The future of Bitcoin is illegal

[kwoody]

So I hear people can predict the future now.. sweeeet mang.

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[DoomDumas]

anyone who wants dollars in this environment is not paying a great deal of attention

Totally Agree !!!

That's why I want Bitcoins !!!!

there is too many endoctrined, not enought awaken !

WAKE UP !  Stop taking what's told a truth, think and challenge, then you'll see the real truth !

[sturle]

The prohibition of illicit drugs does relatively little to deter users.

Eh?  Yes, it does.  Not a little, it does a lot to deter users.  It has a large impact.  Drunk drivers was a problem as well before driving while drunk was criminalized.

Well, I suppose it deters some people.  *cough, cough*  But my larger point was that the deterrent effect of prohibition is much MORE pronounced on the supply side.  

The supply of Bitcoin is fixed.  Illegal coins are going to be harder to get and to sell, because you won't find any traders, but also less interesting to most people, and not used due to legal alternatives.  People don't walk around with illegal substances to pay for illegal substances.  They pay with something legal.  Supply is not only fixed, bitcoins will also not be used.  Because bitcoins will be hard to buy, and you don't want to get caught with something illegal if you can avoid it.  The value of the coins will go down, because you don't want to sit on a fortune in illegal money.  You will want to exchange the coins for legal tender as soon as possible.  The coins will no longer be useful as a store of value.

For illegal activity today, I think Bitcoin is comparable to cash.  A substantial amount of cash transactions involve illegal activity of some sort.  Most do not.  If cash is outlawed, cash will become worthless.

[becoin]

If cash is outlawed, cash will become worthless.

No. Bitcoin is a tool. You can outlaw a certain usage of this tool not the tool itself! You can not outlaw knifes just because they can be used by criminals!

Money in the form of cash is money not based on debt! If you remove cash you setup a monetary system that is entirely based on debt. That means every member of such a society must be indebted first if they want to be part of this society and use such money. And then, who would be the master creditor? How debtors would control their creditors? They can't. This is where capitalism transforms to neofeudalism and this is exactly what you'll do if you outlaw cash!

[Roger_Murdock]

The supply of Bitcoin is fixed.  Illegal coins are going to be harder to get and to sell, because you won't find any traders, but also less interesting to most people, and not used due to legal alternatives.  People don't walk around with illegal substances to pay for illegal substances.  They pay with something legal.  Supply is not only fixed, bitcoins will also not be used.  Because bitcoins will be hard to buy, and you don't want to get caught with something illegal if you can avoid it.  The value of the coins will go down, because you don't want to sit on a fortune in illegal money.  You will want to exchange the coins for legal tender as soon as possible.  The coins will no longer be useful as a store of value.

I'm using "supply" in the economic sense.  It's an upward sloping curve that tells you how many sellers you'll find at a particular price.  Again, if bitcoins are declared illegal, they're still going to be somewhere after that law passes. And I don't think those holders are going to be particularly anxious to sell them.  (After all, doing so will be illegal.) You don't have to "walk around with" bitcoins. If you use a brain-wallet, you don't have to worry about being discovered in possession of illegal bitcoins.  We're basically talking about thought-crime at that point.  But the holders might be somewhat hesitant to sell or transact with them.  So again, I think that shifts the supply curve to the right. Of course, as you point out, the announcement of the law might have first shifted the supply curve to the left if people scramble to unload their coins while it's still legal to do so. And sure, being declared illegal might also shift the demand curve to the left. But as someone else pointed out, the crackdown would be local (it's very unlikely that ALL jurisdictions pass laws at the same time) while the legitimacy boost of "this is something that worries us" would be global.  So I don't think it would destroy Bitcoin as a store of value any more than Executive Order 6102 destroyed gold as as store of value. 

 
For illegal activity today, I think Bitcoin is comparable to cash.  A substantial amount of cash transactions involve illegal activity of some sort.  Most do not.  If cash is outlawed, cash will become worthless.

Bitcoin is the opposite of fiat cash.  Cash depends on an artificial scarcity protected by government violence.  Cash is just not very good money.  Its primary competitive advantage comes from state authority.  Take that advantage away and of course it becomes worthless.  But that wouldn't happen with good money, e.g. gold or Bitcoin.

[cunicula]

It would be awesome if these threads had a garbage disposal button. If garbage disposal is upvoted enough times, then everyone who posted in the thread would be banned from the forum.

[sturle]

If cash is outlawed, cash will become worthless.

No. Bitcoin is a tool. You can outlaw a certain usage of this tool not the tool itself! You can not outlaw knifes just because they can be used by criminals!

