The future of Bitcoin is illegal

[Roger_Murdock]

Prohibition -> reduction in supply (supply curve shifted leftward) -> higher market price

Econ 101!

Supply is fixed. You only need to concern yourself with demand. Publicity is possible, but whether this boosts or reduces demand is not obvious.

The number of coins in existence is fixed. But that doesn't mean that the supply is fixed. Supply refers to the amount of coins that sellers are willing to part with at a given price.  If it were illegal to transact with or sell bitcoins, I don't see many current holders simply deleting their wallets.  But they might be less willing to sell their coins if doing so exposed them to the risk of criminal sanctions.  So presumably the supply curve would be shifted to the right.  On the other hand, the demand curve would presumably shift to the left.  So the ultimate effect on price is not immediately obvious.  My guess is that the effect on demand would be greater than the effect on supply so I'd expect a price drop.  That's the opposite of what you see with the prohibition of illicit drugs where the effects on supply dominate the effects on demand.  The prohibition of illicit drugs does relatively little to deter users, but it does make sellers demand a fairly substantial risk premium.

[FreeMoney]

Prohibition -> reduction in supply (supply curve shifted leftward) -> higher market price

Econ 101!

Supply is fixed. You only need to concern yourself with demand. Publicity is possible, but whether this boosts or reduces demand is not obvious.

The number of coins in existence is fixed. But that doesn't mean that the supply is fixed. Supply refers to the amount of coins that sellers are willing to part with at a given price.  If it were illegal to transact with or sell bitcoins, I don't see many current holders simply deleting their wallets.  But they might be less willing to sell their coins if doing so exposed them to the risk of criminal sanctions.  So presumably the supply curve would be shifted to the right.  On the other hand, the demand curve would presumably shift to the left.  So the ultimate effect on price is not immediately obvious.  My guess is that the effect on demand would be greater than the effect on supply so I'd expect a price drop.  That's the opposite of what you see with the prohibition of illicit drugs where the effects on supply dominate the effects on demand.  The prohibition of illicit drugs does relatively little to deter users, but it does make sellers demand a fairly substantial risk premium.

The legitimacy boost of "This is a thing that worries us" is global and any actual cracking down would be local. We'll never really know the exact effect even if it happens because it will probably happen in response to a period of rapid increase in interest.

It is already seen by many as a way to get around laws, so it might not be hurt much by a law. Though you do lose the plausible deniability that you could be doing something legal with it if just owning it is illegal.

[bg002h]

Another good use was pointed out in the excellent TEDx talk (https://bitcointalk.org/index.php?topic=115555.0):
the ultra poor -- those who have no means of establishing financial arrangements with banks and have no safe place to store their money -- could use Bitcoin not only as a bank but also as a global payment system.  

Someone else mentioned this type of thing earlier and I wanted to comment. Very cool thinking and it appeals to me a lot. Is anyone actually trying to put this into action?

Not that I'm aware of...I mean, not directly.  A cheap Ellet would go a long way

[CharlieContent]

Sorry you didn’t convince me. I still think you’re lying. You supposedly bought into btc for $1000 at a time when you could have spent that amount on equipment and mined more solo at 50 coins a block than you could have afforded to buy.

The businesses are all around you do your own research.  https://en.bitcoin.it/wiki/Trade

I notice you conveniently missed arguing against speculation because there is no argument against it.

Haha, I wasn't trying to convince you, but I think it's quite rude to call me a liar considering you clearly have no idea what you are talking about. Luckily I don't care what you think.

I had a look at that list and I didn't see anything worth a fuck that either isn't an exchange or doesn't deal mainly in cash with BTC transactions offered as a little thing on the side. If I am missing something feel free to point it out.

A currency can't survive on speculation alone, at some point you have to exchange it for goods or services.

[n8rwJeTt8TrrLKPa55eU]

I'd add gain control of their own wealth to that list.  With infinite QE happening as we speak, keeping cash around is folly.  Not everyone involved in bitcoin is trying to circumvent laws and regulations, in the same way that not all people who hoard gold are trying to do so. 

