Silk Road forums
Discussion => Security => Topic started by: 6EHjrmcoC8T on September 30, 2012, 09:47 pm
-
Bitcoin
Monetarists Anonymous
After a spectacular crash, an online currency makes a surprising comeback
Sep 29th 2012 | from the print edition
“GIVE me control of a nation’s money supply, and I care not who makes its laws.” So said Mayer Amschel Rothschild, founder of the Rothschild banking dynasty. What would he make of Bitcoin, an online currency with no issuing authority whatsoever? Despite being written off following a speculative bubble and crash last year, the online cryptocurrency is still going strong, not least thanks to its ability to circumnavigate the law.
Bitcoin was devised in 2009 by a mysterious figure known as Satoshi Nakomoto. It is the world’s first, and so far only, decentralised online currency. Instead of a central bank, Bitcoins can be issued by anyone with a powerful personal computer: it mints them by solving extremely difficult mathematical problems. The problems are automatically made harder to ensure that the overall supply of Bitcoins cannot grow too fast. They are traded online, with transactions cryptographically authenticated.
These curious capabilities make Bitcoins a combination of a commodity and a fiat currency (creating the coins is referred to as “mining” and they have value only because people accept them). But boosters inflated a Bitcoin bubble. Shortly after the currency launched, articles spread around the internet arguing that Bitcoins would protect wealth from hyperinflation and that early adopters would make a fortune. The dollar price of a Bitcoin currency unit climbed from a few cents in 2010 to a peak of nearly $30 in June 2011 (see chart), according to data compiled by Mt Gox, a popular online Bitcoin exchange. Inevitably, the currency then crashed back down, bottoming out at $2 in November 2011.
But in the nine months since, Bitcoin has recovered. One unit now costs $12, and the volume of transactions is increasing. Though the price still fluctuates against the dollar, it is less volatile than it was, which makes it a better store of value. Its use as a means of exchange is also getting easier: an increasing number of online retailers take the currency, and new smartphone apps make Bitcoins almost as easy to use as cash. A proliferation of exchanges means that it is relatively easy to swap Bitcoins for conventional currencies.
Tony Gallippi, the boss of Bitpay, which processes Bitcoin payments for retailers, says that his client list has increased from around 100 in March to 1,100 now. These are mostly e-commerce businesses, selling things like domain names and web hosting. But the list also includes a taxi-driver in Chicago and a dentist in Finland. “Credit cards weren’t designed for the internet,” he says. Bitcoin transactions cost less and cannot be reversed in the way credit-card transactions can be. This is important for firms selling to customers in countries known for credit-card fraud, such as Russia or Belarus.
But another big reason for the currency’s success is its role in dodgy online markets. Although tracing Bitcoin transactions to real people is not impossible, the currency’s relative anonymity and ease of use makes it a natural conduit for criminal funds. On the website Silk Road, a sort of eBay for drugs hidden in a dark corner of the web known as Tor, Bitcoins are the only means of transaction. Buyers transfer their Bitcoins into an escrow account where they sit until receipt of the goods is confirmed. Bitcoin transactions on Silk Road are now worth $1.9m per month, estimates Nicolas Christin, a researcher at Carnegie Mellon University.
This may explain why users put up with a big drawback. Bitcoins tend not to be very secure, says Richard Booth, a consultant at RSA, a cyber-security firm. As some users have found to their cost, hackers can sometimes steal Bitcoins from users’ online vaults. In the latest raid, on September 5th, hackers stole $250,000 in Bitcoins from Bitfloor, a large American exchange, causing it to shut down its operation. But although the raid caused a dip in the price of Bitcoins, it soon recovered. It turns out that a currency can thrive even when no one is making laws for it.
or the the actual article: www.economist.com/node/21563752
-
Thoughts vaguely linked to the article.
The Economist is one of our natural allies in many senses, to both darknet markets like SR, and to cryptocurrency like Bitcoin. They are interested in economic innovations, technology, various security issues, and they are proponents of free markets. Less violence in the world and more wealth for it. Obviously they think the Drug War is a disaster both financially and morally. They fully grasp that the DEA are a tax funded collection of armed thugs ensuring the monopolies of other monopolies like the Cartels. People who deal with numbers and statistics in general tend to see straight through false narratives that sound plausibly correct to even a moderately intelligent 'joe' or 'jane'.
