Quote:
Originally Posted by rsrguy
I love the concept of BC.. Love other hard assets for the same reasons. BTC has a couple of potential issues I'd like some opinions on though...
1. What possible negative moves could the fed make against it and how could one hedge against them?
2. China holds over 50% at this point, what effects (+or-) could this potentially pose to holders?
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Here's my thoughts, which are often wrong:
1. The Fed is controlling the legal/easy ways to convert large sums of USD into BTC. Coinbase is the best known "legal" exchange. There are other exchanges, but most of them are unregulated and often lacking transparency. I would seem trivial for the Feds to create a "honeypot" exchange or multiple exchanges. This would allow them to track the IP addresses and figure out who was transacting. In theory, I think that would also unravel anonymity. And of course one could use a VPN, but there's a trust issue there too. Anyway, seems like BTC has potential weaknesses around anonymity. I suppose with enough layering, someone money laundering could avoid getting caught as happens in the traditional system, but I'm not convinced BTC is immune from monitoring so the usual rules/penalties would apply.
I think the open structure of BTC makes #2 less an issue. And I personally have a hard time seeing BTC go mainstream - - it's pretty clunky as a currency, so who cares if the Chinese have half. That said, the Chinese are a weird part of the BTC value chain. It seemed ironic/suspicious to me when I was mining BTC that I was buying high priced bespoke computer gear (ie, the mine) that was only available from the Chinese. That's probably just a reflection of electronics supply chain realities, but still. Felt like I was spending my scrip at the Company store...