Banning is the "easy solution"--just as easy as banning alcohol, drugs, and gambling has been in the past. What banning money exchanges will do is 1) drive it underground to money exchanges being done by unsavory characters who have no issues committing crimes up to and including physical violence, 2) Drive up enforcement costs and create an entire police enterprise whose mandate and funding depend on hunting these unsavory characters, 3) Deprive Uncle Sam of any and all tax revenue from capital gains, etc, etc...

I mean, all of this literally happened with alcohol, with cannabis, etc etc. Are we just going to keep repeating this cycle forever.

> Drive up enforcement costs and create an entire police enterprise

This is a feature if you're the government.

Those other things are desirable in themselves. Cryptocurrency seems unlikely to fit the same mould.

Wait until you find out what people buy with cryptocurrency.

Sure, but at that point the cryptocurrency is a means to an end, not the end itself.

A buyer's intentions after the purchase of an illicit item have zero relevance to the evasion of law enforcement during the purchase itself.

I'm not sure I understand what this is a response to.

The assertion was that banning things is counterproductive, just look how much it failed for alcohol/drugs/gambling.

My counterpoint is that these things are desirable in themselves, cryptocurrency isn't really.

Your comeback is that it gets used for some of these things like drugs and gambling - yes, it does, that's a fine point. I agree

My response is that OK great, but cryptocurrency is a means there, not an end. And then you've said something about enforcement and intentions. Perhaps I should have expanded on my last post. What I meant is if cryptocurrency is harder to get, I don't think we'll see the exact same demand phenomenon as we would with those others things, even though cryptocurrency is used to pay for them right now, because cryptocurrency is not the object of desire itself.

Make drugs illegal, people still want drugs, so they go to the black market, which thrives, criminals make bank etc. They take risks to get the drugs.

Make gambling illegal, people still want to gamble, so they go to the gambling black market, which thrives, criminals make bank etc. They take risks to gamble.

Make cryptocurrency illegal, people still want ... drugs and gambling, so they either go to the crypto black market or maybe they find another way to pay for the drugs and gambling? They take risks to get drugs or gamble, not specifically for the crypto.

So I don't think this is wrong -

> A buyer's intentions after the purchase of an illicit item have zero relevance to the evasion of law enforcement during the purchase itself.

However I also don't think it really addresses the point that I was making, that while I agree prohibition has a history of not doing what it's supposed to, in the case of cryptocurrency I don't think it's safe to assume the same historical pattern would play out, because (for most people who aren't ideologically wed to it) cryptocurrency is second-order desirable, rather than the object of desire itself.

I understand your point more fully now, and agree that my second reply was somewhat orthogonal to it.

Crypto is a huge risk minimizer for buying illicit goods. Unless you make the punishment for purchasing cryptocurrencies severe (on par with buying/possession of the goods in question) you won't remove the motivation for using them as an intermediate means of exchange. If you do make the punishment sufficiently severe, you'll be sending people to jail for the exchange of the equivalent of digitally encrypted beanie babies. Have you thought through the implications of that? For whom is that solution easy?

Cryptocurrencies are a second-order desirable in the same way that meeting in private, instead of public, is. Would you support criminalizing private meetings and encrypted communications to the same end?

> Unless you make the punishment for purchasing cryptocurrencies severe (on par with buying/possession of the goods in question) you won't remove the motivation for using them as an intermediate means of exchange.

See I don't necessarily agree with you there, it all depends what you're trying to achieve. I think in the context of the discussion - an article which says that cryptocurrency is being seen as bullshit by democrats - you just have to make it difficult for normal people to participate in order to kill the current industry, and you can do that by regulating banks rather than individuals. You could make it illegal to market these things, illegal for exchanges to operate and for banks to send money to them, and you'd strangle the majority of it.

Yes, you're right that there would probably be a residual demand for it illicit purchases, gambling, that sort of stuff, but the mainstreaming of it as an investment/speculation vehicle would likely be crushed.

