If that was the argument, I would ask in response: if it could do that, why would the combined vested interests of the US military-industrial lot allow Bitcoin to succeed? It’s not beyond the reach of governments to ban unwanted trade, and even though bans are not magic, even a half-arsed enforcement of such a ban is enough to prevent a currency becoming endemic.
> It’s not beyond the reach of governments to ban unwanted trade
Yeah, right, it worked so well for alcohol... It DOES (/s) work so well for drugs in the US right now...
And hey imagine whether it's easier or harder to ban something that doesn't take any physical space in your suitcase and can be transacted with only internet connection.
On the contrary, bitcoin mining operations can be sniffed out by their impossibly outlandish power requirements, like pot growers used to be.
Increasingly, mining operations have to make special arrangements with entire power grids to suck up their energy and basically just burn it in arbitrary calculation. The scale at which this operates, and the increase over time, are both what makes up a lot of the problem, and what makes it impossible to hide.
If you'd prefer a world where people value bitcoin BECAUSE due to its unpopularity and externalities, governments resort to drone striking such operations when discovered, all I can say is: well, that solves the energy wastage issue, as blown-up ASIC farms aren't good at burning energy anymore. Maybe it solves the constant devaluation against energy cost issue, too! But I think you're missing the point and looking at only the end product of the industry.
Mining doesn't have to happen in the same country where you use the coin though.
In order for this scenario to become a reality, many governments would have to collaborate to make mining infeasible. But they would be incentivized to not collaborate so they can instead tax their miners and get the profits for themselves.
I'd actually argue that it was more of a threat to the authority of the state than Bitcoin is today. The widespread disregard of Prohibition lead directly to its repeal. Defying the state in one aspect of your life leads to defiance in other aspects.
Basically we are talking about the world's reserve currency becoming a denationalized currency. To be "mainstream" the denationalized currency will need to be defended by the militaries of the Euro-zone, US, India, China, and Russia (likely one after the other in this order).
Only the US is incentivized to have USD be the world's reserve currency. Meanwhile, 7 BB people around the world prefer a denationalized reserve currency, countries will prefer to interact with each other with a less trackable currency (e.g. Iran and the current sanctions), and based on the usage of tax loopholes by every multi-national company (e.g. FB, Apple, Google) every business will prefer transacting in less trackable currency (especially with crypto-coin tumblers). This demand for a denationalized reserve currency will be supplied by some crypto-coin (maybe BTC, maybe something else). FWIW, I don't think having a "less trackable currency" is a "good thing", I'm just saying there are large organizations that benefit from it financially and therefore it will exist.
Frankly once the S&P companies purchase enough BTC (e.g. TSLA, Square, etc), a BTC 51% attack will need to be defended against by the US military to ensure national stability. If BTC (or any crypto-coin) can hit "too big to fail" in the US, the rest of the world's militaries will all build a defense strategy around BTC mining. As as consequence, cheaper energy will also be an investment into national security.
There are still more problems with BTC specifically, like "slow transactions" but as may here have said, we can either use a geographically sharded blockchain (e.g. BTC-California, BTC-USD, BTC-CAD, BTC-RUP), where each shard allows fast transactions, and slow reconciliation, or we will just leverage credit for fast transactions like we do today, with slow reconciliation between banks like we have today. I don't see "centralization" as a problem, because having bank accounts and credit are very useful as an individual (as individuals will likely only transact with credit cards like we do today).
Will BTC become "too big to fail" in the US? Unclear. Another crypto might get there first. However, there is no scenario where the world's reserve currency continues to be tied to a single nation.
> Only the US is incentivized to have USD be the world's reserve currency.
The US is merely the largest reserve currency and has been trying to reduce that role for well over a decade now - being a reserve currency merely means foreign crises lead to dollar flight which has knock-on effects on US trade. There's no real upside - demand for dollars is based on the stabiliy and size of the US economy, nothing more. EUR, JPY and GBP also operate as reserve currencies due to the strengths of their economies.
What need there is for an international reserve currency is filled by the IMF's SDR, an asset whose value is based on basket of USD, EUR, RMB, GBP and JPY:
Too late to what? Forcefully distribute it as it sees fit or else put you in prison or harm your family? If you keep using it in secret it will never be mainstream.
Physical force is the strongest currency on Earth. Arguing it’s not is arguing millions of people die for entertainment rather than shifts of power.
If Bitcoin is the revolutionary future millions will die on that hill to make it so.
If they haven't done it by now, then they don't currently see it as a threat.
Now let's say in a few years, that inflection point happens where crypto sees an exponential rate of adoption. Every other country begins to use it, some ban it, many others adopt it. At that point, if not using crypto will put the US at a disadvantage, they have no other choice but to adopt it as well.
A semi-related example is the way many companies "disrupt" the markets e.g. Uber/Airbnb wasn't a threat to many cities, until it was. At which point, the demand for Uber/Airbnb outweighed the government's ability to do anything about it.
It's not the best example since some cities have done things about it and Uber/Airbnb, being a company, is easier to target.
With crypto, its decentralized nature makes it much more difficult to control and attempting to ban it will raise issues around free speech.
That's not to say countries won't try and succeed in getting it banned, though in the case of the US, I don't think it's as cut and dry.
I mean all that US Govt needs to do to crash the price 90% is, accuse ... not even that, only hint, that Tesla’s BTC holdings might be tainted by drugs/terrorism financing/money laundering. Game over.
But what if it's not a conscious forfeit of power. The power is taken out from underneath them and by the time they realize it, they have no recourse. Other than threatening all countries that use the currency, which I don't see happening.
You’re saying all militarized countries on Earth will come to a point where Bitcoin is prominent and they will forfeit their power over their citizens without any fight?
You’re proposing Bitcoin will bring world peace without conflict?
