Silk Road forums
Discussion => Philosophy, Economics and Justice => Topic started by: Lightner7 on April 03, 2013, 11:54 pm
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I'm one of those buyers who's wallet has had an exponential growth, because I've held on to money from last fall. I've more that quadrupled my initial deposit since then, even while still buying a few drugs now and then. I believe that the Bitcoin economy is complete a dependant on SR atm. Because of this, it is actually people like me, who, by keeping my money in my wallet, drive up the value of the bitcoin. And I'm not the only one who's benefiting from old deposits. When people start spending those 'old Bitcoins', it will crash the Bitcoin-bubble we're experiencing at the moment. The trick is to be the first of the last 50% to do so.
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Bitcoin prices are not completely reliant on SR, they are reliant on the people who have invested in them and are sitting on the waiting for them to reach a certain value before they sell them.
They will get to a stage where everyone hoarding them will start selling them off for crazy products and this will create a crash in prices.
I don't know when this will happen, I suspected it would once they reach 100 dollars each but that has happened already. There are a good few BTC exchanges that allow you to sell them automatically once they reach a certain price, I'd imagine many people have this set up for a specific amount.
I will be paying attention when they hot 100 euros a pop.
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It's already passed 100 euros a pop!
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It's been a bad week to join the SR game. I haven't bought a single bitcoin yet, waiting for a less risky time. If it wasn't such a process, I would just buy 'em and spend 'em right away.
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If people aren't just taking as it comes they can go sober. I can take it. Ultimately BTC is pinned the dollar in the long term so we can take it. I don't mind really. Just hectic times really.
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I agree, i am the same way.
If i believe i can make more money waiting 3 weeks with BTC in my wallet
instead of waiting 3 weeks for my product to arrive and then for me to sell it and get my money
then ill obv just leave it in my wallet.
This ultimately hurts SR but not an enormous amount, and the entire BTC economy
is hardly dependent on SR or even a few thousands BTC users, it depends more on the biggest wallet sizes those are the only people who have any sort of control.
I wish there was a way to slow BTC's rise until i could get all my orders in!
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Well there are various factors. For instance, I have large amount sitting in my wallet. I still use them to purchase from vendors because truth be told - by the time I place an order, usually the next day (and definetly by the time my order arrives), I've got more $$ sitting in my wallet because the BTC price has gone up! So I'm barely dipping into my gains to purchase oftenly, and it still doesn't affect the value of my coins in a signifcant way. I just hope they keep going up for eternity (which won't happen).
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Will be interesting to see if/when BTC starts dropping in price and all the vendors rapidly try to sell their coins driving the price down further. It could end up decreasing at a faster rate than it has been rising.
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Will be interesting to see if/when BTC starts dropping in price and all the vendors rapidly try to sell their coins driving the price down further. It could end up decreasing at a faster rate than it has been rising.
lol another clueless idiot
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Will be interesting to see if/when BTC starts dropping in price and all the vendors rapidly try to sell their coins driving the price down further. It could end up decreasing at a faster rate than it has been rising.
LOL! what a smart analysis bahahahaha go back to kindergarten
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People try to sell their coins - but no traders want to buy them due to their dropping price. So people start offering lower prices in order to sell them. Before you know it the price is dropping.
Just my two cents worth. We'll see what happens over the next few months.
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Hording is the rational response to runaway deflation. If I spend $100 on drugs now and the price of BTC doubles in a week, then I've effectively spent $200 on those drugs by next week.
What keeps SR's business afloat in this deflationary period is the large percentage of irrational actors in the drug community. I think they fall into two categories:
1. Ignorant/uninformed people. These are people who just want drugs and don't follow bitcoin. They buy when they need coins and spend immediately
2. Addicts. People who need their drugs and will pay for them, despite knowing that they could buy twice as much for the same money in a week
The second category contradicts the notion that SR is an agora of voluntary trade, since drug addiction is more like mental slavery.
