Quote Originally Posted by Dan Druff View Post
Fallacy #2: Bitcoins cannot be shut down by the US government, because they have no centralized location. This is false because the US government doesn't need to remove every bitcoin from the internet in order to eradicate them. This is because bitcoins only have value to most people because they can be traded for real currency. This is why people accept bitcoins for drugs. This is why young camsluts take off their clothes for bitcoins. This is why people even consider playing on fail bitcoin gambling sites like Seals. If bitcoins were truly internet play money, they would be worthless. The US government doesn't have to shut down bitcoins themselves. They just have to shut down the middleman sites involved in trading them for real currency (such as MtGox), and the whole model will come crashing down. We have already seen bitcoins do a panic-fall in value when major bitcoin hacking stories hit the press. Once the US government shuts down sites like MtGox, everyone will want to dump them, and they will go from their current value of around $5 to less than 5 cents (or perhaps even less than 1 cent). And this will happen so quickly that nobody will have time to get rid of their bitcoins at $5 each, or anywhere near that.
Wouldn't the obvious answer to this be for the middlemen to similarly decentralize? Perhaps the U.S. government could exert enough pressure and wield its power to shut down MtGox (a Japanese company, I believe, with no non-internet U.S. presence). But what if MtGox and the like were themselves decentralized (kinda like UB snap-moving to Panama when things got too hot in Costa Rica)? Properly decentralized, could the U.S. really shut down enough of these middlemen in cyberspace fast enough to really put a dent in (much less "shut down") the bitcoin market?