They have no recourse because the box has opened, and the new economy is up and running. Barring your citizens from participating would put your whole country at a disadvantage.
Also, I don't think I agree with the notion that adopting crypto would result in a country forfeiting their power over the citizens. There are plenty of ways to integrate crypto into existing governments while still maintaining control.
I'm not claiming this will happen, more of contemplating on how a global decentralized currency can take over.
As far as bringing world peace, I don't think a decentralized currency would do any such thing. It's probably one of the required steps towards it, but one of many.
For example, if the rest of the world adopts BTC as the world's reserve currency, the USA would HAVE TO purchase crazy amounts of BTC, and defend against a 51% attack by investing into mining.
Meanwhile, the USA could try to preempt this future, but only the USA is incentivized to have USD be the world's reserve currency. As such the USA would need to threaten every other country in the world to stop using BTC, but its not clear if that causes BTC adoption to drop, or the Streisand Effect to kick in.
And ofcourse, "mutually assured destruction" stops any large country from employing too large a threat against any other large country.
Would any nation allow itself to be in a position where a coalition of the willing could perform a 51% attack on their currency? Because if not, only one country could use BTC or anything with the same mining algorithm.
If we are talking about a coordinated aggressive action to cripple the economy of a non-superpower nation, like today it requires a superpower to protect it.
If we are talking about a coordinated aggressive action to cripple the economy of a superpower nation, you're basically triggering "mutually assured destruction". As such its most productive to assume that doesn't occur.
Given what governments worldwide have done with currencies in the past, I think you’re underestimating their capacity and how much they care about the functioning of their currency.
If you’ll excuse my admittedly also-naïve wargaming of their responses:
“Dear ISPs, this is the government. That stuff you do to block piracy and illegal porn? Do that for bitcoin.”
“Dear Banks, this is the government. Purchase of bitcoin is now a federal offence. Tell us if anyone tries to exchange them for money.”
“Dear The Power Company, this is a government order. Turn off power to these properties who are engaged in illegal Bitcoin mining.”
“Dear everyone, this is the government. Your taxes can only be paid in dollars, not in bitcoin.”
(Not that I would say such things will never happen, only that I expect America to become irrelevant on the world stage before it happens; and even in the most extreme USSR-mimicking scenario that is not something I expect before 2041).
As I mentioned in my reply above, I think the way it can work is if it grows exponentially, and the US government doesn't respond in time at which point not using crypto will put the US at a disadvantage. Crypto has the unique ability to spread across borders with ease, no other currency has had this ability. So I think it's a pretty unique scenario in that case.
Another scenario is if it grows slowly amongst the countries that have unstable currencies. Slowly it takes over the USD as the world currency. At a certain point, the US would have to allow it to participate in that economy.
Nations with bad currencies and mismanaged economies sometimes switch to the USD.
Such nations collectively switching to a different currency like the Euro or the Yuan is way more plausible than switching to Bitcoin; and not only do none of the USA, the Eurozone, nor China have economic policies compatible with giving up direct control of inflation, the usefulness of a shared single currency isn’t enough to outweigh the political costs for the UK to use the Euro (famously), or South Korea to use the Yuan, or Canada to use USD.
Money in the scale of governments isn’t like money on the scale of individuals. For governments, money isn’t even like it is for the richest individuals, different as it is between the rich and normal people.
I don't follow. Why would a country's citizens choose to use a different country's currency rather than a denationalized currency? i.e. couple their monetary policy to the world market, rather than to a single country's market. Given they just experienced one countries economy create poor monetary policy, why trust a single entity rather than diversify by trusting the group decision of many decentralized entities?
And why wouldn't a government whose citizens do not trust the government's currency, not incentivize its citizens to use a denationalized currency instead of funding potential threats?
e.g. The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
Aaa… this will take too long to do justice to the topic, but politically speaking, the Euro is supernational and the UK collectively hates it, that sort of attitude is part of the problem. “Loss of sovereignty” is how they felt about it, how many discussed it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties
Why would those parties have Venezuelan interests in mind rather than their own? One of the arguments against the Eurozone (I’m not qualified to judge it on quality, but it is given as an argument) is that Northern Europe “should” have different inflation to Southern Europe to help boost the local economies. Can’t do that with a single currency, they say, and that would apply more the wider that zone spreads. A single global economy — fiat, digital, or metallurgical — would never be able to resolve it.
> “Loss of sovereignty” is how they felt about it, how many discussed it.
Yup! I agree, there will be many holdout countries. However, even the UK uses the USD as the world's reserve currency.
> Why would those parties have Venezuelan interests in mind rather than their own?
Venezuela was fucked because a handful of people are performing bad monetary policy. While the interests of each mining operation would be their own interests, in aggregate, the interests of all BTC mining is a globally averaged monetary policy. Unaffected by corruption, or stupidity (whichever you think is a more apt description of Venezuela's current monetary problem).
I don't know what a globally averaged monetary policy will look like (or who it'll benefit the most), but I can say that for any population currently living with a monetary policy below the average (i.e. because of corruption or stupidity), it'll be an improvement and they will adopt a denationalized currency to get it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
No, the Venezuelan government has tried to create its own cryptocurrency called the Petro in order to have control of it.
Of course they did! They want control. Meanwhile, the population doesn't trust its government and wants a non-Venezuelan controlled currency.
Legitimizing crypto currencies by creating one, without increasing trust in the government just results in more of the Venezuelan people buying a denationalized crypto.
> It’s possible that, as Jiménez suggested, Venezuela’s peer-to-peer bitcoin activity wouldn’t be where it is today without crypto-friendly initiatives from the government itself. It’s also possible that bitcoin adoption in Venezuela may be driven by the sheer rate of Venezuela’s hyperinflation, which outpaces other crisis economies. [0]
