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TL:DR - Bitcoin dies in two very simple steps.

1: A DOJ indictment is unsealed which names everyone on Planet Three who operates, or has ever operated, or perhaps who has ever even breathed on, a BTC/USD exchange, as a criminal defendant.

The charge: money laundering. The evidence: the defendants knew that BTC were used for organized criminal activity. Therefore, they knew they were transferring money for criminals. This is quite simply the definition of "money laundering."

(Obviously, prosecution under our modern "rule of law" proceeds according to these broad definitions, without regard to any specific technicalities. For instance, Aaron Swartz downloaded many more papers from JSTOR than JSTOR wanted him to. Therefore, he used JSTOR's computers in a way that JSTOR didn't want them to be used. Therefore, he could be prosecuted for "computer hacking." Indeed he seemed to sense this when he put his bike helmet over his face and ran from the police. The details? They might have mattered, at the trial. But of course there was no trial.)

2: The BTC/USD price falls to 0 and remains there. BTC are permanently worthless. Everyone who was involved in the Bitcoin market and was holding BTC when the indictments were unsealed feels burned. Everyone who got out feels lucky. Many who escape prosecution, in fact, feel lucky. And BTC is remembered as an epic bubble.

This is a very strong prediction. Am I right? Am I this confident? I never get hate mail. Really - never. But won't I get hate mail for this?

Obviously, I have no inside information at all and am just speculating - as a devout student of the fascinating organism that is USG. However, my guess is that this event will happen soon - ie, probably in 2013. Why? Because of the ECB report on Bitcoin, which quoth:

All these issues raise serious concerns regarding the legal status and security of the system, as well as the finality and irrevocability of the transactions, in a system which is not subject to any kind of public oversight. In June 2011 two US senators, Charles Schumer and Joe Manchin, wrote to the Attorney General and to the Administrator of the Drug Enforcement Administration expressing their worries about Bitcoin and its use for illegal purposes. Mr Andresen was also asked to give a presentation to the CIA about this virtual currency scheme. Further action from other authorities can reasonably be expected in the near future. Neighbor, if you're at all involved with BTC, I'd advise you to heed this remarkably direct warning. You'll note that (a) the people who wrote this report do have inside information (since the ECB and our own dear "other authorities" operate, of course, in practice as a single global institution), and (b) these are people with actual power, and people with actual power tend to do what they say they're going to do - regardless of how Reddit might feel about the matter.

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