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Comment by elhudy | Hacker News Reader

>It doesn’t serve any socially useful function.

I never thought I would so heartily disagree with a Nobel Economics Laureate, but this appears to be a misguided opinion. Bitcoin drives an entire black market which enables consumers worldwide to securely and faithfully make purchases that they would be unable to otherwise make. Direct tax generation isn't the only measure of socially useful functions.

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Not to mention it's the best-funded behavioral economics experiment in history :)

I was thinking about this, since the blockchain is public, there is a lot of data out there steadily accumulating. Are there any published studies exploiting this data already?

Bitcoin isn't even a good currency for the black market anymore, there are other cryptocurrencies that provide more anonymity

In Canada (at least where I live), one can't sell bitcoins to an exchange without providing government-issued ID. I would never use bitcoin on the black market.

What's regulated here is not bitcoin, is the standard currency you want to trade for bitcoin. If you just trade in bitcoins, there is no validation needed ;)

Citing the black market is not the best evidence for utility. Global remittances is clearly a market that overlaps very well with Bitcoin and I would argue that Bitcoin can achieve the same features at lower cost.

However the skeptics are correct that this particular use can be satisfied by very many other cryptocoins, so it's not unique to Bitcoin.

My interpretation is that he would disagree with your definition of 'socially useful' in regards to black market purchases.

I'm not saying Bitcoin doesn't provide a value of exchange, after all, it could be said that the storage of gold for holding value is also not a 'socially useful' function.

I'd guess that approximately zero Nobel-winning economists are keen on the idea of proof-of-work replacing trust. That is the ultimate issue here.

For the important transactions you mention, presumably an escrow service is needed. This reintroduces the requirement for trust in a third party.

You can get a little safer than escrow via multisignature wallets; you need M-of-N signatures before bitcoins can be sent. You can tie the extra signatures to machine-interpretable signals like the state of a tracked package (when it hits delivered the funds are automatically released, etc.).

Still some trust involved, but the third party can't pocket your money directly.

Presumably you mean "second party", because the concept here is that there is no middleman. EDIT: to clarify, I'm sure there are cryptographic solutions which prevent an escrow agent from doing anything beyond releasing the funds. A system of escrow that involved total trust in the third party escrow service would be an extremely basic proposition. I'd have to research it but it seems like a protocol probably exists; maybe part of the techniques to which you referred. Still, both parties in the transaction count on the escrow service, which is the trust I am talking about.

The example system you mention, which involves having faith in (for example) a courier's delivery notification service, seems to me underline the ubiquitous implicit relationships of trust we implicitly rely on currently, generally being of the form "individual trusts institution/infrastructure".

It hardly needs saying that cypherpunks don't like that unreciprocated trust, or even deny its importance to their own security.

News to me that people still use bitcoin to buy drugs. Everyone i know got out of that game years ago.

What would they use instead? Perhaps the people you know stopped buying drugs from the internet. People in general haven’t.

Monero.

The global risks for bitcoin far exceed its utility. Take a look at the work of the macroeconomic scholars and see just how risky it is for create more unknowns into our money supply. To date, Bitcoin is nothing more than a ponzu.

ponzu?

https://www.merriam-webster.com/dictionary/ponzu

Ponzi (scam)

In what way is individuals being able to make illegal purchases of any social utility?

I am guessing that your actually ideology isn't as hardline as the question you asked would imply. But just incase it is; consider a country like North Korea, certainly the black market there provides a lot of social utility.

There's also a good argument that Silk Road provided social utility in the US because anonymous transactions over the internet are less prone to shootouts than the physical black-market.

If you're looking at it from a harm-reduction perspective, people are obviously getting drugs despite prohibition, so you might as well have a less violent drug trade.

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