Quote from: Guru on September 27, 2012, 01:38 amActually, it might be better if Bitcoin does, in fact, fail. Bitcoin's Achilles heel is that it was never designed to be anonymous -- in fact, to counteract double-spending, all transactions MUST by design, be public. Chaumian digital cash is the exact opposite -- it is PRIVATE by design, using blinding, and uses mathematics to prevent double-spending by de-anonymizing anyone who double-spends a coin. GuruAgree completely, I can think of at least 3 practical reasons why Bitcoin has to fail that I have never seen discussed. But that's ok, it is a stepping stone, an intermediary. It's funny that some bitcoin proponents think that we're some kind of parasite on bitcoin, when in fact it's basically the other way around. SR is like a country. Bitcoin people who think that because SR is 1/3 - 1/2 of the market of bitcoin or so, it's not the main picture, are completely bonkers. This is why:When I said SR is like a country, I wasn't using a metaphor. Let's say we have two countries. Americastan and Silkroadistan. Products in Silkroadistan are priced in bitcoins. Products in Americastan are priced in dollars. When you want products from Americastan, you must sell bitcoins and acquire dollars, then you visit Americanstan and return with Americastan products. Similarly, in order to obtain products from Silkroadistan, you doing the exact same process in reverse.It's simply amazing how many people on the bitcoin forums do not comprehend this simple piece of economic logic. They say that "exchanges and currency trading" is the mainstay of the bitcoin economy currently, not the Silk Road. I fell over laughing when I heard that, but nobody seemed to get it.Nooooooooooo. Not correct. The reason why those 'sectors' exist in the first place, is because travellers to Silkroadistan require currency to acquire product in Silkroadistan. Their accounting is badly wrong.Thus, the currency trading done and the darknet markets are one and the same thing, just two sides of the same coin. The bitcoin advocates against SR are simply double counting. Actually almost the entire bitcoin economy is powered by the darknet markets. Not unless they literally mean that the trading fees from MtGox and Intersango are over 20 million dollars in income, which they are definitely not. 1 BTC bought on an exchange is 1 BTC used to buy drugs (or nice socks). Currencies are only worth their use value."Speculation" is another thing they fall back to. This doesn't add up either. Speculation is by definition a zero sum game. Gambling in such a way doesn't put any value into the bitcoin economy, it merely provides temporary liquidity. This is important property, but it doesn't materially change prices over any reasonable time frame and so it doesn't make sense to quote it as a sector. Similarly, real gambling e.g. bitcoin for poker games doesn't add value to the economy either. At no point is further value generated back into the bitcoin economy. Currencies are exchanged, but new value, actual products and services are not generated. An easy way to see this, is to visualize yourself on a desert island. If you use coconuts as a medium of exchange with your fellow ship wrecked friends, you'll quickly note that exchanging coconuts, at any kind of speed, does not change the economic value of the coconuts. The value of the coconuts remains static, but the prices continually changes, following the typical boom and bust process. Ultimately, if you average out the value of the coconuts over different (long) periods of time, you find that you reach an average that is almost exactly the same every time. This is because actual goods and services, real things, are what actually underpins the value of a currency, despite all appearances to the contrary. I know that bitcoin is mildly inflationary, but you see my point. Bitcoin is used to buy alpaca socks and drugs in the physical realm, and but for that it's just a bunch of geeks trading a sophisticated version of World of Warcraft game gold pieces back and forth. The exchanges themselves do actually add value to the economy, not the net transactions they facilitate, but the service of making transactions. This however, is not really that much value. Witness the size of the stock exchanges. The stock exchanges themselves are huge. The stock exchange, that is; the company offering the stock exchange service, is really really tiny, manned by a dozen staff or so in most cases.LE, not having the rose tinted glasses so much, likely grasp this instinctively even if they don't hire an economist to work it out, which is why the exchanges are going to be raided and shut down. That is simply inevitable. I think they would try to hit SR first, and then the bitcoin exchanges later, which is the only reason why it hasn't yet occurred.At some point naive bitcoin people and we shall part company. They will likely go into a tailspin like every other e-commence currency. I mean, I hope they don't, honestly. But any concessions to the State in the form of identification or registration is the regulatory death knell for an e-commerce solution trying to compete against the financial established order. They are up against MASSIVE corrupt banking corporations and officials making backroom deals. They haven't a hope in hell. They need us, but not all of them know it. SR is an extremely practical identification of a market requirement that already had a high threshold imposed via regulations i.e. that the product was illegal and therefore by definition regulated out of white market existence. So, looking at it this way, you see SR has less hurdles "paperwork", if you want to call it that, in obtaining product for many people.Eventually however, the darknet markets will actually provide *cheaper* access to drugs. This is an outcome not many people get, not even on SR. But it too is inevitable. One simple reason among many, is that the entire apparatus of distributing drugs normally, this big hierarchy of gangs, is hugely expensive for the Mafia and other entities to maintain. The majority of players get pittance in fact, but there are so many of them that it's something (off the top of my head) like 20% - 40% of the cost of the drugs themselves. The second reason is horizontal and vertical integration is economic and highly profitable for a huge number of new market participants. Look those up on youtube or wikipedia or some place if you haven't heard of those ideas before. Basically it is now possible for a tiny team of even 3 or 5 person operation (making synthetics or doing grow-ops) to provide the same level of output as an entire traditional black market corporation with hundreds or thousands of workers. And there are others too.Black market just turned Industrial. It's just that not everybody's caught up yet. In the future, all this will seem stupidly obvious to anybody on the street.