Bitcoin Is for Drugs
medium.com
medium.com
A lot of communities in these areas love bitcoin, not becuase they want to scam anyone, but precisely the opposite: becuase they are tired of being scammed.
Do you know what you have to do when you use Paypal to buy digital goods from many persons or companies? You have to send them your ID, a picture of you next to your ID, often confirm a phone call or email, and then pay an extra fee.
Because if they don't make customers do that, they will get scammed by chargebacks no matter what, and lose all of their money. People are tired of bullshit like Paypal, and that's why they prefer Bitcoin.
I agree with some points the author has, I don't think there's anyone that thinks the valuation of recent ICOs on the Ethereum network are anywhere near reasonable, but just because things are significantly overvalued doesn't mean the entire technology is for scamming.
Just like there's reasons to not exclusively use Amazon/Google, there's reasons to not exclusively use USD/Paypal/Banks/etc.
I'm trying in like 6 different places and not chance to work.
In light of that claim, I wonder how difficult it would be for: one of my neighbors in Queens, NY to take $1000 cash, turn it into bitcoin, send it to a brother in Cebu City, Pachuca, or Dhaka; for the brother to turn those bitcoins into Philippine or Mexican pesos or Bangladeshi takas; how long it would take; and finally how much it would end up costing versus the mid-market exchange rate between dollars and the other currency.
While I havent personally done an in person bitcoin exchange, I'd imagine that there aren't too many people doing it this way, and probably not in quantities of $1000+. I would love to hear about the experiences of people who have done this.
The other option would be to setup a bank account, which might be a bit of a challenge if the person is not a citizen, or perhaps not even in the country legally, and then there's the issue of the money now having a permanent digital paper trail (not bad per-se, but probably something your typical migrant worker sending money home might try to avoid (but seriously pay your taxes))
I sold bitcoins in person around 2012-2013. I had way more demand than bitcoins I was willing to sell.
Doesn't that imply it isn't easy? Or at least wasn't back then?
They ended up getting scammed a few times, and they realized that it was a fairly efficient market after all. So they got out.
With a bank account or debit card it's even easier.
- Bitcoin ATM: You insert cash and get bitcoin on your wallet. There are over 1000 ATMs in US alone. [1]
- People: There are lot of craigslist-like sites for P2P bitcoin exchange. [2]
- Gift card: Again there are lot of communities for exchanging gift card for bitcoin. [3]
- Bank account/Debit/Credit card: You can buy bitcoin from sites like coinbase which are US-based and are actually FDIC insured. [4]
Obviously cryptos are not very close to this goal, but you can imagine that it could be very convenient in this example if that was not the case.
> Investing in Bitcoin is investing in vice.
Unless the author is using an unfamiliar definition of "vice," I hardly see how this follows. Several of the use cases listed are not what I would consider immoral. Drugs and gambling can obviously lead to addiction, but I don't consider them inherently immoral regardless of whether they are legal in a given jurisdiction. Tax evasion is a little more of a grey area in this context, because I'm not quite sure how you would use Bitcoin for tax evasion. Sharing secrets is completely morally ambiguous; it depends entirely on what the secret is. Does anyone consider capital flight immoral? I've never heard that idea. Lastly, yes, scamming people is fairly unambiguously immoral.
...
Really. Who reading this do you expect to believe you're unfamiliar with drugs and gambling being called 'vice'?
Just guessing (and this also applies to money laundering): using undeclared/ill-acquired funds to buy bitcoin, which are not taxed and cannot be traced back to you (if you take the necessary protections). Selling it back when you need liquidity.
If you pay someone in Bitcoin, and they spend that Bitcoin on something else, and none of those transactions are properly reported for their income or capital gains implications, that's tax evasion. Bitcoin facilitates it because it doesn't have the built-in processes for handling large-scale monetary transfers that the traditional banking system does.
"Capital flight" presumably means hiding ill-gotten money by using Bitcoin to transport it across borders. A better term might be "money laundering".
So, sure sharing secrets is not vice, but the rest are or contribute to it. The point is that most of the value of Bitcoin is wrapped up in vice.