If I can't buy cryptocurrency by credit card or bank transfer then I'm probably not going to try and invest my pension in it, or invest in a high-yield staking account at Celsius, or just buy some BTC at an exchange to speculate on price rises, firstly because my bank would throw up obstacles and secondly because it would be difficult to rehabilitate any gains into the system. Yes, I might want some to buy drugs, but the pseudo-financial industry that's sprung up around this stuff (the FTXs, the 3ACs, the Celsius, Coinbase) wouldn't be able to operate in that sort of environment, and the number of people who are in it to make a buck would be considerably reduced.

So -

> Cryptocurrencies are a second-order desirable in the same way that meeting in private, instead of public, is.

Yes, for transactions where that's important, I can see it still being desirable, until/unless some other means to do this comes along, and you're right, that would likely be a comparatively resilient demand.

But for the current speculative mania, and the large-scale fraud it enables? Less so.

(Frankly if I have to take cash down a back alley to get some bitcoin to buy weed ... I may as well just buy the weed there!)

We are in agreement on the crypto split between illicit and mainstream activities, and your points are well supported by the history of monero/XMR--it can't be bought with card or bank transfer on any of the major exchanges, and has been insulated from the volatility and inflation of the more mainstream coins. So in a sense the outcome you're describing has already come to pass, in a small section of the market.

Where we disagree is the criminalization of cryptocurrency transactions to achieve that end. Owning, buying, and selling monero isn't illegal; regulations of some type (I am not aware of the exact structure) have prevented it from being touched by institutional players, but the risk of a private citizen getting caught in some sort of spike trap designed to eliminate reckless speculation and fraud on an institutional level is zero.

I agree 100% that there's a major bubble in cryptocurrency, the popping of which will happen in manner that is novel and unknown, but "make it illegal" means cops and guns, full stop. I (and I suspect many of the people who replied to you) see that option as a last resort, and totally inappropriate in the case of free exchange of innocuous assets between private individuals.

You’re actually the only person that replied to me :)

I think you can make something illegal for the banking industry to connect to, without too much in the way of cops and guns.

shrug

Either way, it’s fascinating to watch!

This does make sense that cryptocurrency doesn't necessarily have any intrinsic value, but I also feel like there's going to be a bit of a "Bart Simpson" effect. If you tell people exactly what they _can't_ do, you are going to induce serious demand in many people who are going to attempt to do exactly what you told them they can't do, just for the sake of it. Which could then drive up value, and attract more people, etc... owning banned things is very attractive to a lot of people.

Can't you use it as a stand alone currency for the exchange of goods?

Theoretically but it’s a weak fiat currency with high overhead and no intrinsic value, and it’s risky for anyone to use if they are not complying with local law. There are very few cases where someone’s best option is to pay more to use bitcoin despite the drawbacks.

Nothing has intrinsic value as value is subjective. Things may have inherent human utility, but in the case of cryptocurrency, there is certainly utility.

The true utility of a cryptocurrency is the blockchain itself as way to perform escrow, saving, spending, and transaction auditing without a human intermediary.

Despite all of this, I will grant that so far it would seem that the financial and material costs of crypto are higher than the benefits lowering overall utility.

> Nothing has intrinsic value as value is subjective.

Yeah, yeah, and reality has no meaning because everything is subjective. That's great as a dorm-room topic at 4am but it's not a useful distinction here because there's a huge practical difference. Bitcoin uses random hashes which nobody cares about except to the extent that someone else will give them some tangible value in exchange for them. That's different from almost any other fiat currency because most of them are linked to a functioning economy and have some built-in demand where a government requires use for taxes, procurements, salaries, etc. Quality varies, of course, which is why some currencies are stronger than others but Bitcoin is an extreme outlier in the sense that almost nobody has any need to use it except when they think it's financially advantageous.

