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RE: The Three Most Probable and Effective Ways For Governments to Attack Most Cryptocurrencies

in #bitcoin7 years ago
  1. Attack by bugs in the code requires evil coders hunting a coin's code for weak spots. To me that does not sound much different than ordinary hackers trying to game the system. It seems unlikely that government would attract brilliant hackers to try to find bugs in a cryptocurrency coin's code. Even if they find one, software can be changed quickly so damage to the reputation of cryptocurrencies, if any, would only be temporary.

  2. The connection points between digital currencies and fiat (meaning: current money) systems are weak spots. But the importance of exchanges may diminish over time once cryptocurrencies spread over communities, entire countries, the entire world. In principle, exchange can be done directly without the need of an exchange. However, some form of exchange is still needed for price signals. Should government attack exchanges instead of regulating them, I foresee the rise of decentralised exchanges like Bisq. In fact, Bisq may be the next-gen exchange once fiat money no longer plays a major role in economies.

  3. For infiltration a similar thought applies as stated under 1. Yes, it could do damage and yes, it may give governments an angle if they want to cause harm. No, it won't stop cryptocurrencies from advancing. Set backs would only be temporary. The strong points of (open source) software are that it can be copied endlessly, reused and changed by anyone. Whacking a mole will not destroy all other moles popping up.

  4. I miss the biggest 'threat': taxation. Governments will probably tax cryptocurrencies in forms that are not always the best in terms of economic effects. With governments up to their eyeballs in debt, there may be an incentive to impose crushing taxes on cryptocurrency gains or capital gains taxes levied from exchanges directly. Such move would severely delay the rise of cryptocurrencies. But it would not stop the advance, only temporarily slow it. Cryptocurrencies would go underground on a 'dark net' and if that happens in large enough numbers, governments will have lost total control, forever.

  5. So in my opinion,, government's best approach would be to adapt to this new tech and find a place in a new equilibrium between citizens and State. Attacking it too hard and this tech will go underground.

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Brilliant additions, thank you!