Yes, you can.  And it is done.  Many kinds of knives are outlawed in a lot of countries.  You can outlaw a tool which has certain properties.  E.g. certain kinds of knives, weapons or tools.  Exchanging western currencies used to be forbidden east of the Iron Curtain.  In my country balisong knives, switchblade knives and stilettos are forbidden.  Usefulness as a tool is not enough.

I agree it will be hard to forbid Bitcoin, and I can't understand why most of the people posting in this thread wants it to be forbidden.

Money in the form of cash is money not based on debt! If you remove cash you setup a monetary system that is entirely based on debt.

No.  Reserve banking means that some real money has to be kept in reserve.  This is normally money in a central bank or similar, not cash in a vault.  Not in 2012.

[sharky112065]

OP, you are a bit short sighted.

I have bought completely legal items with my Bitcoins. There are many legal items that can be bought with Bitcoin. As time passes, more and more items will be available.

[sturle]

The supply of Bitcoin is fixed.  Illegal coins are going to be harder to get and to sell, because you won't find any traders, but also less interesting to most people, and not used due to legal alternatives.  People don't walk around with illegal substances to pay for illegal substances.  They pay with something legal.  Supply is not only fixed, bitcoins will also not be used.  Because bitcoins will be hard to buy, and you don't want to get caught with something illegal if you can avoid it.  The value of the coins will go down, because you don't want to sit on a fortune in illegal money.  You will want to exchange the coins for legal tender as soon as possible.  The coins will no longer be useful as a store of value.

I'm using "supply" in the economic sense.  It's an upward sloping curve that tells you how many sellers you'll find at a particular price.  Again, if bitcoins are declared illegal, they're still going to be somewhere after that law passes.

No, you are redefining supply to mean something completely different, as it suits you.  The coins are still there, and people will work hard to get any money from them at all, because noone are going to want them.  Do you think Bitcoin would be more valuable if it were much harder to buy them?  Because that's what you are writing.  So far every new exchange and service has made the price go up.  Demand increases as the coins get more liquid and easier to buy and sell.  You seem to think the value will increase if all exchanges close, and you have to find a miner on the street to buy a coin.  And when you get it, you can only use it to buy something illegal.  This does not make sense anywhere but in your own head.  Back in the time when this forum was the only exchange for Bitcoin, a pizza would cost 10,000 BTC.

And I don't think those holders are going to be particularly anxious to sell them.  (After all, doing so will be illegal.) You don't have to "walk around with" bitcoins. If you use a brain-wallet, you don't have to worry about being discovered in possession of illegal bitcoins.  We're basically talking about thought-crime at that point.  But the holders might be somewhat hesitant to sell or transact with them.

You finally hit the nail.  People aren't going to use bitcoins if bitcoins are outlawed.  There is no reason to do so.  There are plenty legal payment methods, so why risk using an illegal one?  Or go through any kind of hassle to buy it?  There will be no demand for it, and plenty supply.  You could just as well switch to NMC, in case they forgot to outlaw NMC at the same time.

So again, I think that shifts the supply curve to the right. Of course, as you point out, the announcement of the law might have first shifted the supply curve to the left if people scramble to unload their coins while it's still legal to do so. And sure, being declared illegal might also shift the demand curve to the left. But as someone else pointed out, the crackdown would be local (it's very unlikely that ALL jurisdictions pass laws at the same time) while the legitimacy boost of "this is something that worries us" would be global.  So I don't think it would destroy Bitcoin as a store of value any more than Executive Order 6102 destroyed gold as as store of value.

You speculate a lot and don't concern yourself much with reality.  First of all you are now concerned about legality after all, but you think it will be OK as long as it is legal somewhere.  Laws spread fast.  If the USA or EU outlaw Bitcoin, the rest will come fairly quickly.  The result?  Bitcoins become worthless very fast, and the demand is gone as well.  People will use LR or something instead.  Easier to buy, quite anonymous and irreversible.  More expensive and higher transaction costs, but legal.

For illegal activity today, I think Bitcoin is comparable to cash.  A substantial amount of cash transactions involve illegal activity of some sort.  Most do not.  If cash is outlawed, cash will become worthless.

Bitcoin is the opposite of fiat cash.  Cash depends on an artificial scarcity protected by government violence.  Cash is just not very good money.

But cash is legal, and owning or using cash will not get you arrested.  The same applies to Bitcoin, and Bitcoin is doomed as a currency unless it stays this way.  If the future of Bitcoin is illegal, Bitcoin will become worthless in the future.