You're correct in reminding the OP about Bitcoin's function as a store of value, but bear in mind, to the OP's point, that in many countries on this planet, gaining control of one's own wealth is actually illegal.  Prohibitions against metals ownership, currency exchanges, and currency transport exist in most countries in varying degrees, and are specifically designed to disable people's ability to preserve and move their wealth.  And so, to the extent that Bitcoin is used to protect savings (which I agree with you, it is), it's potentially yet another bullet on the OP's "illegal uses" list, as opposed to the "legal uses" list.   Most countries (including USA in 1933) have, at least once, made wealth preservation strategies illegal, and will likely do so again as the worldwide ponzi economy continues to deteriorate.

[Wekkel]

Someone else mentioned this type of thing earlier and I wanted to comment. Very cool thinking and it appeals to me a lot. Is anyone actually trying to put this into action?

Insofar I am aware, mobile payments in those areas is developing (e.g., payment by SMS).

In my opinion, we need some more years for the back lands to sufficiently upgrade on mobile networking (internet) and devices (smartphones) before we may expect BTC to lift off in those areas of the world. This element of time can hardly be considered as a blockade for BTC, because the more spread out the use of BTC is at that time, the better it will gain traction in less developed areas of the world.

In terms of mobile payments, we could use progress on speedy payment confirmation and a mobile BTC client that is lightweight and data-thin. I am yet to make/receive my first mobile Android BTC payment....  

[Roger_Murdock]

The legitimacy boost of "This is a thing that worries us" is global and any actual cracking down would be local. We'll never really know the exact effect even if it happens because it will probably happen in response to a period of rapid increase in interest.

It is already seen by many as a way to get around laws, so it might not be hurt much by a law. Though you do lose the plausible deniability that you could be doing something legal with it if just owning it is illegal.

Those are really great points, thanks!

[Roger_Murdock]

A currency can't survive on speculation alone, at some point you have to exchange it for goods or services.

And people are exchanging bitcoins for goods and services.  But right now many of them are going through the intermediary of fiat.  I've argued that Bitcoin is currently operating a lot like gold, i.e. a store of value that few people use as a direct medium of exchange.  But bitcoins have tremendous potential to be an absolutely amazing direct medium of exchange.  It's just that becoming a direct medium of exchange (as opposed to a store of value) relies much more heavily on network effects. So it will take longer.  But I have no doubt that we'll get there. I'd say Bitcoin is doing pretty well for a kid who hasn't even celebrated his fourth birthday.

[sturle]

And the value will of course drop to the bottom if Bitcoin is deemed illegal.  Both I and most other people will get rid of all we have as soon as possible, and it is going to be hard to do it in a legal way.

I'm not convinced that's true. After all, prohibition has never made illicit drugs cheap, quite the opposite!

Prohibition has made illicit drugs more scarce.  Supply goes down.  The addicts aren't affected much, so demand stays up.  When supply goes down and demand stays up, the price goes up.  This is very basic economics.

Bitcoins however are produced in the same amounts no matter the legality.  Making them illegal just means fewer people will want them, which makes demand go down when the supply stays exactly the same.  If Bitcoin were made illegal tomorrow, all legal bitcoins will go on the market today.  And you can see how this thread alone makes the market nervous. 

[becoin]

I am interested in seeing the value of those coins go up vs. the USD so that I can sell my coins for USD in future. For me, there's no other reason to have them.

The future of bitcoin is bright, Charlie. Get over it.

[bg002h]

There's nothing other than drugs to spend them on.

You can't buy anything with Bitcoin, and 90% of Bitcoin investments are a scam.

[/quote]

http://coinabul.com/
Gold and silver != drugs....

[Severian]

I had a look at that list and I didn't see anything worth a fuck

I know gold and silver aren't as valuable or as durable as your "Visa money", but for those people that lack your faith in credit-based currency instruments, there's a rising list of metal traders:

https://en.bitcoin.it/wiki/Trade#Precious_.26_Base_Metals.2FCoins

When PM dealers are trading their stash for a currency, it's probably going to stick around for a awhile.

[bg002h]

I had a look at that list and I didn't see anything worth a fuck

I know gold and silver aren't as valuable or as durable as your "Visa money", but for those people that lack your faith in credit-based currency instruments, there's a rising list of metal traders:

https://en.bitcoin.it/wiki/Trade#Precious_.26_Base_Metals.2FCoins

When PM dealers are trading their stash for a currency, it's probably going to stick around for a awhile.

good point...their inventory is their hedge...

[becoin]

A growing number of goldbugs are parting with their metal for bitcoins.

