Could the government decide to make holding cryptocurrencies illegal?

Posted by $ Olduglycarl 3 years, 2 months ago to Going Galt
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Could the government decide to make holding cryptocurrencies illegal?

So first – I get why people are asking this.

The thinking is that if the government feels threatened that its citizens are moving their money out of dollars and into cryptos instead, they'll just outlaw cryptos altogether so all that money will flow back to them.

Here's why I don't see that happening...

Bitcoin was built by computer geniuses as a form of digital money that would be unaffected by the whims and desires of politicians and regulators around the world.

And in order to shut down Bitcoin or just about any other cryptocurrency that I'd recommend... you'd have to shut down the ENTIRE INTERNET.

There's no First National Bank of Bitcoin to close. There's no Fort Knox of crypto to raid.

Cryptos were born online... they live on the internet... and they're mined all over the world.

Outlawing them would be the single most massive undertaking ANY government could ever try to take on right now. You'd need an army of cyber-cops working 24/7/365 to track down and confiscate all of the cryptocurrency out there online. (Remember there's over 5,000 of these digital coins right now... so good luck with that Uncle Sam!)

And let's pretend for a minute that the government DID shut down the internet... people have actually bought and sold Bitcoin without the internet. In fact, they've done it over HAM radio! So, not even that would work.

Not to mention there's at least one satellite orbiting in space right now that carries the entire Bitcoin blockchain. So, what? Is NASA going to fly up and shoot it out of the sky?

If you've ever heard the saying "the juice isn't worth the squeeze", it definitely applies here.

12 years ago, cryptocurrencies were created to avoid exactly this type of threat. That means any government that's going to try to ban them is already over a decade behind and trying to catch up.

I'm not saying that the crypto space is some lawless anarchy. But I believe what's far more likely to happen is that governments will find a way to regulate and profit off the rise of digital currencies... especially with the dollar losing more and more of its value every year.

Plus... starting a currency war with its own citizens would be HUGELY unpopular and likely never gain approval in Congress, where we already know members own Bitcoin themselves.

So, to answer the question: Could the government ban cryptos? Sure.

They could also add an extra day to the work week... or block out the sun... but the logistics behind such a move and the backlash that would probably result from it make it HIGHLY unlikely we see it happen.

It's just not realistic.

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  • Posted by BCRinFremont 3 years, 2 months ago
    My understanding is that bitcoin, et al, are treated as a commodity in the marketplace. Thus, capital gains are taxed and capital losses are deductible to $3,000. So, the government will make money if people buy low and sell high due to capital gains taxes. If the bottom falls out, the loser will be the holder of the coin. Tulips, anyone? Also, I think there's something in the Constitution about the power to coin money which may make digital money a tricky proposition when it comes to legality. With our Supreme Court, who the heck knows how this will be interpreted.
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  • Posted by $ Abaco 3 years, 2 months ago
    They can just make it illegal to own.

    I've been following this fairly closely. One thing that I noticed that's surprising - there are no exchange traded funds that are direct holders of bitcoin. There is one bitcoin trust fund (GBTC). But, this void of such funds is noteworthy because there's certainly a market for such funds. Why hasn't one been approved? Perhaps one was the past few days and I missed the news...
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  • Posted by $ AJAshinoff 3 years, 2 months ago
    Fact is, cryptocurrencies would not have to be shut down for them to be rendered moot. A simple content filter limiting what passes across the web, through routers, switches and firewalls would be sufficient to prevent anyone from receiving their entirely digital and non-tangible 'currency' no matter where on earth it originates. Unlike cryptocurrency 'banks' governments have the means and manpower to weather a sustained and prolonged tech one-ups-manship. As we've been last election, if CISCO decided to embed a cryptocurrency filter 85% of major corporations would lost the ability to receive and relay, if NetGear or Ubiquity pretty much everyone else would lose the ability, cryptocurrencies would be there but inaccessible.

    Not only is invalidating cryptocurrency realistic, its easily done with tools on hand today (at least those we know of).
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  • Posted by freedomforall 3 years, 2 months ago
    imo, the danger short term is the banking cartel taking control of the price of bitcoin as they have done with gold using paper trading mechanisms. If that doesn't turn out to be profitable enough then governments can and will step in to make holding bitcoin a crime.
    Enforcement will be a significant effort, just as enforcing off shore bank accounts was. The cartel controls money creation and can create as much as needed to control a market.
    Is it a better risk to trade your fiat that is backed by nothing of value for bitcoin backed by nothing of value?
    Has betting against the banking cartel ever been a good risk?
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  • Posted by $ 3 years, 2 months ago
    Good News...Now if trading with Bitcoin or other Cryptos is not going Galt, then nothing is.

    I went to buy something on the interweb and one of the options was to pay with Bitcoin, Ether or another I didn't recognize.
    You could do all your banking, bill paying or buying with Cryptocurrencies...
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