I believe that Bitcoin and other digital currencies will face a choice: become part of the system that cooperates with law enforcement or lose 95% of it's investors.
Did you hit your head 10 years ago and just woke up now or what? Otherwise one can't understand why you come here to pontificate about a supposed future that has already been happening for years.
Well, I guess I could have written... "The past and future..."
.
These days there are probably almost nobody is using Bitcoin to avoid their government, which is what it was originally designed to do: most just think of it as an investment that will yield them a profit.
You'll need some stats to back this up. A good number of people still use decentralized wallets to store their bitcoins, that is retaining your custody and not giving agencies control of your assets. There's a lot of coins stored in exchange, I think more that there is in self custody, but there's still a good number that have retained their custody.
I get that many still do self-custody (although I don't think it's a lot in terms of volume and I think it's rapidly evolving away from that in any case), but to actually obtain the Bitcoin in the first place these days usually requires KYC, and I suspect it will get harder and harder (and more and more illegal) to get Bitcoin any other way, or to spend it.
I could imagine, for instance, a similar law that the US currently has around physical cash deposits, wherein if the amount is >$10k the receiver must report the transaction to the government.
Imagine that, in reaction to some bad thing that happened using Bitcoin and money laundering, Congress proposed such a law. Who would oppose it? Not the giant crypto companies that just bought the 2024 election, that's for sure. In fact, I suspect it would be those companies that would
actually write the law.
As long as there is still decentralized services, the privacy hardcores will have a way to hold and trade without using centralized exchanges. This could create a distinction in Bitcoin, between those under the radar and those duly accounted for.
I get that--although I suspect most criminals* these days use something like Monero and not Bitcoin. But again, I suspect that from a volume perspective, this is a tiny portion of the total Bitcoin investment, and thus a tiny portion of Bitcoin's $2T market cap.
(* I'm using the word "criminals" here to mean anybody who has a specific need to evade their government--in some countries and situations this is not necessarily a bad thing).
Regulations =/= secure or safer. Criminals use a lot of regulated services today still.
Sure, but human beings have laws to prevent crime, and it mostly works. There are laws against murder, but there are still murders--but that doesn't mean we should just make murder legal.
For average investors, regulations are a good thing because they can just invest without worrying they will get ripped off most of the time.
Indeed, regulated markets are
bigger markets for that reason.
