bitcoins to the rescue! is probably how that will evolve. they can't bully a money supply they can't control.
While bitcoins themselves are possibly (hopefully) going to stick around, much of their use is contingent on being able to buy (and sell) them. Not everyone can be a bitcoin miner after all.
That's where regulation kicks in. Anyone exchanging USD for Bitcoins is subject to federal regulation, as Dwolla and Mt. Gox found out the hard way (Paypal was already blocking Mt. Gox):
Feds seize money from Dwolla account belonging to top Bitcoin exchange Mt. Gox
"The Department of Homeland Security and US District Court for the District of Maryland issued a ?Seizure Warrant? for the funds associated with Mutum Sigillum?s Dwolla account (a.k.a. Mt. Gox)," a Dwolla spokesperson told NYO's BetaBeat. "Dwolla has ceased all account activities... for Mutum Sigillum while Dwolla?s holding partner transferred Mutum Sigillum?s balance, per the warrant."
I just checked Mt. Gox and they're resuming withdrawals again via a Japanese bank and other offshore partners. That's a very temporary fix, because the US is currently "promoting" an international agreement that will require all signatories to enforce US financial regulation. There is no way not to sign it, because signatories agree to limit trade with those who don't (effectively killing that country's exports industry). You wouldn't be able to withdraw your money to a bank in the Channel Islands and wire it to the US from there. Within a year or two, these Japanese banks will be subject to the same regulations as US banks and I don't know where Mt. Gox is going to go from there.
It seems to me that a requirement to keep records of all financial transactions and associate them with specific individuals is outright impossible with cryptocurrencies. It wouldn't surprise me if some regulatory agency decided that regulating bitcoins fell under its authority, in which case conducting transactions in the currency may be illegal.
Honestly, these laws are incredibly easy to pass because people focus on tax evasion. But there are much more important reasons to demand privacy in financial transactions and a few billion in lost tax revenues are a small price to pay. Much more revenue is lost to things like babysitting not being reported as self-employed income (subject to social security and medicaid taxes as well as regular income taxes).
Torrid_sl said:
I was ready to be outraged over that, but it just seems to be the credit card companies continuing their denial of service to copyright infringing sites. Media companies have made arrangements with credit card processors to deny services to certain web sites, and it is very effective and shutting them down since there are so few credit card processors. Pirate friendly VPNs are the minority, so it makes sense to go after them.
But the same benefits that those pirating content seek out (anonymity) is also what others conscious of their privacy would seek out. A VPN that keeps logs of all your activities and hands them over to anyone asking them nicely is utterly useless.
That'd really be the same way as trying to shut down Tor or TrueCrypt because they're used by people who trade child pornography. (I get that one is decentralized and one is open source, but you can always go after donations or operators of exit nodes.) Or bitcoins because of silk road.