Imagine that I run a country named "MyAwesomeCountry". I accept Bitcoin as a currency that can be legally used to buy things and also pay taxes.

Then I say that there are some bad guys (let's name them "errorists") and say that if that known that some address is used by an errorist is will be blacklisted, so will be any future recipient from that address.

Then I build an information system to track and blacklist any addresses that received bitcoins from already blacklisted addresses. All that information is open and anyone can check any address to make sure if it's not blacklisted.

If someone is caught buying something using bitcoins from a blacklisted address s(he) will be put in jail.

So, none of the money that I don't accept can be used in MyAwesomeCountry. Then I can extend prohibitions not only to errorists but on other people (e.g. prohibit bitcoins of some organizations that I don't like). Then after some time, I can prohibit any bitcoin addresses that are not registered in my governmental databases.

So from now, I control bitcoins in my country like any other money.

  • Is it possible for a country to enforce blacklists/whitelists as described?

  • Can that be a problem for the citizens of MyAwesomeCountry?

  • If yes, what can people do to prevent such things from happening?

  • yes and yes. If you control down to the level described, it is possible to black/whitelist on known addresses, and for sure cthis can be a problem for the citizens. People can use Bitcoins to prevent these things from happening, cause it has several layers of circumventing this. Adress re-usage, conjoins (or mimblewimble), exchanges in foreign countries, localbitcoins... there is many options. I think this post is having interesting assumptions, and is highly speculative, and as such does not fit in reality. – pebwindkraft Dec 20 '17 at 15:29
  • I'm voting to close this question as off-topic because there are many assumptions making it highly speculative to predict the future. – pebwindkraft Dec 20 '17 at 15:30