Actually this is not true, Severian. Goldbugs are people that have very strong common sense compared to paperbugs or cryptobugs.

[Severian]

Actually this is not true, Severian. Goldbugs are people that have very strong common sense compared to paperbugs or cryptobugs.

The biggest goldbug in my town recently agreed to take bitcoins from me. I'd spent months trying to get him to take a look at Bitcoin, to no avail. It took a well-heeled couple coming into his store last week and bringing Bitcoin up to make him look at it. He's now willing to trade bitcoins. He's as conservative and common-sense as they go, having been in biz since the 70's.

So yes, it's a growing list.

[bg002h]

A growing number of goldbugs are parting with their metal for bitcoins.

Actually this is not true, Severian. Goldbugs are people that have very strong common sense compared to paperbugs or cryptobugs.

this argument is ridiculously difficult to prove true or false...anyone up for a scientific survey of goldbugs?

[sturle]

I use Bitcoin because it is usually simpler and faster and cheaper and more secure than all other ways of international money transfer. 

In my opinion the future is legal.  I sell coins every day to people who use the coins to pay for services or as a store of value / investment.  Nothing of this is illegal.  And the value will of course drop to the bottom if Bitcoin is deemed illegal.  Both I and most other people will get rid of all we have as soon as possible, and it is going to be hard to do it in a legal way.

Simpler? Than going to a bank and doing an IBAN transfer? Man, cheaper maybe but not simpler. Getting money in and out of Bitcoin is an extreme hassle for most people.

Yes, simpler.  I can get loaded up with coins with one simple IBAN transfer, and use the coins for many smaller purchases.   Getting money in to Bitcoin is not any more difficult than one IBAN transfer.  And I make it even simpler for people in my country by offering coins at a low rate for domestic bank transfer.  This enables people who don't know how to do international money transfers to get their coins in a very simple way and very quickly.  Buying coins from me, asking me to pay directly to the address they want to pay to, is always faster than any kind of international money transfer through a bank.  Credit card may be faster, but not as secure.  And not everyone want to pay everything with a credit card for various valid reasons.

I don't think, for most people, it's a substantially better way to transfer money internationally. It's pretty slow, there is a hassle getting money in and out the system, and transfers won't be free forever.

Slow?  Compared to banks?  Have you ever done an international money transfer?  It takes 4 to 5 days to transfer money to Japan from here.  A Bitcoin transaction has 6 confirmations in an hour by average.  And there is no risk of fraud.  Nobody can take the coins back when they are sent.

Plus, for people to use Bitcoin to transfer money, they need to be aware of it, and they need to make a special effort to use it. Why would anyone spend money in order to market the system like that? They would need a reason, and that means exchange fees.

A lot of people do.  I've sold bitcoins to more than 400 people.  IRC and e-mail. 

As to your 2nd point, if Bitcoin is made illegal somewhere then the value will soar. And of course people will be able to use it legally in another country.

I proved the opposite in simple economic terms in another posting.  Demand will go down.  Supply stays exactly the same.

Other factors which will also contribute to the fall if Bitcoin is made illegal.  Development will stop.  A lot of good services will stop.  Exchanges will shut down.  People with a lot of coins will obviously try to sell before the exchanges close their doors.

[becoin]

So yes, it's a growing list.

It's a growing list of people trying to profit from bitcoin, Severian. People that purchase bitcoins instead of gold believe that bitcoin will appreciate faster to fiat money than gold. That doesn't mean they will ditch their gold and silver for bitcoins!

[Severian]

It's a growing list of people trying to profit from bitcoin, Severian. People that purchase bitcoins instead of gold believe that bitcoin will appreciate faster to fiat money than gold. That doesn't mean they will ditch their gold and silver for bitcoins!

It doesn't matter what they do with the bitcoins after they get them. The point is, a growing list of PM dealers are trading their metal for bitcoins. They see it as a viable trading option.

That speaks volumes about the longterm viability of the currency. How many PM dealers are trading their metal for Linden dollars or whatever they call EVE money?

[becoin]

The point is, a growing list of PM dealers are trading their metal for bitcoins. They see it as a viable trading option.

Trading means today they'll buy bitcoins and sell gold, and tomorrow they'll buy gold and sell bitcoins. This is just a profit opportunity and is different to "parting with their metal for bitcoins".