Re: Why is it so hard to regulate Bitcoin?

There seems to be only two options: 1) allow bitcoin complete freedom 2) make it illegal to accept bitcoin as payment. The second option seems more likely at the moment, be the first is still possible

I think that the option 3) is also possible. The bitcoin will stay as a "parallel" currency "as it is" but with the certain regulation/limitation of its use. Like it is already in some countries, where bitcoin payments are acceptabile in parallel with other currencies and is used by the companies with a solid reputation.

Indeed, Bitcoin is most likely parallel currency for a while.

I'm one of the authors of the paper mentioned in that Wired article (http://arxiv.org/abs/1406.5440).
Clearly the Bitcoin community rejected our proposal, it took even 9 hours for my pull request to be closed.

That's fine, I love Bitcoin. The key question is now how could millions of normal people start getting into Bitcoin?
Bitcoin ATM machine's legal in EU and US require photo-ID registration.
So #2, Bitcoin without a photo ID registration is illegal today in EU+US.

Option #3 means only tech savy people will get into it. It poses insurmountably high barriers for large-scale uptake.

it is interesting video about the legal aspects of bitcoin regulation from TEDx Talks: "The concepts of Bitcoin and their impact on the worldwide legal space." Today bitcoin needs some tech knowledge, but it is only question of front end interfacing and ecosystem. So, it is only matter of time. Like a photography - "wet" darkroom skills and expensive optics were limitations which are already forgotten in the age of digital photography. Of course, it took some time (about 200 years since the first daguerrotype)