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I agree, i am the same way.
If i believe i can make more money waiting 3 weeks with BTC in my wallet
instead of waiting 3 weeks for my product to arrive and then for me to sell it and get my money
then ill obv just leave it in my wallet.
This ultimately hurts SR but not an enormous amount, and the entire BTC economy
is hardly dependent on SR or even a few thousands BTC users, it depends more on the biggest wallet sizes those are the only people who have any sort of control.
I wish there was a way to slow BTC's rise until i could get all my orders in!
i literally lost money buy buying 10g of molly off SR and selling it over the course of 3 weeks. I would have more money now if I had just done nothing at all
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I agree, i am the same way.
If i believe i can make more money waiting 3 weeks with BTC in my wallet
instead of waiting 3 weeks for my product to arrive and then for me to sell it and get my money
then ill obv just leave it in my wallet.
This ultimately hurts SR but not an enormous amount, and the entire BTC economy
is hardly dependent on SR or even a few thousands BTC users, it depends more on the biggest wallet sizes those are the only people who have any sort of control.
I wish there was a way to slow BTC's rise until i could get all my orders in!
i literally lost money buy buying 10g of molly off SR and selling it over the course of 3 weeks. I would have more money now if I had just done nothing at all
I'm desperate from this ; wish i had let more coins in my wallet..
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oh and +1 astor,
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i literally lost money buy buying 10g of molly off SR and selling it over the course of 3 weeks. I would have more money now if I had just done nothing at all
That's what I've been saying for weeks, vendors can make more money holding onto their bitcoins than cashing them out to buy drugs to sell. It's a wonder anyone is trading for goods at all.
BTC will stabilize eventually and become a useful tool of exchange, but who knows if that will happen in a week, a month, or a year.
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Oh, and SR isn't losing even if sales are down, since they are making money off the shit tons of BTC that they hold. If they had $5 million in BTC two months ago, then they have $50 million in BTC today, which is probably more than they've made from commission since they started.
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Hording is the rational response to runaway deflation. If I spend $100 on drugs now and the price of BTC doubles in a week, then I've effectively spent $200 on those drugs by next week.
What keeps SR's business afloat in this deflationary period is the large percentage of irrational actors in the drug community. I think they fall into two categories:
1. Ignorant/uninformed people. These are people who just want drugs and don't follow bitcoin. They buy when they need coins and spend immediately
2. Addicts. People who need their drugs and will pay for them, despite knowing that they could buy twice as much for the same money in a week
The second category contradicts the notion that SR is an agora of voluntary trade, since drug addiction is more like mental slavery.
I guess I fall into category 1, and I guess it is ignorance. I just see it as there is no way I can possibly know if the prices of BTC will drop after I deposited my $100 budget to buy drugs with. Then I don't get to buy drugs. Maybe for people capable of watching the prices pretty consistently that would work but I can't do that. But, if I deposit my $100 and spend it on the drugs I want right away then I get my drugs and I am happy. I do keep small amounts in BTC between orders, but I can't count on something like that so it seems pretty rational to me.
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I think it would make sense to start accepting LTC on SR. Each vendor could get the option to accept them or not. But it would take some of the heat of off BTC and kick-start the sales again on SR. Also it would be nice to be able to deal with two different crypto-currencies. At the moment everything is riding on BTC. If the rise in BTC is a bubble that are going to burst soon then we would have to wait again for the price to settel before orders again would start coming in. Buyers would be afraid to buy BTC in some period after a large fall in price. Much like the housing bubble. If people had the opportunity to jump from one currency to another we wouldn't be so dependent on BTC. Don't get me wrong i love BTC but it is very irritating that we cant use it as a currency at the moment. IF the BTC bubble bursts, then people would ether jump to dollars or to LTC. Why not keep that LTC option open. I for one would love to sell my products for Litecoin.
