Quote from: Dobbs on December 15, 2011, 09:56 pmNow see here. I have truly been pondering becoming a bit-coin dealer. If I did, it wouldn't be on Silk Road...and I'll tell you why.While I was pondering the finer points of this type of business, I began to wonder - Is there a way to generate Interest on a bit-coin investment (even if it means temporarily turning it into cash and doing an overnight investment then reconverting it back to bitcoins). Generally, if some entity (person, business etc) has lots of cash just sitting around, they may offer it to the bank for an elevated bit of interest for only "overnight". Which means that someone else can borrow the money through the bank as long as its paid back in like 12 hours (terms can vary).So, Silk Road has how many sellers? 250? Now, the average weed seller (don't know about others) can probably get quite a few orders per day/night, sometimes there's a huge stampede for certain items correct? and if you add ALL the Silk Road orders that require some minimum shipping time (does not apply to digital or bit-coin sales exactly) that's a boat load in escrow. You know that order isn't shipping instantly so you have at least one, maybe two nights out of it. That's four 12 hour blocks of time to invest that money while it sits in escrow. This of course doesn't include the fees they collect from everyone. Its actually brilliant, however I have one small problem here.So, how much money is Silk Road actually making here? And what are they doing with it? How can "the good ole boys"(aka the people on our side) hide THAT much money? Good guys with that much cash available are rare in this world, almost non existent. Why don't we see large sums of bit-coin converted back to cash on a very regular basis? Is this what caused the bit-coin to fall? SR Cashing in his over and over?Don't get me wrong, I don't grudge anyone an income. But this setup sounds like its funding something. I love my country. I love the people...the people to me means every scrap of humanity on this globe. Could we be funding something bad and not even know it? I AM NOT LE, I AM NOT A SCAMMER, I AM NOT anything but thoughtful. I would appreciate some conversation on this topic. How do you feel about not knowing what all that cashola is doing out there? Forgot to address this one.Currently the exchanges make it impossible to do something like this. In tradtional [actually non-traditioanl legal-tender-monopoly fractional reserve] banking, you can throw money into short term money markets or interest bearing notes like t-bills overnight. However, since the banks can count this against reserves for that short duration, you don't get charged a transfer fee for this. the interest is miniscule, we're talking a percent of a percent for such a short duration (worse not due to market instability and asset collapses causing cash-shortages). maybe 0.01% or 0.02 %. that's a on a fixed, yes-i'm-getting-this-money-back-in-12-hours placement.The exchange rates for BTC in and out are at lowest 0.25% each side. So Sr's escrow and USD/constant system works for them because they are probably clearing 1-2%, maybe a touch more, from this activity while offering price stability to SR users (and liquidity to the btc market becuase they have to trade on both sides, buying and selling, to adjust the hedge).Under current market conditions, SR would only mitigate it's costs by about 0.02% total, or about 4%, and that's if something like bitcoin credit were available and something like an overnight market were developed.I think for that to be a reality you would need to be close to the end of the bitcoin mining era, and have BTC value at a hundred times or more valuable than it is now to be able to actually start developing some of this stuff. It might be a possibility, because many of the fiat currencies of today will be gone sooner than later. But the USD will be a beneficiary of this before bitcoin will be, and I don't think we'll see a massive influx of capital into bitcoins until the world's currency crises have shaken themselves out and some faith in alternative currencies starts to return. The other lynchpin to bitcoin's success is going to be precious metals. If the world moves back toward a precious metals monetary system (here's hoping), bitcoins value will die off rapidly. Bitcoin's only strength when held up against gold is the fact you don't have to have a central depository or clearing house, whereas it is required for gold (until personal telportation devices are deveopled?). All other metrics of what voluntary market participants still stack up in favor of gold over any 100% digital currency, because you absolutely cannot exploit gold the same way you can code. Even the CHANCE (however likely) of weakness in money is detrimental to it's value long-term. If gold returns in a big way, bitcoin will be a novelty item and its entire use will be for the purpose of anonymity, not value, and certainly not storage.I love the idea of bitcoin. It has circumvented some of the longest-standing historical empowerments to state tyranny that mankind has known for all its days. But the last hurdle is what will be its undoing, unless someone can come up with a way to merge tangible with decentralized and instantly transactable (again, we're talking teleportation at this point).It's a [bit]coin flip, at this point, whether bitcoin will outlast the coming currency crises and emerge as a winner or loser, or at all, or whether market-based money will have its day and leave by-fiat ANYTHING flopping in the dust...