# Last edited on 2014-02-25 17:05:08 by stolfilocal

[quote author=Holliday link=topic=178336.msg5353975#msg5353975 date=1393307160]
[quote author=JorgeStolfi link=topic=178336.msg5353832#msg5353832 date=1393306589]

That is one of the two disasters that befell the bitcoin project, and will kill it.
[/quote]

You underestimate the resilience of a distributed network. 
[/quote]

Bitcoin was (at least officially and originally) supposed to be just a technical breakthrough in e-commerce: a way to safely make payments through the internet --- quickly, at low cost, without the need for a mutually trusted intermediary, and so on.  It was supposed to be good for merchants and customers and accepted by all society.

But then bitcoin was seized by a mob of ultra-libertarians, drug users, tax evaders, and plain common criminals, who redefined its purpose as a way to make safely make [b]illegal[/b] payments and evade taxes (and, for some, even a weapon to destroy governments and banks).  And so those people started using it heavily for those purposes, without even waiting for it to get a firm hold in its originally intended role.   Bitcoin thus got the unwelcome reputation of being "the currency of crime".  That was the first disaster.

Then the price rose by more than 100x in a year or so, due to increased demand, especially in China.  That development attracted a second contingent of sleazy businessment and criminals, who saw bitcoin as an efficient instrument for separating suckers from their money, out of the reach of regulating agencies.  Those entrepreneurs took over the "bitcoin industry" and replicated in it all the schemes and tricks that they were used to apply in the financial industry, such as exchanges and banks, day trading, and market manipulation, investment and hedge funds, ponzi schemes, multiple flavors of theft, and much more.   First thousands, then millions, and perhaps now billions of dollars were sucked by a few scoundrels from thousands, perhaps millions of victims around the world.  That was the second disaster.

Will bitcoin survive these two disasters?

Governments quickly and easily learned how to stop illegal payments, but the measures they took greatly harmed bitcoin's utility.  In China, for example, crypto coins cannot be used for retail payments, cannot be acquired without the intermediation of banks, and cannot be exchanged for foreign currencies in local exchanges.  Thus bitcoins in China have been reduced to a gambling device.  Other countries will probably follow China's example, if they haven't already.  So the remedies for the first disaster, by themselves, may already kill bitcoin.  

Now we have the debacle of MtGOX, which is only the newest and largest of a long series of scams.  Once enough victims realize that they have been egregiously screwed by the snake oil salesmen of the "bitcoin community", there will be pressure to ban bitcoin altogether.  In the best scenario, bitcoin will survive, but will become so regulated, restricted and monitored that it will lose whatever it still has left of its utility. 

Then, what will be the point of maintaining it?