Government Ban On Bitcoin Would Fail Miserably
In a blog post last week at Unqualified Reservations, the author described a fictitious account of how bitcoin dies because a “DOJ indictment is unsealed” naming any and all BTC exchange operators as criminal defendants and the “BTC/USD price falls to zero and remains there.”
While this U.S.-centric plot would seem more plausible in a cryptographic flaw scenario, it does bring to light some interesting game theory strategies for both regulators and free market monetary proponents. Aside from the impact on price, would a government ban on bitcoin, including a direct ban for law-abiding merchants, shrink the available size of the so-called bitcoin market? Is an officially “illegitimate” bitcoin a useless thing?