It is a digital collectible. There are a finite number of them produced (in Bitcoin's case, at least). The price is high due to speculative demand. People hoard them and lose them, and the price will continue to rise until it collapses. It is extremely deflationary and has no monetary controls in place to stabilize it.
Government backed currencies have value because of taxes. Everyone must pay taxes in the designated currency and failure to do so is punished by a monopoly on force (the government can make your life miserable for not paying).
There is no necessitating force, like taxes, for cryptocurrencies. The main use case and driving forces in their adoption are illicit (ransomware, dark markets, etc). There are no capital controls either. No one will elect to pay their employees in Bitcoin due to its extremely deflationary nature. No employer will elect to pay someone in a currency without capital controls. For example, if I agreed to pay someone 1 BTC per week for their work, and one week it is worth $1k USD and the next it is $3k USD, I would be getting seriously screwed. Also, since it is unstable, prices will always be pegged to the fiat currency (eg. 5 USD in BTC at the current market price), since charging a fixed amount in Bitcoin would cause people to be unwilling to pay it or the company to take a loss on the sale.
I don't know if the illicit markets are enough to sustain demand for cryptocurrencies in the same way that taxes do for normal currencies. I personally view them as a modern day ponzi scheme driven by speculative demand. That is not to say that you can't make money off of them, but don't be surprised if they go the same way as Beanie Babies. Just don't ever expect a major entity to adopt a currency that unknown actors have large control over.
The blockchain is for having an immutable[1] log of transactions that does not require trust in the peer that you are making a transaction with.
Off the top of my head...
- Bank transactions
- Security audit logs
- Securities (stocks)
- Corporate governance
- Actual government
- Legitimate business transactions where you don't want to have to worry about charge backs or bounced checks
The article also falls into the trap of thinking Bitcoin and Blockchain are anonymous. They are not. Some blockchains try to be more anonymous. Bitcoin is not one of them.
[1] Yes, I know the blockchain can be forked which in theory makes transactions mutable. However, the barrier to take advantage of that is prohibitively high and highly visible (i.e. is hard to do in secret).
The only trust that blockchain provides is trust that a counterparty won't go back and change the ledger showing that a pizza was ordered. This solves the double spending problem, but it doesn't solve all the other kinds of fraud.
Unless the blockchain supports contracts and you have a well coded contract.
So your use cases either hit the too slow problem, of if they use their own block chain the 51% problem. Most would be better off with a git repo with signed commits. That way 3rd parties could audit, you couldn't arbitrarily edit older transactions, and you wouldn't be limited by performance or the 51% problem.
Alternatively you can piggy back of an existing blockchain where the 51% rule is less of a problem because of high hash rates.
I agree, Bitcoin is painfully slow. But not all other blockchains are. Many have one minute solve times which is acceptable for many transactions and for low value transactions you might even be OK with accepting it as soon as it hits the mempool.
Also, you may be a private blockchain run by multiple organizations (multiple banks for instance).
But for argument sake say trust-less is not a selling feature. Immutability is. And yes, immutability can be achieved with traditional database systems, enforcing it with cryptography adds another layer.
You mean like... mysql with encryption and sharding? So my company's mysql database is a private blockchain?
No. Not the same. There is more than one use case for encryption. The kind you are talking about protects unauthorized reading and writing of the data. The kind the blockchain uses protects the data from being edited and identifies who wrote the data but does not protect it from being read. Similar to PGP in email.
All data on the blockchain is readable (i.e. not encrypted in the same sense as MySQL) but it is cryptographically signed but you can ensure that:
- Only people with the appropriate private keys can perform certain actions
- Historical data cannot be edited because editing it would corrupt the entire database (after the point of the edit)
Your MySQL example has neither blocks or a chain. Encryption is not sufficient. The encryption of each committed group of transactions (block) needs to be dependent on previous blocks (chain).
Not sure why you think blocks are important, but if you want, you can have the entries to the mysql database be batched into "blocks" and inserted all at once. Being connected to another set by hashing that data and putting it in a single record of the database (the "chain" part) is similarly trivial.
The only efficiency provided by the blockchain in your scenario is that it allows you to use blockchain terminology in marketing materials.
It sounds like you already made up your mind that blockchain is just marketing hype without actually understanding how it works.