[becoin]

If the future of Bitcoin is illegal, Bitcoin will become worthless in the future.

That is very funny statement. The worthiness of something doesn't depend on its legal status. You can outlaw the Moon or the Sun but they still will be used by humans.

[FrogBBQ]

How can you do anything illegal with a currency that today as a total value of ~$125-130 million again? This is peanuts, worth maybe one minuscule money laundering operation, if at all.

To put it back in context, Wall Street alone got ~$75 billion worth of bonuses last year. The Fed is printing $40 billion each month.

Obviously nobody is bothering doing the math and do a reality check.

Typical negative propaganda from the uninformed.

[muyuu]

If the future of Bitcoin is illegal, Bitcoin will become worthless in the future.

That is very funny statement. The worthiness of something doesn't depend on its legal status. You can outlaw the Moon or the Sun but they still will be used by humans.

At this point BTC doesn't have enough traction to withstand the closure of its main exchange without a collapse in value. If Bitcoin was made illegal right now it would be set back very very strongly at this point.

[RodeoX]

But then there are people like me. I will continue to buy and sell in BTC no matter what the rest of you do.

[evoorhees]

Spend them on what? There's nothing other than drugs to spend them on.  If you want to buy literally anything else (and drugs too), you'll find EUR and USD absolutely perfect for your needs.

This is a very silly statement.

I've spent probably $10k worth of Bitcoins over the past year and a half. Not once have I bought drugs. Most of this has been spent paying other individuals for various things (typically freelance contractor work from people in other countries). I find Bitcoin amazing useful for this.

I'm sorry that you have not found a way to use a frictionless international payment system to your benefit other than to speculate on price movements. But if you have as many bitcoins as you claim, I suggest you dig a bit deeper into the utility of this technology instead of fostering this notion that the only things people use it for are drugs.

[FLHippy]

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

This is a very silly statement.

I've spent probably $10k worth of Bitcoins over the past year and a half. Not once have I bought drugs.

It's not all that silly.

evoorhees has purchased very geek centric services I suspect. Bitcoin being geek centric currency, it wasn't hard to find a willing seller of geek services.

But, your average joe... what is he going to buy? Computer parts? probably not.. Speculation investments? probably not.... Drugs... More likely than not.

I think what Charlie means is that your average joe who is not a geek has no use for bit coins except to buy drugs or other black market items.

Did evoorhees benefit in any way by paying in bit coins over fiat funds? Avoiding taxes perhaps? I would speculate that even innocent sounding transactions are in someway illegal or are a benefit for avoiding legal issues that might otherwise be applied if paid in fiat currency.

 

[evoorhees]

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

This is a very silly statement.

I've spent probably $10k worth of Bitcoins over the past year and a half. Not once have I bought drugs.

It's not all that silly.

evoorhees has purchased very geek centric services I suspect. Bitcoin being geek centric currency, it wasn't hard to find a willing seller of geek services.

But, your average joe... what is he going to buy? Computer parts? probably not.. Speculation investments? probably not.... Drugs... More likely than not.

Yes, the OP claim was silly, because it stated that the ONLY reason to use BTC is for illegal uses. I then countered with the point that I've bought services from people which were not illegal (or anything close to it). Unless I am lying, this invalidates the OP's point completely. Perhaps he could change his statement to say a large use is for illegal items, but saying the "only use" is hyperbole BS.

And the claim has NOT been made that BTC is currently useful for the "average joe".  It is not useful for him... today. Just as the internet was not useful to the average joe in 1995.

[mobile4ever]

And the claim has NOT been made that BTC is currently useful for the "average joe".  It is not useful for him... today. Just as the internet was not useful to the average joe in 1995.

Which means those who are not visionaries, who can not see the future, will be the ones who try to malign bitcoin.

[Severian]

Just as the internet was not useful to the average joe in 1995.

I've heard this all before:

1995: "The web will never be safe for commerce. Only geeks and people looking for porn are on the web."

2012: "Bitcoin will never be safe for commerce. Only geeks and people looking for drugs are using Bitcoin."

[FLHippy]

But, your average joe... what is he going to buy? Computer parts? probably not.. Speculation investments? probably not.... Drugs... More likely than not.

And the claim has NOT been made that BTC is currently useful for the "average joe".  It is not useful for him... today. Just as the internet was not useful to the average joe in 1995.

Well then... Why wait. certainly the bush has been beaten near to death with insinuations.

I would like to officially make the claim that to the average joe bitcoins are highly useful for buying drugs and other illegal items.

[Severian]

the average joe

The average joe, if they've ever heard of Bitcoin, have no idea what it is or how to use it.