I think they would like to run an entire magazine on the Silk Road or Bitcoin purely because they are such novel enterprises. However they have severe restrictions, not just legal, but political too. They have to exist in the physical world. It's one thing for the chicken brains at Gawker to print material on SR, and something else entirely for The Economist to do so because they are taken seriously by every government and corporation in the world. SR and Bitcoin will already have to be approaching household name familiarity before they take the risk of more openly discussing, perhaps even openly supporting us.
However they are the most likely institution to come out on our side not least because their authors are all anonymous and they put a high premium on the truth. Long before 4chan, centuries before the Internet in fact, The Economist (think of the era of the pamphleteers, like mini blogs being physically handed around) recognized the utility in using anonymity (or at least psuedoanonymity given that we know their geographical location). Anonymity is sacrosanct for free speech and honest speech where ideas are recognized as being good or bad according to their merits as opposed to the influence of the author, that has been known long before the age of electronic communications.
I believe that when cryptocurrencies start to threaten the tax base, then TE will take off the gloves and do battle with the government. I'm not saying that everybody at their institution agrees with us, they would probably prefer a much more regulated market with some mandatory controls e.g. > 18 years of age to enter the market, but once Bitcoin and other future cryptocurrencies have a macroeconomic affect, then the floodgates will open and some countries will adopt positive stances to it and others negative stances. I would guess that the developing countries of India, Brazil and many others will support us. In their mode of thought they are more sympathetic to us for historical, economic and practical reasons to say nothing of morality. There isn't a government in South America that concurs with US drug policy. They deal with its results on a daily basis. In South East Asia, the majority of governments would do a rather dramatic turn about face if they could. Kissing ass is expensive, but they'll keep doing it because not doing it makes life much worse for their peoples indirectly through economic sanctions. The majority of extreme measures against drug consumers and vendors exist purely because the DEA controls much of US policy abroad and has spies everywhere. i.e. their tactic is essentially "be anti-drug or you're not a friend to the West".
Of course this is complete bullshit. It is this modern incarnation of the DEA that is the enemy of the West in reality. And by God we will bring them crashing down one way or the other. There is no way out of this for the DEA, they're dinosaurs and I don't mean technologically, I mean their mindset comes straight out of the Middle Ages. The sheer existence of SR is an existential threat to the DEA. They are going to try as hard as they possibly can to equate the Silk Road and any other online drug markets with terrorism, with murder, with pedophilia, anything they possibly can use to smear us so they can get other agencies of the government to do the heavy lifting and extend their domain to the Internet. They are free riders.
It must be understand that although many of us are not exactly on board with many US actions over the past decade, the enemy of SR is not the US government. That is an entire network. The real enemy is a node within that network, the DEA. They will try to drag the other nodes in out of a collective sense of self preservation, but so long as we keep to our principals, build and grow our markets without coercion, without violence, then they should fail. The other nodes have more important objectives that simply don't involve fucking around on the Internet to search for drug dealers even if they wanted to.
This is why it is important for us to keep the ball in the DEA's court and give no excuse for it to be passed to other agencies, so matter how mad you might be that US prisons and US foreign policy are completely over the top. Non violence is a card to play and it must be played first, no goodwill, no game, just endless arms races until both sides become dead or exhausted of resources. Peace should be thought of as something that requires active maintenance, where violence is what happens what you stop maintaining it and let your emotions run riot.
The thing is that cryptocurrencies *are* a potential existential threat to the entire state even if the Silk Road technically isn't by itself. In other words, being associated with Bitcoin could be a poisoned chalice for us. This is a two way street here in our relationship with the cryptocurrency. Some B$ people are against us, which is why we should be wary of them and be politically astute, because I reckon they're going to get much more heat than the darknet drug markets ever will if bitcoin is used to facilitate tax evasion.
I am about to make a prediction!
