I'm not that intelligent, but a few folks on the BC forums and other places have brought up some great points:
1. Government shutdown
2. BitCoins P2P network is very vulnerable to denial of service attacks; ones that actually cost money!
3. Public Node can be tracked; no more anonymity.
4. Technical merits of the crypto implementation have not been fully tested; is there a possible flaw?
5. Social engineering and one-time inflation.
6. Unreliable and opaque banking organizations; no one is backing it.
There are many more, and they could all be fixed if bit coin was a centralized currency system, but it is not. It is too soon to say "BitCoin is ridiculous and will never work", but someone with a motive and means can definitely make a miners life hell.
Actually quite easily. If your nation bans the trading of bitcoins for the official state currency, then you have a problem. Regardless of the fact that bitcoins can be transferred w/o outside observation is irrelevant if you can't purchase or trade for goods and services. And at that point, you're either black market, or you're fucked.
Well, as long as not all nations ban trading bitcoins for official state currency it doesn't completely screw things over. I simply trade my bitcoins for Vietnamese dongs or whatever and then exchange my dongs for dollars.
No, the collapse is more likely to happen on its own. At some point the massive increase in value must draw to a close. What happens then? Big bitcoin holders no longer have an incentive to hold onto their millions of dollars' worth of bitcoins "Hmm, time to sell some of these bitcoins". Millions of bitcoins hit the market and find no buyers at the quoted price. All of a sudden the price is a lot lower, folks panic, drives prices even lower.
In an asset where the only incentive to hold the asset is the massive increase in value, panic selling happens as soon as it looks like the massive increase has gone flat. The steeper the increase, the steeper the decrease. That makes bitcoin unlike gold.
Right, but then you are operating on a black market basis, because you're laundering money. If the problem gets bad enough the US starts banning dongs, or applying pressure on their government or what not.
Worse yet, laundering money on this basis will almost certainly come with an increased cost to trade through another currency, especially if there is legal risk to the parties doing the laundering.
It's not like laws will stop financial trading or traders, but if you're declaring your taxes as you're legally obligated, presumably there's still a paper trail indicating irregularities if you're funneling your bitcoins through dongs.
How might someone go about doing this?