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I think it would make sense to start accepting LTC on SR. Each vendor could get the option to accept them or not. But it would take some of the heat of off BTC and kick-start the sales again on SR.
That's actually an interesting idea. They could offer an in-house BTC-LTC exchange and vendors could opt to sell only in LTC. After a big burst a week ago, its price has been relatively stable in the last week. Then again, that may be a temporary thing. Since it's a smaller market, it may go through much bigger fluctuations eventually.
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I think it would make sense to start accepting LTC on SR. Each vendor could get the option to accept them or not. But it would take some of the heat of off BTC and kick-start the sales again on SR.
That's actually an interesting idea. They could offer an in-house BTC-LTC exchange and vendors could opt to sell only in LTC. After a big burst a week ago, its price has been relatively stable in the last week. Then again, that may be a temporary thing. Since it's a smaller market, it may go through much bigger fluctuations eventually.
Bitcoin started at the same price on SR. I really don't think that BTC would have been where it is today without SR. But today BTC has it´s own life and are not dependent on SR. But "we" could give life to a new crypto-c witch would give the buyers the opportunity to choose the more steady currency at the moment of the purchase.
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BITCOIN IS CRASHING! EVERYBODY BUY YOUR SHIT NOW BEFORE THE MT. GOX WEIGHTED AVERAGE CATCHES UP! EVERYBODY PANIC! AHHH
^
This is what I imagine the state of SR will be at some point in the very near future.
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LOL, like right now? :)
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LOL, like right now? :)
Well, I for one took my advice.
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I think it would make sense to start accepting LTC on SR. Each vendor could get the option to accept them or not. But it would take some of the heat of off BTC and kick-start the sales again on SR. Also it would be nice to be able to deal with two different crypto-currencies. At the moment everything is riding on BTC. If the rise in BTC is a bubble that are going to burst soon then we would have to wait again for the price to settel before orders again would start coming in. Buyers would be afraid to buy BTC in some period after a large fall in price. Much like the housing bubble. If people had the opportunity to jump from one currency to another we wouldn't be so dependent on BTC. Don't get me wrong i love BTC but it is very irritating that we cant use it as a currency at the moment. IF the BTC bubble bursts, then people would ether jump to dollars or to LTC. Why not keep that LTC option open. I for one would love to sell my products for Litecoin.
another clueless idiot
"lets replace one volatile cryptocurrency with another"
I'm seriously here, do people think before they type???????????????????????????????????????????????????????????????????????????????????????????
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I think it would make sense to start accepting LTC on SR. Each vendor could get the option to accept them or not. But it would take some of the heat of off BTC and kick-start the sales again on SR. Also it would be nice to be able to deal with two different crypto-currencies. At the moment everything is riding on BTC. If the rise in BTC is a bubble that are going to burst soon then we would have to wait again for the price to settel before orders again would start coming in. Buyers would be afraid to buy BTC in some period after a large fall in price. Much like the housing bubble. If people had the opportunity to jump from one currency to another we wouldn't be so dependent on BTC. Don't get me wrong i love BTC but it is very irritating that we cant use it as a currency at the moment. IF the BTC bubble bursts, then people would ether jump to dollars or to LTC. Why not keep that LTC option open. I for one would love to sell my products for Litecoin.
another clueless idiot
"lets replace one volatile cryptocurrency with another"
I'm seriously here, do people think before they type???????????????????????????????????????????????????????????????????????????????????????????
Litecoin is not as volatile as bitcoin and have both currencies would give each currency more stability as one would be a hedge against the other. Economics.
