44

Honestly, I think the best way for the government to shut down Bitcoin would be as a secret project. Simply construct a VLSI ASIC miner built using 40nm/1Gtransistor technology and build 100,000 of them. Effectively make them appear distributed around the world using VPNs, the bandwidth is low. Then execute frequent 51% attacks on the Bitcoin chain to "...


24

I think the best way of analyzing your question would be to break the destruction of the Bitcoin into categories. There is the notion of a hard destruction meaning an attempt is made to physically compromise the Bitcoin network either by a 51% attack or international legislation. And there is the notion of a soft destruction, where attempts are made to De-...


19

TL;DR: In the first instance, my belief is that a government would have to create their own brand of Bitcoin (i.e. a new version of the blockchain) and use that to trade against other currencies. This is a useful move because the government retains control over their currency (they set the mining rules) and they don't suffer a wealth drain in ...


10

Property seized is held until a conviction, then sold at auction. If there is no conviction, property may or may not be returned to the rightful owner.


10

As I suggested in my Bitcoin master thesis, a 51% attack would cost in a bulk part of about 7 million dollars to execute. The figure will change depending on the technology used, the current difficulty and so forth. This option would make Bitcoin or any other Bitcoin-like currency useless. However, if the USA goverment was to crack down on Bitcoin as a ...


10

My predictions are they cannot close it down, but they can undermine confidence by: accepting anti-Bitcoin law, closing exchanges, closing Bitcoin businesses (according to law), infiltrating Bitcoin client developers, attacking the network (this is very extreme, low probability of happening). By publicly attacking Bitcoin, they would feel the heat from ...


9

It seems to me that this question can be answered by substituting Bitcoin for similar technology and re-posing the question. For example: "How easily could the U.S. Government shut down bittorrent" is quite similar and has already been answered. The U.S. Government has TRIED to shut down bittorrent and its associated sites a great many times. The Government ...


9

The bitcoins will be sold, but they haven't said precisely how that will happen. Since there is no bitcoin exchange that is properly legally licensed in the US, they will likely auction them off directly, like seized property. The bitcoins, if you're interested, are sitting in two very large wallets: one with ~144K bitcoins (~US$117.6M right now) and ...


9

Technically, yes it's possible to do this. Practically, doing this would probably break everyone's trust in Bitcoin. One of Bitcoin's principle guarantees is that nobody can confiscate anyone else's bitcoins through the Bitcoin protocol. This protects all of us, but it also means that we're each responsible for keeping our private keys secure. If we fail ...


8

What prevents Bitcoins for being used by criminals to avoid taxation? nothing. thats the price of anonymity: it can be used for good and for bad. In a Bitcoin world, how can a state tax its citizens when it's impossible to check their transactions? in a hypothetical purely bitcoin world, the state would have to find different ways of funding ...


7

The scenario you name would be great for cryptocurrencies as it would make them mainstream. As soon as people got sick of govt intervention with Bitcoin in such a scenario, it would probably be relatively easy to get enormous numbers of people to switch over to a very similar (but independent) Altcoin. The nature of the cryptocurrency technology is such ...


7

In the ECB's view, (Bitcoin) can be used by business (criminals), customers (fraudsters) and savers (money launderers) to perform legal (illegal) activities, but lets ignore it until volume reaches a level where comparison with sovereign currencies reflects negatively on our reputation. The public will then expect us to regulate such digital (rogue) systems ...


6

A nation State would never adopt Bitcoin willingly because the government would lose control over the ability to inflate the money supply. Inflation is nothing more than a tax. No government will ever willingly give up its primary means of stealing from the public. The inflation tax is the most insidious and the easiest for government to get away with. ...


5

It's near certain that other Bitcoin-like currencies will continue to be introduced from time to time. Some of them will likely gain some traction. Over time, more and more deficiencies of Bitcoin will become apparent and newly-designed competitors will be able to fix them. While Bitcoin can certainly make some changes, it will always have a trade-off ...


5

According to this New York Times article of October 3, 2013: Investigators believe Mr. Ulbricht collected commissions of more than 600,000 bitcoins, the equivalent of $80 million, which they are trying to gain access to. So far, the authorities have seized 26,000 bitcoins, worth about $3.6 million, from escrow accounts into which Silk Road buyers placed ...


