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How does regulation work for illegal drugs, prostitution, or other black markets, which can overall amount to double-digit percentages of economies? Bitcoin on

How does regulation work for illegal drugs, prostitution, or other black markets, which can overall amount to double-digit percentages of economies? Bitcoin only needs the black market to be a huge success. If it can avoid any surveillance ramps, that is ideal. It doesn't need to be everywhere. IMO, the surveillance on/off ramps are going to have a hard problem ahead of them, of their own making. Black markets are only going to accept "cleaned" bitcoins because they won't put themselves at risk of being surveilled. The "cleaned" bitcoins will not be usable on AML exchanges. The "unclean" bitcoin can be cleaned through CoinJoins and such, at the risk of whoever obtained them in their unclean state, but once cleaned, they'll be back on the black markets. Trading fiat currencies for Bitcoin will happen mainly in person, with cash, to avoid the surveillance. You will be able to tell, to an extent, whether bitcoin are clean or unclean through their transaction history - a clean coin will be one which originates as the output of a CoinJoin. All transactions on the black markets will be a CoinJoin of some kind. For most purposes, this won't matter because the majority of trade will be conducted over the Lightning Network, which has sender anonymity, and will very likely get receiver anonymity in the near future. Node operators can use Tor to avoid being surveilled - and the transport protocol used is fully end-to-end encrypted and authenticated. Since the majority of trade will be happening on the black markets, exchanges which built their castles in KYC land will eventually fail. Nobody will care for "unclean" bitcoin if they are too heavily regulated. There will probably be a premium on clean bitcoin due to the risk involved in anybody who decides to wash unclean bitcoin. Savers will not care if they have to resort to black markets to protect their wealth from theft or seizure. As long as they can find some local black market vendors who'll trade them for some other goods or fiat cash. For governments to attempt to stamp out the black markets, the solution involved will be much worse than anything you could imagine being caused by Bitcoin - complete totalitarianism is the only way it could be enforced, and your open internet will be finished long before then. Careful what you wish for.

Nursie 6y ago
> How does regulation work for illegal drugs, prostitution, or other black markets, which can overall amount to double-digit percentages of economies? Very few people want bitcoin for itself, most are in it purely to get rich through speculation, and even those who use it to transact will find it less attractive if it can't easily be converted. Your Heath-Robinson process of money laundering there is hilarious, and reads like a how-to for lengthy jail terms.
- sparkie 6y ago
  > Very few people want bitcoin for itself, most are in it purely to get rich through speculation, and even those who use it to transact will find it less attractive if it can't easily be converted. From an outside perspective, it might seem that way. There is a plentiful, and growing crowd who understand Bitcoin as a means of saving and avoiding state interference in their finances. Conversion of fiat to Bitcoin is highly desirable because people want to save over long periods. The conversion of Bitcoin back to Fiat is less desirable because it is trading good money for bad money. People only do the latter when they have a liquidity crisis. The bulk of bitcoin users are HODLers, as can be seen through the UTXO ages on the blockchain. Market speculators are a minor subset of bitcoiners. > Your Heath-Robinson process of money laundering there is hilarious, and reads like a how-to for lengthy jail terms. I wasn't talking about money laundering at all. What are you reading? Not sure you know what money laundering means. I'm referring to people taking their legitimate earnings and storing them in Bitcoin for the purpose of avoiding devaulation by inflation and illegal surveillance without warrant. People pay their income taxes when they earn (Usually with no choice because it will be deducted fromn their wage via a PAYE scheme). They also pay their sales taxes when the purchase any items from outside of the black markets. The Bitcoin saver who merely interacts with this black market as a means of exchanging fiat money for bitcoin is not engaging in illegal activity. It is the black market vendors who provide the services who are. Consider this: You go to a shop and purchase an item which costs $0.99 (inc. sales tax). The owner of that shop decides to pocket the sales tax and does not pass it on to the tax authority. Have you engaged in illegal activity by purchasing this item? It has nothing to do with you whether the shop owner pays his sales tax - you paid yours. Ok, it might be possible to dodge sales taxes by purchasing within black markets, but the black market doesn't necessarily provide all the commodities one would want. The most common use case will be converting back to fiat cash to use at local stores, where every purchase has a sales tax. If money laundering is a concern, then a government would really want to deregulate bitcoin and encourage its use in paying taxes. By utilizing the blockchain and its auditability, they could largely automate the process of tax collection and save significant amounts of money. People will still be paying their income taxes via PAYE, but the process can be fully automated by every participant involved (employer, employee and tax authority). By attempting to overregulate, they push most of the activity underground, where they are no longer collecting sales taxes on the transactions.

Nursie 6y ago

> How does regulation work for illegal drugs, prostitution, or other black markets, which can overall amount to double-digit percentages of economies? Very few people want bitcoin for itself, most are in it purely to get rich through speculation, and even those who use it to transact will find it less attractive if it can't easily be converted. Your Heath-Robinson process of money laundering there is hilarious, and reads like a how-to for lengthy jail terms.

sparkie 6y ago
> Very few people want bitcoin for itself, most are in it purely to get rich through speculation, and even those who use it to transact will find it less attractive if it can't easily be converted. From an outside perspective, it might seem that way. There is a plentiful, and growing crowd who understand Bitcoin as a means of saving and avoiding state interference in their finances. Conversion of fiat to Bitcoin is highly desirable because people want to save over long periods. The conversion of Bitcoin back to Fiat is less desirable because it is trading good money for bad money. People only do the latter when they have a liquidity crisis. The bulk of bitcoin users are HODLers, as can be seen through the UTXO ages on the blockchain. Market speculators are a minor subset of bitcoiners. > Your Heath-Robinson process of money laundering there is hilarious, and reads like a how-to for lengthy jail terms. I wasn't talking about money laundering at all. What are you reading? Not sure you know what money laundering means. I'm referring to people taking their legitimate earnings and storing them in Bitcoin for the purpose of avoiding devaulation by inflation and illegal surveillance without warrant. People pay their income taxes when they earn (Usually with no choice because it will be deducted fromn their wage via a PAYE scheme). They also pay their sales taxes when the purchase any items from outside of the black markets. The Bitcoin saver who merely interacts with this black market as a means of exchanging fiat money for bitcoin is not engaging in illegal activity. It is the black market vendors who provide the services who are. Consider this: You go to a shop and purchase an item which costs $0.99 (inc. sales tax). The owner of that shop decides to pocket the sales tax and does not pass it on to the tax authority. Have you engaged in illegal activity by purchasing this item? It has nothing to do with you whether the shop owner pays his sales tax - you paid yours. Ok, it might be possible to dodge sales taxes by purchasing within black markets, but the black market doesn't necessarily provide all the commodities one would want. The most common use case will be converting back to fiat cash to use at local stores, where every purchase has a sales tax. If money laundering is a concern, then a government would really want to deregulate bitcoin and encourage its use in paying taxes. By utilizing the blockchain and its auditability, they could largely automate the process of tax collection and save significant amounts of money. People will still be paying their income taxes via PAYE, but the process can be fully automated by every participant involved (employer, employee and tax authority). By attempting to overregulate, they push most of the activity underground, where they are no longer collecting sales taxes on the transactions.