if bitcoin only served the "underground" economy...

[paulie_w]

could it still reach those incredible highs of $1000/btc and beyond, in some years?

[1714031306]

1714031306

[1714031306]

1714031306

[kwukduck]

Depends on the userbase, if your underground economy is huge the price will be high too, if it's 100 people, it will be very low.

[FreeMoney]

For various reasons it wouldn't hold the whole underground economy if it had none of the "regular" economy, but it could grow the size of the underground economy too. I mean what's more important than a secure money for that?

[MyFarm]

If our governments continue to erode the value of mainstream currencies, absolutely.  Otherwise, I'm not sure, but hopefully BTC becomes widely adopted so we don't have to find out.

[radracer]

statistics are hard to come by but consider the fact that marijuana is widely recognized as being the largest cash crop in california...

[paulie_w]

bumping like a jerk because i want this topic to get some more love.

anyone care to comment?

[justusranvier]

The underground economy will soon be the most important economy. http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy?page=full

[paulie_w]

a mixture of underground and 'above-board' might produce a very interesting BTC valuation indeed then

[the_thing]

http://www.forbes.com/sites/benzingainsights/2011/11/07/rise-of-the-shadow-economy-second-largest-economy-in-the-world/

The black market economy is estimated to total $10,000,000,000,000.

If Bitcoin takes over...
.01% of the black market, then 1 BTC = ~ $47
1% of the black market, then 1 BTC = ~$4,761.90
10% of the black market, then 1 BTC = ~$47,619.05

Jon Matonis has previously discussed Bitcoin being an ideal currency for the black market here: http://www.forbes.com/sites/jonmatonis/2012/03/19/could-bitcoin-become-the-currency-of-system-d/

What if Bitcoin gets replaced by another cryptocurrency. I think it is quite likely.

[caveden]

The black market economy is estimated to total $10,000,000,000,000.

If Bitcoin takes over...
.01% of the black market, then 1 BTC = ~ $47
1% of the black market, then 1 BTC = ~$4,761.90
10% of the black market, then 1 BTC = ~$47,619.05

Your math doesn't make sense, but you're not the first that I see making such mistake so I decided to reply.
You're comparing apples and oranges.

When people estimate that black markets are "10T USD large", they're trying to estimate the amount of production outputted by such black markets. A summed value of all goods and services produced, normally in a year time. This has nothing to do with the amount of money that circulates in this market in a given instant, i.e., its "money supply".

For example, an (arguable) estimation of US total economic production is it's GDP of ~14T if I'm not mistaken. That's much more that the entire USD money supply. Granted, you must better define "money supply" as many things may be used as money... but if you take for example the M2 aggregation for USD, that's around ~10 bi according to wikipedia. More than 1000 times lower than the GDP...
EDIT: Oups, my mistake, USD M2 is actually close to 10T... so yeah, not that far from the GDP, but that's still just a coincidence. The M1 is lower. And bitcoin's 21M cap is the M0 of bitcoin. USD M0 is around 2,8T.

Anyway, my point is, money supply != economic production in a year. You can't compare "black market production" with bitcoin's monetary base of 21M and reach any meaningful number.

[caveden]

The underground economy will soon be the most important economy. http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy?page=full

Thank you for that link, it's a very interesting text!

[justusranvier]

For example, an (arguable) estimation of US total economic production is it's GDP of ~14T if I'm not mistaken. That's much more that the entire USD money supply. Granted, you must better define "money supply" as many things may be used as money... but if you take for example the M2 aggregation for USD, that's around ~10 bi according to wikipedia. More than 1000 times lower than the GDP...

Anyway, my point is, money supply != economic production. You can't compare "black market production" with bitcoin's monetary base of 21M and reach any meaningful number.

One could produce an approximation by making some assumptions about velocity. The simplest assumption is that velocity is roughly equal in the underground and official economies.

[tvbcof]

What if Bitcoin gets replaced by another cryptocurrency. I think it is quite likely.

I doubt that that will happen absent either a failure of the system (including significant exploitation of the user-base and technical difficulties associated with load...which could actually go hand-in-hand) or changes/shifts in the core development team.