This is why it's so volatile: someone who has purchased a lot of Bitcoin has an incentive to get other people to buy into the system so they can make money off of it but nobody else shares that reason. Using Bitcoin could make sense if it was cheaper but there are many alternatives and unless you have an ideological commitment you're most likely to pick whatever fits your preferred balance of easiness, cost, and safety. That could some day be Bitcoin but it hasn't been for the last decade and a half except in a few cases involving unusual circumstances.

Yes, plus it's also risky as a store of value for someone even if they are complying with local law. There are greater opportunities for fraud as well as the risk the regulatory environment can change at any time.

In fairness, all the businesses that currently accept it (at least in America) as a method of payment would likely stop accepting it if they couldn’t exchange it for dollars.

Over the past N years since bitcoin came into being, I have yet to see a real use for exchange of goods that is running at scale. The cost to move coins/token has always been too high or the use was never at real scale.

Yes. Even if every country in the world “banned” it. It would still be used as such.

So let me get this straight. I can't be paid in it, and I can't pay rent with it or buy groceries with it.

Sure, there would be hobbyists who conduct trivial transactions with their monopoly money. But no, this would not even be a small fraction of overall economic activity in such a scenario.

No, you can still be paid in it and still pay rent with it or buy groceries with it. You can't exchange a bitcoin for cash, but you can exchange bitcoin for something that has cash value.

Please let me know when the first ever major employer offers a paycheck in BTC, and when the first ever landlord offers rent payment in BTC.

Oh, and most importantly. When the U.S. government will allow me to pay my taxes in BTC.

Until then, this is a thought experiment. I'm not holding my breath.

Employers offering paycheck in BTC: https://www.coindesk.com/markets/2014/11/04/bitwage-now-lets...

https://www.nyc.gov/office-of-the-mayor/news/041-22/mayor-ad...

Landlords offering payment in BTC: https://www.american-apartment-owners-association.org/proper...

U.S. government allowing you to pay taxes in BTC: you can take your btc and turn it into usd and pay taxes that way - and would need to on your capital gains.

Lots of reading for you to do!

So do you considering that you missed that the entire premise of this thread was, "what happens if the U.S. government bans the exchange of BTC and dollars?".

In that instance, bitcoin would lose nearly ~100% of its current market value due to anyone with a brain dumping it.

That is an easy solution. But it's neither a feasible solution nor a good one.

There are plenty of things that you currently can't legally exchange for dollars. But it happens.

It always amazes me how trigger happy people are when it comes to banning things they don't like/don't agree with.

Think about something that you like/strongly support getting banned. How would that make you feel?

Did the gov try banning stuff in the past? How did that work out?

Whatever people choose to place value in with their transactions cannot be easily regulated by banning it.

The whole point of cryptocurrencies is that they're not supposed to be converted to and from dollars - their use case is to bypass fiat currencies such as the dollar and more specifically the centralized institutions necessary to process transactions in fiat currency.

If you sell goods or services for a bitcoin, you can buy a bitcoin worth of stuff. If bitcoin happens to be worth $15k, that means you can buy $15k worth of stuff, but the important thing is at no point in time do you need to convert your bitcoin into $15k.

If you are measuring the value of your BTC in USD, you already kinda lost there.

Furthermore, you just handily stated cryptocurrency's true purpose, which is avoiding the modern world's curbs on the more destructive habits of unregulated finance.

You are not painting yourself into a good corner with a lot of more normal people here.

I'm not measuring the value of BTC in USD, I clearly stated 1 bitcoin for 1 bitcoin worth of stuff. That stuff will invariably also have a USD value, and similarly a EUR value, and a Yen value, because that's how currencies work. And just as you can say a EUR is worth 1.05 USD, you can say a BTC is worth 15k USD.

Yes, I stated bitcoin's purpose, but I said nothing about avoiding financial regulations. What I was referring to was ledger keeping.

I am quite happy with the corner I'm in. May I ask why you are opposed to and seek to vilify something you don't use or are in any other way affected by?