a new thought experiment: bitcoin's industry identifier

[chaord]

Somewhere in this forum ( I have searched, but to no avail) I came across a funny high-level way of describing bitcoins:

"It's like a bunch of farmers grow crops, then burn the crops and take before and after pictures of the burnt crops.  They look at each other's pictures and collectively agree, "yep, you burnt those crops correctly."  Then they decide to trade those pictures amongst themselves as a currency/commodity/collectible"

So, I know the above example seems harsh, but it does point out the lack of intrinsic value nicely.  Please, let's not discuss whether you think bitcoins have intrinsic value or not; there are many other threads discussing this.  

Instead, what I would like to brainstorm about is the following: are there any upstanding social or commercial causes [Edit: with a large market] for which the properties of a system like bitcoin's are perfect for? Those properties being: decentralized, anonymous, global, etc.  Perhaps there is some giant market out there that the product/service which is bitcoin is absolutely perfect for.  Something that bitcoin is so perfect for that bitcoins become identified with that industry, much like gold first became identified with the ornamentation industry.  From that, perhaps bitcoin as a product/service/commodity will gain the intrinsic value enough to overcome its obstacles and be accepted into the mainstream.

Sadly, the only industries I can think of that readily desire bitcoin's inherent properties are the very industries that governments like to control or keep off the radar:

• drugs
• porn
• gambling

There has to be an non-shady industry in good standing with the mainstream just asking for a product/service like bitcoin.  If not, we need to create one.  Any ideas?  

Perhaps there is some social cause that even governments agree anonymity, decentralization, etc is the best policy?  We need bitcoin concepts to be valued and ubiquitous before it is used heavily for the "shady" industries, IMHO.  Either that or maybe we should face the facts and become the porn kings and druglords of the internet. At least we'd gain a wide user base very quickly. Ha!

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[Anonymous]

So far most of the bitcoin accepting businesses are pretty innocuous.Maybe bitcoin is not anonymous enough to attract porn,gambling and drugs?

The most obvious mainstream use for bitcoins is charity.

Bitcoins are the perfect way to donate anonymously if you don't want people to find out who you support - just say wikileaks set up a bitcoin node.There might be powerful  people interested in finding out who the financial contributors are to such an organisation.

How would politicians look to the public if they shut down something that allows more support for charity organisations?

[hugolp]

This does not seem to be a very shared opinion, but I have always though that as bitcoin evolves and more people adopts it, there would be different networks for more local use of the coins. For example, the shops in a town get together and agree to start their own bitcoin network, kind of like they do with local currencies to improve local shopping. There could even be exchanges between the different bitcoin networks.

But who knows what will end up happening. One thing is clear to me: the adoption of bitcoin depends on shops accepting bitcoin as method of payment. That will make people who is not so conscious about the monetary system to start using it.

[Red]

There has to be an non-shady industry in good standing with the mainstream just asking for a product/service like bitcoin.  If not, we need to create one.  Any ideas?  

I've been kicking this around for a while. I've been thinking of bitcoin as the privacy currency.

Suppose you want to post on a web site but don't want to give them personal information. If you could just include a bitcoin, that would make clear you are not a spammer. Or if you are, at least the site gets paid for canceling your posts.

The same thing is possible for dealing with spam email. Sending email to someone and want to avoid their spam filter? Slip them a couple of bitcoins. Then they have some when they want to send an email to someone new.

This way there is a complete circuit for bitcoins without going back to cash.

As people start making distributed social networking things it could be even more useful.
 

[MoonShadow]

So far most of the bitcoin accepting businesses are pretty innocuous.Maybe bitcoin is not anonymous enough to attract porn,gambling and drugs?

The most obvious mainstream use for bitcoins is charity.

Bitcoins are the perfect way to donate anonymously if you don't want people to find out who you support - just say wikileaks set up a bitcoin node.There might be powerful  people interested in finding out who the financial contributors are to such an organisation.

How would politicians look to the public if they shut down something that allows more support for charity organisations?

I think that you are on  to something here.  Perhaps we could promote bitcoin to national or international charities as a means to accept small donations nearly effortlessly and with a near zero monetary overhead.  I know for me, donating to a good cause is easiest to justify to myself when there isn't going to be a credit card fee or even the cost of the postage stamp.  A 44 cent stamp is still getting close to the 3% overhead mark if one is writing a check for less than $20.  With Bitcoin, supporters could send a "widow's mite" over the Internet and know that every last bit of it would go to the actual funds of the organization.  We could also promote the same to social groups that come to the US to work and send money back to family in the motherlands.  The companies that profit from the transfer of such funds overseas legitimately cost quite a bit, themselves. 

If it's hard to get these groups to take such a thing seriously, mention that bitcoins can be sold online on the exchanges for other currencies, or locally to people who walk in the door looking to buy some bitcoins from the organization so that they can buy other stuff online, or even send support to *another* organization half-way around the world.