The future will be... complicated. ;)
I believe that cryptocurrencies will encourage the existence of city states as opposed to federalism. A huge tide is turning here in world history. Confederacies becomes a much more successful form of relationship with truly free currencies. The emergence of Leviathan, the very concept of 'national' and 'nation' strongly depended on control over a central bank, much more so than even we realized. Without central banks, new forms of governance will be required to manage our affairs outside of economy. We do need governance. Social organization needs to exist, there is nobody who is being an anarchist about that. Unless, you know, you don't like belonging to clubs or a family and you hate having friends...! Whether we need governments, at least in their present form, is up on the table as an open question thanks to cryptocurrency. I think we do, but they will be much smaller and paradoxically also more powerful. They will have various 'helper classes' of other organizations which revolve around them like a constellation, but which are not part of a government but an independent grouping. So, confederacies of city states and a lot lot more NGOs, I think that is the solution and we shall all we be wildly richer and better off in comparison to before, possibly with much more minor conflicts, but no large catastrophic state based wars because our self interest shall be too intertwined with the others. I think this is a world where collectivism and individualism are both better off, where their modes of thinking undergo significant evolution and become much more diverse.
But I don't think we're going to get to that world without a great deal of tumult, possibly epic amounts of violence. It will be a huge upheaval, even with the best will in the world. Getting past that stage is the kind of worry that keeps me up at night. I can see people who use cryptocurrency getting turned into "Jews" if you take my meaning.
tldr; I think in the future we'll be living in a world that is much different to our present one, that you'll have to go back 2 or 3 centuries until capitalism sparked its revolutions to find a comparable change to society.
-
How is anyone supposed to follow a post like that, Pine!? Ha ha. Well done. I'm in absolute agreement.
-
Fascinating post pine.
My prediction (and also my hope) is that people in the near future look back at us and say: "The fools, they learned nothing from the twenties one century earlier".
In 1933 the alcohol prohibition was repealed. I hope that by 2033 this drug war has ended.
You should never go to war with human nature.
-
How is anyone supposed to follow a post like that, Pine!? Ha ha. Well done. I'm in absolute agreement.
with adderall!
-
Seriously though, well stated Pine.
I think in the future we'll be living in a world that is much different to our present one, that you'll have to go back 2 or 3 centuries until capitalism sparked its revolutions to find a comparable change to society.
This makes me think of Vernor Vinge's singularity theory. What that's mainly just great sci-fi, I do believe that this information age we live in is just the beginning of another exponential change in the quality of life for humans. Even despite all the political retardation that we have to live with on a daily basis.
I just wish I could live long enough to see it all happen...
-
I haven't followed the thread yet, or even read the article, but I just wanted to note that when the attacks on Bitcoin begin, and they are inevitable, SR will just be the excuse.
Bitcoin itself poses more of a threat to the current power structure than SR does.
-
How is anyone supposed to follow a post like that, Pine!? Ha ha. Well done. I'm in absolute agreement.
Agreed. Damn. After reading the article I had so much to say... then Pine chimes in and kills it. /goesandsitsincorner.
.Hades.
-
One question, would bit coin survive if SR got shut down?
I personally think so, it's got too many useful features and honestly seems quite future proof and it will serve the people far better than any govt/corp sponsored digital currency. SR is however, the biggest impetus to the widespread adaptation of it, but I don't think SR will be shut down anytime soon. Even if that were to happen, Blackmarket Reloaded would step up to carry the slack.
-
One question, would bit coin survive if SR got shut down?
Be aware that Silk Road is a multimillion dollar enterprise. The amount of money the Silk Road staff make from operating the site is huge, think hundreds of thousands of dollars. Estimating conservatively.
If Silk Road gets shut down, or ceases its operations, people will stand in line to offer alternatives. I don't see the online drug market shutting down any time soon.
To the contrast, I actually see Silk Road outliving BitCoin. BitCoin is awesome as experimental software, and if it wasn't for BTC, there would be no Silk Road. However, it has some limitations. Every user that installs the BitCoin client, the original software, has to download the entire blockchain (the transaction history). This blockchain is growing every day and it's getting really big and unwieldy, we're already at more than 4GB.
It's possible that in the future, an improved version of BitCoin will be released. Maybe one where you only need to download the blockchain of the last month or something like that.
Cryptocurrency is designed to imitate cash. In the real world there are multiple currencies. I believe that we'll see various cryptocurrency too some day.
-
I would tend to agree, I think it will be at least a couple more years until LE decide to put money and resources into shutting down SR and then we will really find out how powerful the tor network is or is not.
There is an interesting thread here called: "how governments have tried to block Tor". A link to it can be found in the sticky thread of this subforum.
The Chinese government is already in a constant war with the Tor network. And the Tor network is fighting back. We'll have to see how it plays out, but banning encryption is going not going to be easy.