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I think it would make sense to start accepting LTC on SR. Each vendor could get the option to accept them or not. But it would take some of the heat of off BTC and kick-start the sales again on SR. Also it would be nice to be able to deal with two different crypto-currencies. At the moment everything is riding on BTC. If the rise in BTC is a bubble that are going to burst soon then we would have to wait again for the price to settel before orders again would start coming in. Buyers would be afraid to buy BTC in some period after a large fall in price. Much like the housing bubble. If people had the opportunity to jump from one currency to another we wouldn't be so dependent on BTC. Don't get me wrong i love BTC but it is very irritating that we cant use it as a currency at the moment. IF the BTC bubble bursts, then people would ether jump to dollars or to LTC. Why not keep that LTC option open. I for one would love to sell my products for Litecoin.
another clueless idiot
"lets replace one volatile cryptocurrency with another"
I'm seriously here, do people think before they type???????????????????????????????????????????????????????????????????????????????????????????
I never said anything about replacing Bitcoin with Litecoin. The idea is to take some of the volatility out of the marketplace (SR) by introducing a second currency. Silkroad need a reliable currency to keep business going. When bitcoin fluctuate like it dose, allot of people starts to get afraid of eater buying or using the currency. There interest in bitcoin is as a tool for buying stuff not as an investment. Rapid change in price is bad for vendors and therefor for SR.
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I think most of you have missed the point.
The impact on Silk Road is whether Silk Road will be able to honor it's hedging of transactions or not.
For example, a 1BTC purchase 24 hours ago will require SR to provide the vendor with 4 BTC or more tomorrow (current price of BTC is $64).
I know that SR revenues are not insignificant, but this is a big hit.
Discuss.
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I think most of you have missed the point.
The impact on Silk Road is whether Silk Road will be able to honor it's hedging of transactions or not.
For example, a 1BTC purchase 24 hours ago will require SR to provide the vendor with 4 BTC or more tomorrow (current price of BTC is $64).
I know that SR revenues are not insignificant, but this is a big hit.
Discuss.
i bet they've got enough to cover it. DPR is in this for political reasons, and while I'm sure he's very happy to make lots of money (which he most certainly has), I guarantee he's not gonna let this market correction ruin this project (the road).
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I think most of you have missed the point.
The impact on Silk Road is whether Silk Road will be able to honor it's hedging of transactions or not.
For example, a 1BTC purchase 24 hours ago will require SR to provide the vendor with 4 BTC or more tomorrow (current price of BTC is $64).
I know that SR revenues are not insignificant, but this is a big hit.
Discuss.
I dont belive that to be true. I could be wrong but hedging or not is just a matter of whiter or not the vender wants the escrow to fixed in dollars or in bitcoin. If escrow is unhedged the vendor will be payed the amounte of bitcoin its costed (in btc) at the moment it vent into escrow. If escrow is hedged the vendor will be payed in the amount of dollars regardless of the change in bitcoin prices. So if escrow is hedged SR would just have to sell the bitcoin you put into escrow and put the dollars a side. So i dont see any risks for SR.
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So HOW can DPR hedge his BTC?
The think I liked about BTC was exactly the fact that there are no derivatives yet.
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C.I.A are running this show ;)
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I think most of you have missed the point.
The impact on Silk Road is whether Silk Road will be able to honor it's hedging of transactions or not.
For example, a 1BTC purchase 24 hours ago will require SR to provide the vendor with 4 BTC or more tomorrow (current price of BTC is $64).
I know that SR revenues are not insignificant, but this is a big hit.
Discuss.
I dont belive that to be true. I could be wrong but hedging or not is just a matter of whiter or not the vender wants the escrow to fixed in dollars or in bitcoin. If escrow is unhedged the vendor will be payed the amounte of bitcoin its costed (in btc) at the moment it vent into escrow. If escrow is hedged the vendor will be payed in the amount of dollars regardless of the change in bitcoin prices. So if escrow is hedged SR would just have to sell the bitcoin you put into escrow and put the dollars a side. So i dont see any risks for SR.
I think you are incorrect.
Lets say right now you make a purchase on SR for 1BTC. On SR right now, 1BTC is $159. But the actual value of BTC is actually much less than that. It has been fluctuating bet $60 and $90.