I don't see Bitcoin being totally replaced in most circumstances, and if it is, I theorize that BTC themselves would play a role in ushering in alternatives.  That is to say, I suspect they Bitcoin could continue to act as something of a reserve currency backing alternative crypto-currencies.  The (theorized) load issues and excessive transfer fees would disappear if BTC were used mostly for infrequent account re-balancing in significant per-transaction chunks.

[Rassah]

What if Bitcoin gets replaced by another cryptocurrency. I think it is quite likely.

Why would Bitcoin be replaced by another cryptocurrency if it can simply "evolve" to include the new features if they are good?

[2112]

Why would Bitcoin be replaced by another cryptocurrency if it can simply "evolve" to include the new features if they are good?

The "old money" interests in the core development group are hampered by need to maintain backward compatibility and the needs for security that is ratcheted up near to the paranoia level. There's also the bunker mentality: all other coins are pump&dump scams. The combination of the three makes for a very powerful handbrake.

Older thread about the same:

https://bitcointalk.org/index.php?topic=101686.msg1113732#msg1113732

[kangasbros]

Why would Bitcoin be replaced by another cryptocurrency if it can simply "evolve" to include the new features if they are good?

1. Marketing. Some company could throws millions and billions of money marketing their cryptocurrency alternative.
2. Infrastructure. Money transfer companies like Western Union could adopt their own cryptocurrency, and therefore enable superior access to black markets. (The black market already uses these companies, so it would be easy choice)

Edit: before anyone gets defensive, I'm not saying that these will happen. Just wondering about possible different scenarios.

[tvbcof]

What if Bitcoin gets replaced by another cryptocurrency. I think it is quite likely.

Why would Bitcoin be replaced by another cryptocurrency if it can simply "evolve" to include the new features if they are good?

I'm a big fan of 'evolution' generally, but NOT in a currency system which I hope to rely on in even a modest way.  For that I value:

 - highly static and well documented rules and function.

 - stone simple specifications and implementation.

 - a high degree of attention to detail in development.

I am a big fan of modularity.  I'd prefer to see 'bitcoin' be a bare-bones reference implementation of the protocol and let other efforts fill in the gaps when it comes to GUI's and that sort of thing.

[Rassah]

The "old money" interests in the core development group are hampered by need to maintain backward compatibility and the needs for security that is ratcheted up near to the paranoia level. There's also the bunker mentality: all other coins are pump&dump scams. The combination of the three makes for a very powerful handbrake.

That still doesn't mean that if some new cryptocurrency comes out with a killer feature, and more and more people and vendors start to use it, that Bitcoin can't just implement that feature as well, and once again overtake the newcomer due to already having established hardware/software/merchant support. It could happen, but I really don't think it's likely.

1. Marketing. Some company could throws millions and billions of money marketing their cryptocurrency alternative.
2. Infrastructure. Money transfer companies like Western Union could adopt their own cryptocurrency, and therefore enable superior access to black markets. (The black market already uses these companies, so it would be easy choice)

This would make their currencies no different from Beens and Flooz, and will likely result in the same levels of adoption, trust, and eventual/inevitable conclusion.

[wareen]

1. Marketing. Some company could throws millions and billions of money marketing their cryptocurrency alternative.

They sure need those billions because they would compete against PayPal or maybe MintChip, not Bitcoin. I just can't see the business model for a company developing a truly decentralized cryptocurrency like Bitcoin.

2. Infrastructure. Money transfer companies like Western Union could adopt their own cryptocurrency, and therefore enable superior access to black markets. (The black market already uses these companies, so it would be easy choice)

I don't think they'd want to risk even more involvement in black market financing - such a move would most likely backfire.

Edit: before anyone gets defensive, I'm not saying that these will happen. Just wondering about possible different scenarios.

Not at all - just tossing ideas around...

[2112]

That still doesn't mean that if some new cryptocurrency comes out with a killer feature, and more and more people and vendors start to use it, that Bitcoin can't just implement that feature as well, and once again overtake the newcomer due to already having established hardware/software/merchant support. It could happen, but I really don't think it's likely.

You are 100% right. Bitcoin and its developers could somehow become inclusive. It isn't impossible. I just find it extremely unlikely. The not-invented-here vibe is just extremely strong. The current mindset is highly exclusionary.