- This will be US only, but it will propagate to other countries. Let’s say you are in Russia, and you are accepting bitcoins. At some moment in the future, you may want to buy a new iPhone using all those coins. But if they are on “bad bitcoin” list, you won’t be able to do so! So it makes a fill economic sense to refuse bad bitcoins, or maybe accept them at a heavy discount.
- Big players, such as investment funds or major payment processors, are almost unaffected. After all, only 0.001% of bitcoins are bad, and losing a few potential customers due to regulations is common in financial industry.
- Eventually everyone gets used to “bad bitcoin” system, and the US starts putting more addresses in it. “Terrorist activities”, “embargoed countries” and so on.
And that’s how US can get a fair amount of control over bitcoins, and without having to buy entire thing out!
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#4This seems highly inefficient - why give money to random people (many of them non-US citizens) when you don’t have to? Here is a much cheaper plan which grants US a lot of control over bitcoins: - Some US government agency publishes “bad bitcoin address” list - this is initially a list of addresses of clearly evil people, like ransomware attackers. - The new law is passed, requiring all US-based bitcoin firms to refu…
Simple:
1. Destroying bitcoin as a free market network would put the final nail in the coffin of crypto as an alternative to fiat.
2. They would have no obligation to buy bitcoin from anyone they don't like.
3. They can funnel a lot of wealth to the elites who own the lion's share of the bitcoin.
4. They're just printing the money. The cost to the government is zero. In fact, a 51% attack is probably cheaper than the bureaucracy required for a complex legislative effort and worldwide enforcement. Not that cheaper has any sensible meaning when you have a money printer in your basement, LOL.
5. This involves no messy legislation, no courts, at most a special purpose vehicle or two. The Fed can take it from there with their own "private" resources.
6. The bitcoin network has no legal protection against a 51% attack like this, there is no legal obligation for a miner to process any particular transaction they don't like.
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#5This seems highly inefficient - why give money to random people (many of them non-US citizens) when you don’t have to? Here is a much cheaper plan which grants US a lot of control over bitcoins: - Some US government agency publishes “bad bitcoin address” list - this is initially a list of addresses of clearly evil people, like ransomware attackers. - The new law is passed, requiring all US-based bitcoin firms to refu…
Simple: 1. Destroying bitcoin as a free market network would put the final nail in the coffin of crypto as an alternative to fiat. 2. They would have no obligation to buy bitcoin from anyone they don't like. 3. They can funnel a lot of wealth to the elites who own the lion's share of the bitcoin. 4. They're just printing the money. The cost to the government is zero. In fact, a 51% attack is probably cheaper than the…
It's not true that the theoretical 51% attack is cheap. It either requires buying lots of ASICs or paying existing miners to collude with the attacker.
At best, a 51% attack allows double spending a few transactions while destroying the miner’s business.
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#6Absolutely not. How can the US nationalize a global, decentralized network?
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#7Absolutely not. How can the US nationalize a global, decentralized network?
I am not an expert in this area and have never used virtual currency. That said, I vaguely recall governments already making it hard for some currencies to be converted to regular fiat currency. I don't know the implementation details, but I assume that if you can block conversion or transfer, then the money can only be used within the virtual currencies own network. If enough governments or central banks from enough countries align with this, they can make the currency harder to use internationally or at least limit its functionality. I don't have any references for this, just passing vague memories of news reports being submitted here.
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#8Absolutely not. How can the US nationalize a global, decentralized network?
Did you RTFA? It's like 20 lines of text, that's exactly what it explains. Any entity with the ability to print money can simply buy a dominating share of the hash power and force all the honest miners to either sell out to them or go out of business.
the network is only global and decentralized to the extent that the miners operate with a profit motive. The government that prints the world's reserve currency can afford to print more money than honest miners can afford to lose. Game over.
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#9Earlier quoted context omitted.
Simple: 1. Destroying bitcoin as a free market network would put the final nail in the coffin of crypto as an alternative to fiat. 2. They would have no obligation to buy bitcoin from anyone they don't like. 3. They can funnel a lot of wealth to the elites who own the lion's share of the bitcoin. 4. They're just printing the money. The cost to the government is zero. In fact, a 51% attack is probably cheaper than the…
It's not true that the theoretical 51% attack is cheap. It either requires buying lots of ASICs or paying existing miners to collude with the attacker. At best, a 51% attack allows double spending a few transactions while destroying the miner’s business.
A 51% attack is not just cheap, it's FREE when you have a money printer in your basement. This is the point that is hard for people to wrap their heads around. I find this ironic given the philosophical revolutionary hard money stance many bitcoiners have, yet they can't really comprehend that the Fed can buy literally anything it wants, including hash power.
To put it another way, consider that the Fed prints money to rig the entire treasury bond market and fix interest rates. Buying up 80% of the mining companies and ASICs in the world is not even a rounding error in comparison.
A 51% is not only useful for double spending, it can also be used for un-spending. The Fed would use their hash power advantage to roll back transactions they don't like (this would be any transaction that didn't originate in their own crypto exchange). This puts all the non-Fed miners out of business.
The icing on the cake is that the Fed can use its 51% attack to force Americans owning BTC to sell to them (as they won't be able to sell a bitcoin to anyone else at any price). This ensures that all that money they print goes right back into the US economy, it's just effectively an asset swap like quantitative easing. They can easily sell this to congress for its economic stimulus value.
Re: The U.S. Government Can Nationalize the Bitcoin Network at Any Time
#10Earlier quoted context omitted.
Simple: 1. Destroying bitcoin as a free market network would put the final nail in the coffin of crypto as an alternative to fiat. 2. They would have no obligation to buy bitcoin from anyone they don't like. 3. They can funnel a lot of wealth to the elites who own the lion's share of the bitcoin. 4. They're just printing the money. The cost to the government is zero. In fact, a 51% attack is probably cheaper than the…
It's not true that the theoretical 51% attack is cheap. It either requires buying lots of ASICs or paying existing miners to collude with the attacker. At best, a 51% attack allows double spending a few transactions while destroying the miner’s business.
Miners would not be "colluding", they would be given the choice to sell their business to the Fed and walk away with a nice bundle of money printer fiat, or try to keep mining at a loss until the Fed runs out of money. The Fed cannot run out of money because they just print it out of thin air. Any rational miner would sell their hash power to the Fed. Irrational miners will simply run out of capital and go bankrupt, and the Fed would then buy up their assets and have their hash power anyway.