Mtgox is closed, so SR cannot sell coins for dollars, even assuming that you are correct in describing the way the SR hedging system works (I believe you are incorrect, and no coins are sold for dollars. Rather, hedging is covered by the fees).
SR will have to literally give money to any hedged vendor. Any unhedged vendor loses money on each transaction, because the SR price does not reflect the market price, but rather the Mtgox trading price - trading that was suspended hours ago!
Can you see where that may be a problem? There is a huge liability here. Sure SR could pay it but to pay SR may have to take from the balances of users. A kind of fractional reserve market.
Don't believe me? Do the math.
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Y
I think most of you have missed the point.
The impact on Silk Road is whether Silk Road will be able to honor it's hedging of transactions or not.
For example, a 1BTC purchase 24 hours ago will require SR to provide the vendor with 4 BTC or more tomorrow (current price of BTC is $64).
I know that SR revenues are not insignificant, but this is a big hit.
Discuss.
I dont belive that to be true. I could be wrong but hedging or not is just a matter of whiter or not the vender wants the escrow to fixed in dollars or in bitcoin. If escrow is unhedged the vendor will be payed the amounte of bitcoin its costed (in btc) at the moment it vent into escrow. If escrow is hedged the vendor will be payed in the amount of dollars regardless of the change in bitcoin prices. So if escrow is hedged SR would just have to sell the bitcoin you put into escrow and put the dollars a side. So i dont see any risks for SR.
I think you are incorrect.
Lets say right now you make a purchase on SR for 1BTC. On SR right now, 1BTC is $159. But the actual value of BTC is actually much less than that. It has been fluctuating bet $60 and $90.
Mtgox is closed, so SR cannot sell coins for dollars, even assuming that you are correct in describing the way the SR hedging system works (I believe you are incorrect, and no coins are sold for dollars. Rather, hedging is covered by the fees).
SR will have to literally give money to any hedged vendor. Any unhedged vendor loses money on each transaction, because the SR price does not reflect the market price, but rather the Mtgox trading price - trading that was suspended hours ago!
Can you see where that may be a problem? There is a huge liability here. Sure SR could pay it but to pay SR may have to take from the balances of users. A kind of fractional reserve market.
Don't believe me? Do the math.
Yes i agree that there could be an issue with backing the btc for dollars at the moment of pushed. I dont know how this actually would be done. I dont have any experience in this. BUt do we agree on that the escrow system works like this. You and i want to make a deal and DPR stands in the middle and offers to hold the fund until the deal is finalized. He then askes the seller i what currency he wants to be payed in. Since all customers only have btc on entering his store, dealing in btc wont be a problem. He will simply just have to keep the btc in his pocket til the deal is done. Now the problem starts, if i as the seller, says that i listed my products in dollars and would like to be payed in dollars. So at the exact time you and i make the deal, DPR will exchange the btc to dollars. (he dossent want to take the change in the ever change btc prises. That would be to risky) Now he has dollars in his pocket, just waiting for our deal to be finalized. How that amount is changed to dollars at that moment i dont know. But any other method would not make sense to me. No one would set up a business like this and just let it ride on the fluctuation of the bitcoin price.
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I bought about 5 items ;) do you think the vendors will cancel them? :(
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anyone notice this thread was used as research in an article by Forbes?
http://www.forbes.com/sites/andygreenberg/2013/04/16/founder-of-drug-site-silk-road-says-bitcoin-booms-and-busts-wont-kill-his-black-market/
As the crypto-currency Bitcoin has skyrocketed in value over the last weeks and then fallen even faster, it’s produced plenty of excitement and heartache for investors. But at least one Bitcoin enthusiast has been nonplussed by Bitcoin’s volatility: the entrepreneur who goes by the name the Dread Pirate Roberts, founder of the black market site Silk Road, where visitors can use Bitcoins to buy practically any illegal drug imaginable.
