Re: Governments and Bitcoin

Nice try.

But let's wait and see what happens when BitCoin takes off. Do you really think government will welcome it with open arms?

Depends on the rhetoric swirling around in the bitcoin community at the time. It's possible that we could sell governments on the idea if we undertook to do so. Though bitcoins are a cash analogue, they are ultimately more trackable due to the existence of the blockchain. If a government were to get ahold of a mapping of addresses to identities, calculating tax owed by an individual from bitcoin activity would be as simple as mining the blockchain for data. If a country moved to using bitcoins exclusively as legal tender, they could feasibly replace most of their tax departments with a computer program.

At that point I would stop using bitcoin and I'm sure many others would too.

The beauty of bitcoins is that a comprehensive mapping could never be had. Just as I could open a foreign account and hide my riches, or else deal only in cash, I could also keep myself off the mapping by starting a new bitcoin address, or several bitcoin addresses, or even simply never reporting in for the mapping. Or else simply associating my identity with an address I never intend to use.

The beauty of bitcoins is that any such mapping would have to be voluntary. It could be a useful tool for those who want to pay their taxes in a much simpler way than can presently be had. But the government would have a hell of a time forcing anyone into the map who doesn't want to be there.