Why USG will not kill Bitcoins

People say the U.S. government will kill Bitcoins because it can be used to move money anonymously, funding illegal activity. While this is possible in future, it isn't yet.

Bitcoins are far too small of a currency. The price would need to move to $1,000 per BTC or higher before the transaction volume even began to register for government agents. The drug or arms dealer that can make use of Bitcoin is a small time crook. There are also ways for the government to target an individual and unravel the Bitcoin chain. In order for Bitcoin to become a real problem, it needs to aid the mass movement of illicit goods and services in such a way that becomes untraceable for USG. It needs to replace cash U.S. dollars, the currency favorite for criminals today. Since crack and stolen guns will never be sold for Bitcoins on the street, it needs to become the favorite of major crime syndicates who already do a good job of avoiding detection with cash and banks.

On the positive side, the number one use for Bitcoins will eventually be avoiding capital controls. Banks in some countries (China) limit the amount of foreign currency that can be held or taken out of the country. The U.S. dollar is the reserve currency and will be the last country to implement currency controls, since implementation is the destruction of the reserve currency, a last ditch effort to stop a hyperinflation or bank run. Any other country experiencing bank runs and currency collapses is USD supportive by default because it is the unit of account. It doesn't matter where the Bitcoins flow to, as long as it is out of a foreign currency, the net effect will be dollar positive until the dollar itself is in question, at which time the culprit will be newly issued foreign currencies (post-hyperinflation), gold, oil, wheat, etc.

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