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The security of currencies come from their underlying demand. Gold is used as a currency, first and foremost, because it has strong intrinsic value, and second

The security of currencies come from their underlying demand. Gold is used as a currency, first and foremost, because it has strong intrinsic value, and second because it has physical properties that make it convenient to divide and store. If gold had no independent demand it wouldn't be considered for a currency. The US dollar has even more demand. All Americans are required by law to purchase it and own it for the purpose of paying their taxes. If they do not, the most powerful police and military will lock them in prison. This is the base upon which the rest of the system is built. Bitcoin, to its good fortune, is also backed by independent demand: crime. Because of crime, and its adeptness at enforcing agreements, BitCoin has a strong tangible base upon which it can grow its ecosystem. The biggest threat to BitCoin is not a sudden loss of interest by the masses, but a competing currency that better serves crime and takes BitCoin's market share.

Gormo 13y ago
Government-issed currencies offer far, far more utility for criminals than Bitcoin does. Every Bitcoin transaction is a matter of public record. There's no anonymity - everything you do with Bitcoin leaves a paper trail. Criminals using Bitcoin expose themselves to a much greater risk of detection than they'd face by using a briefcase full of dollars. There are ways to mitigate the traceability of Bitcoin transactions, but these typically involve trusting middlemen, and so come with their own set of risks. The value of Bitcoin originates in the inability of the government to manipulate the money supply, but I suspect that criminals are probably less impacted by inflation than the typical non-criminal is. It's honest businesspeople and not criminals who stand to benefit from Bitcoin.
- thinkloop 13y ago
  BitCoin signatures are traceable, but the link between signatures and human beings is only traceable from outside the BitCoin system. If you are already dealing with briefcases of cash, it is a simple matter to buy BitCoin using one of those briefcases anonymously. Throw Tor in the mix, and you'd have to be the next Bin Laden for the world to dedicate the resources necessary to uncover your dealings. These are people who built 200meter+ tunnels underground to transport drugs between the US and Mexico: http://www.huffingtonpost.com/2012/07/14/drug-tunnels_n_1673317.html http://www.huffingtonpost.com/2012/07/14/drug-tunnels_n_1673... Cash is a terrible currency for big time crime. It is very difficult to store, being susceptible to mites and fungus. It is very difficult to exchange large quantities, think pallets instead of briefcases for millions/billions of dollars (which is the primary reason they don't make a $1000 bill). It is nearly impossible to exchange any meaningful amount cross-border. It is difficult to count and keep track of. It is easier to counterfeit and get bad cash. Cash has serial numbers, fingerprints, and DNA all over them (I'm surprised we don't hear more about cash forensics, or bugged cash with tracking chips in them). Cash will still be used for the last mile, for the street-level "retail" transactions. But when those get gathered up and need to be sent back to headquarters, or between organizations, or to other nations, the backhaul, by necessity, needs to run on something more sophisticated. Today, that seems to be Bitcoin, even though I agree with you that it is far from perfect. Its first-mover advantage is allowing it to build a robust ecosystem of services that is making it that much harder for an incumbent to take its place. But when that super currency does come, and crime shifts to using it, I predict a relatively straight decline in BitCoin value.
- deleted 13y ago
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Gormo 13y ago

Government-issed currencies offer far, far more utility for criminals than Bitcoin does. Every Bitcoin transaction is a matter of public record. There's no anonymity - everything you do with Bitcoin leaves a paper trail. Criminals using Bitcoin expose themselves to a much greater risk of detection than they'd face by using a briefcase full of dollars. There are ways to mitigate the traceability of Bitcoin transactions, but these typically involve trusting middlemen, and so come with their own set of risks. The value of Bitcoin originates in the inability of the government to manipulate the money supply, but I suspect that criminals are probably less impacted by inflation than the typical non-criminal is. It's honest businesspeople and not criminals who stand to benefit from Bitcoin.

thinkloop 13y ago
BitCoin signatures are traceable, but the link between signatures and human beings is only traceable from outside the BitCoin system. If you are already dealing with briefcases of cash, it is a simple matter to buy BitCoin using one of those briefcases anonymously. Throw Tor in the mix, and you'd have to be the next Bin Laden for the world to dedicate the resources necessary to uncover your dealings. These are people who built 200meter+ tunnels underground to transport drugs between the US and Mexico: http://www.huffingtonpost.com/2012/07/14/drug-tunnels_n_1673317.html http://www.huffingtonpost.com/2012/07/14/drug-tunnels_n_1673... Cash is a terrible currency for big time crime. It is very difficult to store, being susceptible to mites and fungus. It is very difficult to exchange large quantities, think pallets instead of briefcases for millions/billions of dollars (which is the primary reason they don't make a $1000 bill). It is nearly impossible to exchange any meaningful amount cross-border. It is difficult to count and keep track of. It is easier to counterfeit and get bad cash. Cash has serial numbers, fingerprints, and DNA all over them (I'm surprised we don't hear more about cash forensics, or bugged cash with tracking chips in them). Cash will still be used for the last mile, for the street-level "retail" transactions. But when those get gathered up and need to be sent back to headquarters, or between organizations, or to other nations, the backhaul, by necessity, needs to run on something more sophisticated. Today, that seems to be Bitcoin, even though I agree with you that it is far from perfect. Its first-mover advantage is allowing it to build a robust ecosystem of services that is making it that much harder for an incumbent to take its place. But when that super currency does come, and crime shifts to using it, I predict a relatively straight decline in BitCoin value.
deleted 13y ago
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