5 ms·

Bitcoin isn't used as a Fiat hedge. It's used for laundering, buying drugs and other illegal activity. That's all that is keeping it alive

pariahHN 8y ago
The professional criminals long ago switched to privacy focused coins like Monero and Zcash [0], both for movements and for ransomware/cryptojacking. Fiat is still the largest market for money laundering [1], not Bitcoin. The amount of money described in that article is almost 50% of what Bitcoin's peak market cap was. I also think if Bitcoin was significantly better than existing methods for money laundering, we would see an increase in the proportion of identifiable illegal activity instead of a declining trend which implies the amount of money laundering (and other illegal activities) has at most remained constant [2]. That paper also reinforces the point made in [0] with regards to Monero/Zcash. It should also be noted that the paper found only ~25% of users and ~44% of transactions were involved, which while being large portions are not the majority portions. I would also hazard a guess that the majority of large scale illegal transactions would not be conducted on exchanges in amounts large enough to cause major slippage of price, which is a significant limiting factor in how quickly someone can launder their money (especially since while they don't want to significantly move the price themselves, other entities may not have such restrictions) as well as eliminating those transactions as major price movers. Not saying no one uses Bitcoin for these things, just that it's highly unlikely those things are the primary factors in the price we see. Personally, I think the price supports for Bitcoin are speculation, (possibly - I know one enthusiast personally who believes miners would buy up BTC whenever the price falls below break-even for mining) miners, and probably more than a few true believers. I would also like to point out that Bitcoin, while the dominant factor in the crypto market, is not the ENTIRE cryptomarket. There are several projects that have actual unique use cases - Brave (BAT) and Enjin (ENJ) being two examples that are not explicitly targeting fiat substit, Ethereum, or Stellar. Believe it or not, there are actually people who would rather not have unelected third parties able to exercise control over their wealth and daily lives. Especially when some of those third parties engage in predatory practices and take risks that endanger the economy as a whole [3], and when those third parties are practically unavoidable. [0] https://www.deepdotweb.com/2017/09/20/dhs-says-darknet-criminals-switching-bitcoin-monero/ https://www.deepdotweb.com/2017/09/20/dhs-says-darknet-crimi... [1] https://www.cnbc.com/2018/09/14/us-examining-danske-bank-over-possible-money-laundering-wsj-says.html https://www.cnbc.com/2018/09/14/us-examining-danske-bank-ove... [2] https://www.law.ox.ac.uk/business-law-blog/blog/2018/02/sex-drugs-and-bitcoin-how-much-illegal-activity-financed-through https://www.law.ox.ac.uk/business-law-blog/blog/2018/02/sex-... [3] https://www.huffingtonpost.com/entry/bank-of-america-charge-checking-account_us_5a68a762e4b0dc592a0e91d6 https://www.huffingtonpost.com/entry/bank-of-america-charge-...

pariahHN 8y ago

The professional criminals long ago switched to privacy focused coins like Monero and Zcash [0], both for movements and for ransomware/cryptojacking. Fiat is still the largest market for money laundering [1], not Bitcoin. The amount of money described in that article is almost 50% of what Bitcoin's peak market cap was. I also think if Bitcoin was significantly better than existing methods for money laundering, we would see an increase in the proportion of identifiable illegal activity instead of a declining trend which implies the amount of money laundering (and other illegal activities) has at most remained constant [2]. That paper also reinforces the point made in [0] with regards to Monero/Zcash. It should also be noted that the paper found only ~25% of users and ~44% of transactions were involved, which while being large portions are not the majority portions. I would also hazard a guess that the majority of large scale illegal transactions would not be conducted on exchanges in amounts large enough to cause major slippage of price, which is a significant limiting factor in how quickly someone can launder their money (especially since while they don't want to significantly move the price themselves, other entities may not have such restrictions) as well as eliminating those transactions as major price movers. Not saying no one uses Bitcoin for these things, just that it's highly unlikely those things are the primary factors in the price we see. Personally, I think the price supports for Bitcoin are speculation, (possibly - I know one enthusiast personally who believes miners would buy up BTC whenever the price falls below break-even for mining) miners, and probably more than a few true believers. I would also like to point out that Bitcoin, while the dominant factor in the crypto market, is not the ENTIRE cryptomarket. There are several projects that have actual unique use cases - Brave (BAT) and Enjin (ENJ) being two examples that are not explicitly targeting fiat substit, Ethereum, or Stellar. Believe it or not, there are actually people who would rather not have unelected third parties able to exercise control over their wealth and daily lives. Especially when some of those third parties engage in predatory practices and take risks that endanger the economy as a whole [3], and when those third parties are practically unavoidable. [0] https://www.deepdotweb.com/2017/09/20/dhs-says-darknet-criminals-switching-bitcoin-monero/ https://www.deepdotweb.com/2017/09/20/dhs-says-darknet-crimi... [1] https://www.cnbc.com/2018/09/14/us-examining-danske-bank-over-possible-money-laundering-wsj-says.html https://www.cnbc.com/2018/09/14/us-examining-danske-bank-ove... [2] https://www.law.ox.ac.uk/business-law-blog/blog/2018/02/sex-drugs-and-bitcoin-how-much-illegal-activity-financed-through https://www.law.ox.ac.uk/business-law-blog/blog/2018/02/sex-... [3] https://www.huffingtonpost.com/entry/bank-of-america-charge-checking-account_us_5a68a762e4b0dc592a0e91d6 https://www.huffingtonpost.com/entry/bank-of-america-charge-...