Money 2.0 Stuff: Cryptocurrencies are only as censorship-resistant as their owners

The cool thing about cryptocurrencies is their censorship-resistant, bearer instrument-like characteristics. If you get on the wrong side of your bank, or someone with influence over your bank, you risk having your assets frozen. But if you get on the wrong side of your bank, or someone with influence over your bank, there’s not a whole lot they can do, without access to your private key, to seize your bitcoin, or to stop you from interacting with the bitcoin-denominated economy. Cool, it would seem.

And yet, consider a scenario in which the government sends you a polite letter in the mail requesting you, a cryptocurrency owner, forfeit your holdings in exchange for a government-issued currency. “It’s cool, man, I own censorship resistant cryptocurrencies,” you might write back. But then consider a scenario in which you receive a second, less polite letter, threatening some kind of punitive action if you do not agree to forfeit your cryptocurrencies in the next 48 hours? What then, Rambo? Do you don your fatigues, or do you quietly acquiesce and turn in your censorship-resistant cryptocurrencies?