> I can configure my database to require a private key be verified before data is committed to the database.
Absolutely not the same. As I explicitly said in my last reply, that is not the purpose of blockchain. That is not a blockchain, that is just encryption.[1]
The thing that makes it a block chain is that the hash of the new transaction is dependent on the hash of previous transactions therefor the history of transactions is immutable. Hence the "chain" part.
That CAN actually be done with a traditional RDBs IFF:
- You store a cryptographic signature with each row.
- You completely disable DELETE and UPDATE queries.
In other words. Blockchain is much more restrictive of what can and can't be done.
But to truly be a blockchain you also need to include previous hashes in row your signature. Something that is not easy to do in distributed systems without batch committing. Hence The "block" part of blockchain.
> The only efficiency provided by the blockchain in your scenario is that it allows you to use blockchain terminology in marketing materials.
The blockchain is not designed to provide efficiency in storage. That's not it's use case. In fact it is incredibly inefficient at that. The blockchain is designed to allow a party to be able to trust the data at a specific point of time without having to rely on absolute trust of the party sending the data and without having to pre-share keys.
It does no know who the person at the other side of a transaction is, it only knows that the transaction is allowable (or not).
The type of encryption you describe relies on both parties being known to each other and having shared secrets.
I have more I could say but books can be (and have been) written about this.
[1] Also I really hope it's not verifying the private key... private keys should never be sent to the server. They can be verified independently using signed data and a public key.
Never bought drugs with them before, according to the artice maybe I should try...
There is nothing stopping you use it for anything else.
aka freeze anytime at our discretion.
http://68.media.tumblr.com/1b1c73a1c7febea81b3d3163aff2aff4/...
He would have been better of saying that he could create his own fork of bitcoin with the same supply, but that wouldn't make it valuable.
Drug Acquisitions Require Encryption
A couple of friends have bought bitcoin because they think it will go up in value. Maybe it will maybe it wont. I certainly dont want to own BTC when it could fall to zero.
Users of bitcoin exit their position to USD as quickly as they possibly can.
There's a very good response to that argument, and it applies here as well. It runs thus: sometimes society is wrong. Every advancement in our thinking starts out as a rebellion -- such as the civil rights movement in the 60's. Many of the participants did have something to hide from significant chunks of society, yet what they were doing was ultimately judged to be right.
Usually the things society judges to be wrong are wrong -- but sometimes they aren't. I want society to be able to oppose movements when they become large and vocal, and I want society to be able to ban dangerous ideas from public spaces -- but at the same time, I want individuals to be able to study and nurture any ideas they like in privacy, no matter how harmful or radical, because I want the good-but-countercultural ones to grow until they are ready to face society's judgement.
Privacy is often used to pursue vice . . . but that is an acceptable price to me, to guarantee individual freedom of inquiry.
So it is with cryptocurrencies. And for that matter, cash.
Sometimes our laws are wrong, and it is the black market which provides the demonstration and motivation to change them. Prohibition is an obvious example. Uber and Airbnb are controversial, but modern examples. Sex toys are an easily overlooked example. Marijauna legalization comes to mind, too; the laws are changing for that particular drug (and not for, say, Psilocybin) precisely because the scale of the black market has resulted in a lot of people having experience with it and giving us both personal experience and scientific data. If anonymous cash transactions were not possible, that probably wouldn't have happened.
The individual ability to buy anything, much like the individual ability to read anything, is both an important personal freedom and an engine for social progress specifically in the areas where society's mores are wrong. Sure, people almost always use this freedom to do things society doesn't approve of (either in the sense of the whole country or in the more restricted sense of their local community). Sure, those are usually things that are actually wrong. But squashing them isn't worth losing the powerful corrective force for society as a whole that arises from those few cases in which the miscreants are right.
I do want governments to be able to make laws, to be able to regulate commerce, to declare that certain things can't be bought and sold. But I don't want them to have such an efficient method of enforcement that small scale rebellion isn't possible. A certain persistent, low-level, ongoing engagement in vice is the price of moral experimentation, and I think it's worth it.
I think your post is an eloquent explanation of the nuanced topic and merits discussion on its own