In a rare (and brief) public statement sent to me, the Dread Pirate Roberts (DPR) said that despite Silk Road’s reliance on Bitcoin, commerce on the site hasn’t been seriously hurt by Bitcoin’s wild rise and fall. “Bitcoin’s foundation, its algorithms and network, don’t change with the exchange rate,” the pseudonymous site administrator writes. “It is just as important to the functioning of Silk Road at $1 as it is at $1,000. A rapidly changing price does have some effect, but it’s not as big as you might think.”
Silk Road’s customers, after all, aren’t generally interested in Bitcoin’s worth as an investment vehicle, so much as in how it makes it possible to privately buy heroin, cocaine, pills or marijuana. They use Bitcoin because it’s not issued or stored by banks and doesn’t require any online registrations, and thus offers a certain amount of anonymity. (While those privacy protections are far from perfect, they can be increased by using so-called “laundry” services that mix users’ Bitcoins together and reissue them random ones to make any individual coin harder to trace.)
Silk Road has built-in protections against Bitcoin’s spikes and crashes. Although purchases on Silk Road can only be made with Bitcoin, sellers on the site have the option to peg their prices to the dollar, automatically adjusting them based on Bitcoin’s current exchange rate as defined by the central Bitcoin exchange Mt. Gox. To insulate those sellers against Bitcoin fluctuations, the eBay-like drug site also offers a hedging service. Sales are held in escrow until buyers receive their orders via mail, and vendors are given the choice to turn on a setting that pegs the escrow’s value to the dollar, with Silk Road itself covering any losses or taking any gains from Bitcoin’s swings in value that occur while the drugs are in transit. So while Bitcoin’s crash last week from $237 to less than $100 means that the Dread Pirate Roberts was likely forced to pay out much of the extra gains Silk Road made from Bitcoin’s rise, most of his sellers were protected from those price changes and continued to trade their drugs for Bitcoins despite the currency’s plummeting value.
As a result, only about 1,000 sales listings out of more than 11,000 were taken off the site during the crash, according to DPR. “Those were from vendors who didn’t protect themselves,” he (or she) says. “The volatility only hurts vendors who don’t hedge their escrow balance.”
In fact, Bitcoin’s bubbles may be a bigger problem for Silk Road than its busts. In the site’s forums, some users have noted that they’re reluctant to spend their Bitcoins when they’re appreciating so quickly. In some cases, vendors can make also make more by simply holding onto the Bitcoins they earn, rather than trading them for dollars to buy more drugs to sell.
One Silk Road buyer and small-time drug dealer with the name Joey Terrifying writes that he used the site to buy a gram of Molly, a form of ecstasy, with the intention of quickly selling it to his own customers. By the time he’d sold it three weeks later, Bitcoin had risen in value so much that it dwarfed his profits from the drug sales. “I would have more money now if I had just done nothing at all,” Terrifying laments.
“Hoarding is the rational response to runaway deflation,” adds one user with the name Astor. “If I spend $100 on drugs now and the price of [Bitcoin] doubles in a week, then I’ve effectively spent $200 on those drugs by next week.”
But Silk Road has one sustaining advantage: Buyers of drugs, unlike other goods, may be more willing to pay for their pleasure even if it means missing a big investment opportunity. As Astor points out in his comments on the forums:
What keeps [Silk Road's] business afloat in this deflationary period is the large percentage of irrational actors in the drug community. I think they fall into two categories:
1. Ignorant/uninformed people. These are people who just want drugs and don’t follow bitcoin. They buy when they need coins and spend immediately.
2. Addicts. People who need their drugs and will pay for them, despite knowing that they could buy twice as much for the same money in a week.
Another user by the name of AllDayLong chimed in to agree with that theory, using his or her own drug consumption as exhibit A.
“Maybe for people capable of watching the prices pretty consistently that would work, but I can’t do that,” the Silk Road customer writes. “But, if I deposit my $100 and spend it on the drugs I want right away then I get my drugs and I am happy.”