[chaord]

I like Red's idea as an online privacy currency for posting and such.  I also really like the idea of charity.  Of course, I think an ideal scenario would be something that addresses a known social cause in an entrepreneurial manner (eg. social entrepreneurship).  This gives the marketers and promoters a profit motive and gives adopters a social motive. http://www.thehealthcareblog.com/the_health_care_blog/2008/08/creating-curren.html

Regardless, for something like bitcoin to be known and successful before it is used for the shady industries and shut down by governments, the adoption rate needs to turn viral IMHO.

[Red]

Political speech donations is another thing I think would be useful. Especially in an election season. With scotus changing the rules it might not even be rebellious.

This holds for PAC donations as well.

[chaord]

One idea that I keep coming back to as being well suited for bitcoin as payment would be a decentralized freenet + twitter + flattr = bitcoin success?.  I'm not too familiar with freeneet, so for those of you who are, please speak up and tell me whether this is possible.  One of the things I like about freenet is what it stands for (eg. information freedom), however, one thing I don't like is the fact that I cannot control what information is stored/served by my node.  In a sense, freenet is not very autonomous from a node's perspective.  I would really like a decentralized information system with the following properties:

• Simple enough and marketed to mainstream content providers and readers.
  
• Decentralized and open source like freenet.
• All data stored in nodes is encrypted so that even the owner of the node cannot tell exactly what he stores/serves
• Unlike current freenet, the owner can "follow" certain sites and be assured (because it's open source) that his node will only be mirroring the sites that he "follows" and perhaps also the sites that those sites "follow."  Similar to FOAF.
  
• Content providers (ie: nodes) can be paid in bitcoin but perhaps using an api similar to flattr.
  

With such a system, you can choose to store/serve sites like wikileaks or other information that you support while at the same time withholding your resources from those you do not (eg child porn).

The odds of getting the mainstream to host their own personal nodes is pretty slim IMHO, and the more feasible solution might be for the mainstream to "rent" a node from a "certified node custodians" who will implement the customer's encrypted node in one of the various cloud platforms.

I think if done correctly this could actually be a profitable venture.   Additionally, I would love to shift my career in the bitcoin direction and am interested in creating a bitcoin related startup.  If any of you are interested in collaborating, please PM/email me.  

In the mean time, I'd enjoy hearing some responses/critiques of such a system.

[Insti]

• Unlike current freenet, the owner can "follow" certain sites and be assured (because it's open source) that his node will only be mirroring the sites that he "follows" and perhaps also the sites that those sites "follow."  Similar to FOAF.
  

The old "free speech for everyone who I agree with" proposal.


"If we don't believe in freedom of expression for people we despise, we don't believe in it at all."  ~Noam Chomsky

[FreeMoney]

There is a difference between not doing violence on people you disagree with and merely not hosting their content.

I won't hurt anyone, but if your poem is crap I'm not reciting it.

[chaord]

Sorry Insti, I'm going to have to agree with FreeMoney here .  Free speech must also be accompanied by freedom to be silent.

So operationally and technically though, could something like this be pulled off? Are all the pieces of the puzzle out there just waiting for someone to put them all together? Or are there some major technological/implementation hurdles that I'm not seeing?

[Anonymous]

• Unlike current freenet, the owner can "follow" certain sites and be assured (because it's open source) that his node will only be mirroring the sites that he "follows" and perhaps also the sites that those sites "follow."  Similar to FOAF.
  

The old "free speech for everyone who I agree with" proposal.


"If we don't believe in freedom of expression for people we despise, we don't believe in it at all."  ~Noam Chomsky

It is also a property rights issue.If I dont want someone coming onto my property I should be allowed to stop them.It is only the state which makes you use their "service" whether you want it or not.[/list]

[mizerydearia]

Bitcoin can majorly pwn Western Union.  In regards to "charity" idea, I established a thread to help establish how we can best communicate or write to charities and organizations.

Regardless, for something like bitcoin to be known and successful before it is used for the shady industries and shut down by governments, the adoption rate needs to turn viral IMHO.

I agree.  Bitcoin to revolutionize how charities receive donations seems promising.

So operationally and technically though, could something like this be pulled off? Are all the pieces of the puzzle out there just waiting for someone to put them all together? Or are there some major technological/implementation hurdles that I'm not seeing?

I think there is a need for a web-based interface to work with the daemon.  There are some efforts.  I'm working on a php-based templating implementation.  I will release it in a day or two.

[grondilu]

Sadly, the only industries I can think of that readily desire bitcoin's inherent properties are the very industries that governments like to control or keep off the radar:

• drugs
• porn
• gambling

Why would you want anything else ?  If you ignore moral aspects, then those activities fullfill what you were claiming for.

