Quote from: bitplane on June 23, 2012, 03:24:54 PM

Let's assume that Bitcoin catches on in the future and is used for all kinds of online payments by a huge number of legitimate businesses. What happens when a large political power, like the USA or EU, decides to regulate Bitcoin within their borders by regulating the rules used by clients?

Merchants and traders would have to adhere to the new rules, which I'm guessing would make Bitcoin fall out of favour or fork the block chain dividing the currency into regional networks. At this point we'd have lots of local currencies depending on regulations enforced by local government.

Anyone care to speculate on what would happen in this case, or why it won't/can't happen?

In the world you are talking about capital controls become almost impossible without draconian control of the internet itself. Any 'island' that forks the chain and imposes unfavorable rules would see capital flee the chain and toward the more desirable chain. See the Alt. Chains. We have them already but there is de-minimus actual commerce going on i the alt chain world. At least BTC has alpaca socks and drugs of all kinds being traded in BTC. Not super compared to the 50 Trillion global GDP, but you gotta start somewehre.