4 ms·

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3942181 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3942181 > For example, illegal transactions, sc

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3942181 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3942181 > For example, illegal transactions, scams and gambling together make up less than 3% of volume.

sokoloff 4y ago
What constitutes a "scam" in the that paper? That paper treats all USDT (Tether) transactions as "not scam". I think that remains to be proven and I don't think it's anywhere near certain.
- hellotomyrars 4y ago
  Tether is arguably itself a scam based on their incredibly creative account and likely outright lies about the backing of Tether.
  - aww_dang 4y ago
    Turtles all the way down. The US central bank backs the US dollar with "The full faith and credit of the US government" https://www.federalreserve.gov/faqs/currency_12770.htm https://www.federalreserve.gov/faqs/currency_12770.htm
    - hellotomyrars 4y ago
      Sure, totally. But I trust the faith and credit of the US government a lot more than the faith and credit of Tether.
danans 4y ago
You excluded the first part of that paragraph: > We show that the vast majority of Bitcoin transactions between real entities are for trading and speculative purposes. Starting from 2015, 75% of the real bitcoin volume has been linked to exchanges or exchange-like entities such as on-line wallets, OTC desks, and large institutional traders. So 75% of the transactions are just speculative trading, not transactions for goods or services, which is what is being discussed. Taking the paper's numbers at face value, as a percentage of non-speculative transactions, illicit transactions are 12%, which is quite high. There are also papers which quantify the amount of illegal activity as high as 46% [1] in 2018. Illicit activity is still probably the most durable use non-investment use-case for Bitcoin, and realistically will be the most enduring use case going forward. 1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645
- rsj_hn 4y ago
  In some sense, yes the ultimate purpose of a bearer currency in the era of government controlled custodial currencies is having a currency that the government can't seize from you or put prior restraint on you spending. Thus by definition, the main use case is "illicit". But remember that "illicit" also includes sending donations to protestors in Canada when the government froze their bank accounts, or sending payments to dissident organizations that have been blacklisted and denied banking services, etc. We can also say that the primary use case of signal is "illicit" communication -- that is, attempts to skirt eavesdropping by various government security organizations, and this is why Signal received funding from the U.S. government - it was a device to assist in coordinating anti-government protests in nations the US wanted to oppose. For the same reason, the U.S. Navy created and funded Tor. So this is a two way street -- the ability to send payments and securely communicate even if your government doesn't want you to do that is great when they are used to support dissidents in nations you oppose, but not so great when they are used for similar purposes at home, or when they are used for organized crime. Just because a technology's primary use case is "Illicit" doesn't mean it's not a valuable or useful technology.
- throwup 4y ago
  Illegal transactions are also 11-12% of the USA's economy.[1] In 2019, forex volume was $6.6T per day [2], or $1716T per year. Meanwhile global GDP was only $87.5T [3]. In other words, almost 95% of global currency volume is speculation. Why would anyone use currencies that are mainly used for speculation? Both the traditional and crypto economies are reflections of human behavior, but because crypto is more transparent, you can see it for yourself. And a lot of people don't like what they see. But it's not a new problem nor unique to new currencies or technologies. [1]: https://www.investopedia.com/articles/markets/032916/how-big-underground-economy-america.asp https://www.investopedia.com/articles/markets/032916/how-big... [2]: https://www.financemagnates.com/institutional-forex/execution/bis-survey-daily-fx-volumes-jump-30-to-6-6-trillion-in-2019/ https://www.financemagnates.com/institutional-forex/executio... [3]: https://www.statista.com/statistics/268750/global-gross-domestic-product-gdp/ https://www.statista.com/statistics/268750/global-gross-dome...
  - 4y ago

sokoloff 4y ago

What constitutes a "scam" in the that paper? That paper treats all USDT (Tether) transactions as "not scam". I think that remains to be proven and I don't think it's anywhere near certain.

hellotomyrars 4y ago
Tether is arguably itself a scam based on their incredibly creative account and likely outright lies about the backing of Tether.
- aww_dang 4y ago
  Turtles all the way down. The US central bank backs the US dollar with "The full faith and credit of the US government" https://www.federalreserve.gov/faqs/currency_12770.htm https://www.federalreserve.gov/faqs/currency_12770.htm
  - hellotomyrars 4y ago
    Sure, totally. But I trust the faith and credit of the US government a lot more than the faith and credit of Tether.

danans 4y ago

You excluded the first part of that paragraph: > We show that the vast majority of Bitcoin transactions between real entities are for trading and speculative purposes. Starting from 2015, 75% of the real bitcoin volume has been linked to exchanges or exchange-like entities such as on-line wallets, OTC desks, and large institutional traders. So 75% of the transactions are just speculative trading, not transactions for goods or services, which is what is being discussed. Taking the paper's numbers at face value, as a percentage of non-speculative transactions, illicit transactions are 12%, which is quite high. There are also papers which quantify the amount of illegal activity as high as 46% [1] in 2018. Illicit activity is still probably the most durable use non-investment use-case for Bitcoin, and realistically will be the most enduring use case going forward. 1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645

rsj_hn 4y ago
In some sense, yes the ultimate purpose of a bearer currency in the era of government controlled custodial currencies is having a currency that the government can't seize from you or put prior restraint on you spending. Thus by definition, the main use case is "illicit". But remember that "illicit" also includes sending donations to protestors in Canada when the government froze their bank accounts, or sending payments to dissident organizations that have been blacklisted and denied banking services, etc. We can also say that the primary use case of signal is "illicit" communication -- that is, attempts to skirt eavesdropping by various government security organizations, and this is why Signal received funding from the U.S. government - it was a device to assist in coordinating anti-government protests in nations the US wanted to oppose. For the same reason, the U.S. Navy created and funded Tor. So this is a two way street -- the ability to send payments and securely communicate even if your government doesn't want you to do that is great when they are used to support dissidents in nations you oppose, but not so great when they are used for similar purposes at home, or when they are used for organized crime. Just because a technology's primary use case is "Illicit" doesn't mean it's not a valuable or useful technology.
throwup 4y ago
Illegal transactions are also 11-12% of the USA's economy.[1] In 2019, forex volume was $6.6T per day [2], or $1716T per year. Meanwhile global GDP was only $87.5T [3]. In other words, almost 95% of global currency volume is speculation. Why would anyone use currencies that are mainly used for speculation? Both the traditional and crypto economies are reflections of human behavior, but because crypto is more transparent, you can see it for yourself. And a lot of people don't like what they see. But it's not a new problem nor unique to new currencies or technologies. [1]: https://www.investopedia.com/articles/markets/032916/how-big-underground-economy-america.asp https://www.investopedia.com/articles/markets/032916/how-big... [2]: https://www.financemagnates.com/institutional-forex/execution/bis-survey-daily-fx-volumes-jump-30-to-6-6-trillion-in-2019/ https://www.financemagnates.com/institutional-forex/executio... [3]: https://www.statista.com/statistics/268750/global-gross-domestic-product-gdp/ https://www.statista.com/statistics/268750/global-gross-dome...
- 4y ago