Bitcoin and the counter-economy
The counter-economy is going strong in the US, with drugs being by far the most traded item, with some estimates putting marijuana at the highest grossing cash crop in the United States. Next, of course, is guns. The illegal arms trade in the US, whether selling of guns to criminals, or trade in arms which are themselves illegal, such as full auto fire-arms, is so cliche that any police shows or movies without it just feel wrong. Now, you may ask yourself, why is this? It’s simple, really. People want drugs and guns. No law is going to change that. What a law against something does is create profit. This is where the counter-economy comes in. Individuals with the willingness to risk imprisonment for the greater profit move in and fill the void created by driving legit vendors out of business.
I explained in previous articles some advantages of Bitcoin for the counter-economy, and all its uses in such an environment. Yet the counter-economy hasn’t completely jumped on the bandwagon yet. I believe it will, however. It only remains to see how long it will take.
In fact, Bitcoins are already being used for counter-economic purposes and an old but well known example was the operator of The Silk Road anonymous marketplace that’s now closed. That marketplace had categories for various drugs, as well as one for weapons, and one labeled “other”. As a TOR hidden service, it’s anonymous, though it worries somewhat that the packages were sent via post. That seems to be a weak link in the anonymity chain, but the site was offering some tips on that.
Aside from that, however, the bitcoin counter-economy is largely empty. There are no mediators who will accept bitcoin, there are few, if any, anonymous exchanges, and no supply chain can, as yet, be run entirely in bitcoins. The reason for this is simple, the Bitcoin economy itself is very young. The market is small, but it is rapidly growing. We have no producers who accept bitcoin, only middle-men and consumers.
So that covers where we are, but where are we going? The future of bitcoin looks very bright in the counter-economy. Because of all its advantages, I can’t really see any situation where any transaction that can use bitcoin wouldn’t, especially if privacy is important, as it is in the counter-economy. The major hurdle remains getting bitcoin into the hands of suppliers, just as it is in the ‘white’ market. Once that happens, I see Bitcoin gaining massive popularity with both segments of the market.
Of course, we can discuss if it’s good or bad to use Bitcoins for drugs and guns but people are already using “conventional” money to buy&sell drugs&guns. Crime is crime no matter what types of “money” are used, I’m just saying that Bitcoin will become more and more popular in the counter-economy.