I don't use gold as an ornementation personnaly, and yet I own gold because I know some people love gold jewelery.

[FreeMoney]

Sadly, the only industries I can think of that readily desire bitcoin's inherent properties are the very industries that governments like to control or keep off the radar:

• drugs
• porn
• gambling

Why would you want anything else ?  If you ignore moral aspects, then those activities fullfill what you were claiming for.

I don't use gold as an ornementation personnaly, and yet I own gold because I know some people love gold jewelery.

You don't even need to ignore moral aspects since there is nothing wrong about pleasure.

[genjix]

Firstly you guys might want to check out our project:
http://forumserver.twoplustwo.com/28/internet-poker/rake-free-open-poker-room-run-poker-community-938389/

http://poker.bitcoinvegas.com/wiki

Secondly, just because you don't yet know the applications of Bitcoin, doesn't mean they don't exist. Very clever things we never thought of are going to spring up. New ways of doing things.

It makes me feel so good that I made 500 BTC worth of my bitcoins in a diversified way- a) played poker b) donations for bringing that Wikipedia article out of the incubator c) hacking up a website over 1 weekend and selling it d) trading currency. It's not much money, but it is a very cool feeling.

If bitcoin takes off then there will be a new economy of workers on the internet; people selling artwork, people receiving donations for editing wikipedia, coders getting micropayments...

... A new cultural revival

[jimbobway]

Bitcoin as a type of investment.  So the investment business.  Maybe as a tool for diversifying your portfolio.  Kind of like how websites sell gold as an investment, a collectible.

Baseball cards are collectibles based on demand and a limited supply too.   Why not bitcoins?

[Timo Y]

Bitcoin as a type of investment.  So the investment business.  Maybe as a tool for diversifying your portfolio.  Kind of like how websites sell gold as an investment, a collectible.

Bleh, I would be disappointed if that were to become the main use of Bitcoin. It would just be an investment like hundreds of others. There is nothing that "Bitcoin as an investment" does that other investments don't do.

I hope that Bitcoin's killer app will be something more innovative than that, exploiting a feature that is unique to Bitcoin.  p2p bandwidth allocation and p2p DNS allocation are two examples where Bitcoin would not only be ideal, but it would be very hard or impossible to use a centralised currency.

[QuantumMechanic]

Bitcoin can be used to incentivise contributions to p2p networks like distributed online storage (Tahoe-LAFS once accounting is implemented), filesharing, wireless ad hoc networks, anonymizing overlay networks, etc.  I think all of these could have pretty mainstream appeal - especially wireless ad hoc networks and distributed online storage!

It's uniquely useful for anything that can make use of automated microtransactions, really.

If/while storage and bandwidth costs are too high for generators to facilitate these microtransactions, then maybe a Ripple-like network could be used to make the payments, with Bitcoin automatically clearing any debts that build up large enough such that this clearing is economical.  Hopefully much of the debts in Ripple would end up canceling anyway, further reducing the overall burden on the Bitcoin network.  Since the risk for microtransactions across Ripple is very small, perhaps credit line management could be mostly automated using trust metrics.  In this way, I think such a network could become quite connected and thus very effective for microtransactions.  Either way, Bitcoin is the facilitator of microtransactions, and all the neat things that rely on them.

[RHorning]

I have thought about microtransactions in relations to Bitcoins, and while the threshold of what minimum payment can be made effectively with Bitcoins is something that is trivial compared to other electronic payment methods, I don't see payments less than $1 USD being effectively transferred without substantial cost in the near future.  Much of that depends on how the transaction fee system evolves as a matter of practice.  If transaction fees remain low, microtransactions will continue to flourish and be exchanged in the network... but don't count on it as a long-term business plan for the future.  Perhaps other systems like Ripple will develop for those transactions that are effectively less than $1 in equivalent wealth transferred.

Where I do see Bitcoin really coming into its own is with microloans.... and not just such tiny "investments" in 3rd world countries.  I'm still trying to work out the technical details, but I think there could be a system set up where many different people could "invest" into some concept ranging from just a few bitcoins to thousands or tens of thousands of bitcoins under some mutually agreed upon terms.  If somebody has some idea for how to make money using Bitcoins, I think eventually some methods are going to be created to pool resources and get the initial investment available to those who want to create these enterprises.

And I don't think it is going to be for the "illegal" stuff either, but rather something simple like setting up a website selling candles or "investing" in a programmer to make some interesting software.  We've seen some of that already on these forums, and I think that is only the beginning.  What Bitcoin does is to significantly lower the barriers to entry for emerging business concepts.... and that is something which may be very powerful in the near future blowing out of the water any of these "nefarious" concepts that have been mentioned earlier.

Investing in bitcoins like you would baseball cards or gold has value, but investing in enterprises earning bitcoins for an expected return on investment is going to amplify that value much more.