5

Same as the ban on drugs: People would continue to use them, they'll just do it in secret. The value will rise. The government will spend lots of your taxes to try to fight it and fail.


4

As is, the US has a voluntary income tax. You fill out forms, determine how much you owe, and pay it. If the government suspects that you're wrong, you get audited. So with bitcoins, it would be the same. You would determine your income and pay Uncle Sam his due. But you have to pay in USD, not BTC. Cash transactions and bartering income already have ...


4

Would they need to control 51% of mining power to make it impossible to send funds to such an organization If you have less than half of the mining power: You control what transactions go into blocks you mine. You can definitely slow down payments to WikiLeaks2. However, you can't prevent payments from going out forever. Other miners will look at the ...


4

No, once they are mined they are around forever. If someone was able to delete the wallet file (and any backups) they could essentially make the coins lost though, essentially making it impossible for anyone to ever spend them. A transaction fee could possibly be thought of as re-mining the coins since the miners will get payment of those coins again once ...


4

As we've answered earlier today the description of what happens when 90% of the hashpower is lost is approximately accurate, although somewhat exaggerated: "A 90% loss will create 2 hour block intervals and take a year to resolve." Actually, it would be 100 minute blocks and would take less than half a year even assuming that no new hashrate were added ...


4

A party can send a hexadecimal string to another party and nobody in the world can prove bitcoin or any form of money was sent. Governments can ban bitcoin usage but the bitcoin protocol is indistinguishable and can be implemented using plain speech, so it would be a matter of banning freedom of speech.


3

With unlimited money, you could destroy almost anything. I don't really see why it matters. If someone with unlimited money spends a few billion dollars to destroy Bitcoin, we'll just create Bitcoin2 and maybe he'll spend another few billion destroying that. We can keep creating new crypto-currencies indefinitely. If each one gets a few billion dollars out ...


3

The most important thing you could do is inform everyone of the dangers of running said software. It would be similar to saying "hey, that music album installs malware on your computer to prevent you from copying it". With enough publicity you could potentially make people rally against such changes. You also have to keep in mind that for the time being the ...


3

In certain situations it gets very easy: If the NSA decides to send national security letters to developers they can be forced to do anything without being allowed to talk about it. Forcing them to 1: publish low quality updates and introduce backdoors, 2: dump-sell their Bitcoin over a predefined period should be quite effective. This could make Bitcoins ...


3

This is a bad article. While it may be true that Bitcoin is difficult to change, it is much easier to shut down. This is true! While full clients will not accept invalid blocks, nothing guarantees that there will be valid blocks to confirm transactions. The largest mining firms has worked out special arrangements with the chinese government which ...


3

In an ideal world, we would want all programs to be auditable/verifiable(we can verify every execution path to be secure and correct). But that's far from reality, when you download a binary from a source(for example, Bitcoin Core), you have the following choices. 1) Trust the developers of the binary on their claim "binary works as intentded" 2) Verify ...


2

The most likely scenario in which a government would adopt Bitcoin is when their own currency is undergoing hyperinflation. As Gareth's answer points out, there would be no way to transfer the value of the old currency into Bitcoins. But if the currency had essentially no value anyway, it would not have to make that transition. In economies suffering ...


2

A currency controlled by a single individual, company or government would not need to work like Bitcoin. It would be centralised - there would be no need for mining, running special clients and so forth. Those are only a key feature of some decentralised internet currencies similar to Bitcoin. It is possible that such a currency would replace Bitcoin, but ...


2

The ECB is a monopolistic institution: it holds a monopoly over the issuing of money on Europe. As a byproduct, any possible competitor is going to A) Be detained and its activity stopped B) Be criminalized or C) Be condemned. Since technology makes impossible to Government to take over Bitcoin, you can expect (C) for a long, long time. If Bitcoin gets ...


2

I think that banning bitcoins and enforcing the ban would be a huge endeavor. It would be expensive and probably politically unpopular. See this question: How much would it cost for a government to undermine Bitcoins? Also see What methods could a government use to shutdown Bitcoin?


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