Bitcoin, Drugs & Theft: Risks of Taking On High Finance
New Scientist came out with an article today in which the site claims that “new analysis of the anonymous marketplace Silk Road suggests that purveyors of illegal drugs and other black market goods are raking in the equivalent of $2 million Bitcoins per month.” The site then claims that this is 20 percent of exchanges from Bitcoin to US Dollars that take place on the online currency’s main exchange, Mt. Gox.
To suggest that 20 percent of exchanges from Bitcoin to US Dollars is related to illegal drugs is inaccurate, as anybody who understands the power of Bitcoin will understand. While Mt. Gox is responsible for many of the transactions taking place on the Internet – one number thrown around is 80% – the truth of the matter is that thousands of dollars, if not millions, is transacted in the analog world, separate of any online Bitcoin exchange. And, these Bitcoin are not being transacted merely for drugs. Instead, there is a whole host of products and services people are spending Bitcoin on.
Bitcoin is not a medium of drug exchange. It is extremely more dynamic than that. It’s use has been precipitated by a black hole of need in the global economy. Individuals are sick of exorbitant fees and strict terms when dealing with their transnational, illuminist bank. Moreover, they also don’t like being extorted of their hard-earned money through hours of labor through state and federal taxes. There is no moral argument for why state-enterprise has a right to money we’ve earned. The economics of Bitcoin make sense, and that is why the p2p technology has continued to grow despite a volatile first four years. Because of their greed, high finance and governments have made participating in the dominant economic paradigm an exhaustive and abusing experience. That’s why people are withdrawing – they have no choice, their survival depends thereupon.
Bitcoin threatens this economic paradigm, and that is why it must be derided and tied to drug trades. The Powers That Be wish that Bitcoin was only tied to the drug trade, and not at the center of a growing, diverse economic structure.
Security researcher at Carnegie Mellon University in Pittsburg, Pennsylvania, Nicolas Christin, claims that from his analysis he believes there are a few hundred sellers offering drugs like cannabis, cocaine, ecstasy and are earning on average 11,650 Bitcoins per day. The exchange Mt. Gox swaps an average 59,980 into dollars each day. Christin places the dollar amount being transacted at $1.9 million per month. Christin sees opportunities to shut down the drug trade. Authorities could attack the Tor network or improve drug agency monitoring of postal networks. Christin believes, however, that Bitcoin seems to be the easiest way to shut down the trade. According to New Scientist, “While single Bitcoin transactions can be anonymous, previous research has shown that network analysis can be used to identify individuals.” Or the authorities could go after the exchanges like Mt. Gox, as it has proven to be vulnerable to hacks that can cause the currency to collapse, thus making it more difficult for transactions to continue. To be sure, Bitcoin is an idea whose time has come. Just like an Audit of the Federal Reserve. That is why it will be so hard to shutdown and deter individuals from using the currency.
In another article in which the currency is not tied to the drug trade, it is tied to online currencies at the heart of “make-believe economies.” These make-believe economies, nonetheless, are “creating what law enforcement officials say is a multibillion-dollar new territory for crooks to exploit.” In many cases, the play money is bought with and exchanged for real cash, says the article. Yet experts say it’s often poorly protected from hackers. “The currency itself isn’t backed by the full faith and credit of a government entity,” Adam Wosotowsky, researcher at McAfee Labs, said. “Your ability to get legal backing if you’re scammed … is somewhat limited.” The FBI cited two thefts involving bitcoins, a virtual tender. The FBI stated that “as long as there is a means of converting Bitcoin into real money,criminal actors will have an incentive to steal them.”
And as long as we remain the tax cattle of state-enterprises the world over which feed of our tax dollars and fine us into oblivion the inventive to escape the System will persist. As long as the U.S. Dollar exists, bankers will have incentive to steal them, from us. Risk abounds on the planet earth.
And so, while many of the digital currencies are for Internet games and their associated items, some of these currencies are being used to buy other online products, like music and movies. And still others exist solely as alternatives to government-controlled money, like Bitcoin. And this is wherein the power of digital currencies resides. To step outside the corrupt and unlawful dominant financial system and begin exchanging goods, services or a medium of exchange outside the dominant system is a risk that many are willing to take.