Q For Bitcoin Investers
So I've been getting caught up on the theory of Bitcoin lately, and even made a moderate investment in a competing cryptocoin. My question though to those who know the space well is:
What would happen if a government were to adopt cryptocurrencies, but just go ahead with their own version. (Doesn't seem hard to invent them: looks like there are literally hundreds of variants out there.) Or maybe adopt an existing one, but hard fork the blockchain, so as to avoid the "founders" of the coin collecting the fees on all global transactions or give early adopter an advantages?
Seems something like that would actually crash the price.
What would happen if a government were to adopt cryptocurrencies, but just go ahead with their own version. (Doesn't seem hard to invent them: looks like there are literally hundreds of variants out there.) Or maybe adopt an existing one, but hard fork the blockchain, so as to avoid the "founders" of the coin collecting the fees on all global transactions or give early adopter an advantages?
Seems something like that would actually crash the price.
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27 comments
The "bug" with current online payments with tradition payment methods and traditional bank deposit accounts, is the gov't or the merchant bank can step in a confiscate your property (eg, black market sales or adult sales in the case of PayPal). Plus the percentages they all skim off each transaction.
I don't think the government would ever back one that was completely anonymous such that they would not be able to collect taxes on them. That actually factored into my decision of which coin to invest in. I'm thinking some anonymity is good for a cryptocoin, but too much will hurt it.
BTC is generally deemed to have too little privacy. Even the Bank of Canada (i.e. the government!) said so. Others many have much: Monero and DASH + derivatives.
So I'm thinking the government would prefer to adopt one with just the right amount of privacy. Which might mean creating their one (e.g. tell the NSA to come up with something) or tweaking an existing one.
So the USG says we are introducing USCryptoCoin we will put a floor under price, and we back this protocol, which researchers and the NSA have reviewed, and here are the standards. And we'll back banks accepting it but no other crypto coin. Oh yeah, and we are starting a brand new block, since we don't want original creators to control the thing forever.
It think you are also implying they might back no crypto currency. Not even one of their own and just tell existing payment system to get their shit together security wise. (But not secure from the taxman, of course. :-) )
I think the other coins would still have some black market value, but only amongst those willing to barter with illegal goods and services. (Including the illegal service of getting coins in out of this hypothetical situation.)
This is one of the few time I almost regret tormenting poor RickyBoy to the point where he put me on ignore. I would love to hear his thoughts on the matter. So I could take an opposite investment positions, of course. :-)
Bitcoin was invented incase you DON'T want 2 pizzas you can have this currency to spend as you please somewhere else.
"I don't understand bitcoin. It seems to be a medium of exchange that can be hidden from government eyes, and so might be useful for drug dealers and other criminals. But my criminal activities are pretty minimal. Why would I want to mess with bitcoin when I have US dollars? What would be the value of bitcoins if people stopped accepting them?"
- I'll give you an example of what I use Bitcoin for. There are file hosts out there where you pay $15 or so a month and can download just about anything you want. Music, porn, movies. Same thing that Kim Dotcom is in trouble for. You can't pay by credit card in most countries, so you have to pay with something else, and most file hosts don't take PAYPAL anymore, so Bitcoin comes into play. You're also paying anonymously therefore not leaving a paper trail (so to speak).
And as I said above cryptocurrencies should always have the value of some percentage of the black market economy as their floor for market cap.
If you believe it will be black market only then some altcoins are particularly well suited for that and those would be the ones to buy. Or you could play one that tries to play both sides of the fence.