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Drug Site Silk Road Says It Will Survive Bitcoin's Volatility
Sparrowvsrevolution writes "Bitcoin's recent spike and then collapse in value has convinced many that it's too unstable to use as a practical currency. But not the founder of Silk Road, the black market drug site that exclusively accepts Bitcoin in exchange for heroin, cocaine and practically every other drug imaginable. Silk Road's creator, who calls himself the Dread Pirate Roberts, broke his usual media silence to issue a short statement that Silk Road will survive Bitcoin's bubble and bust. The market's prices are generally pegged to the dollar, with prices in Bitcoin fluctuating to account for movements in the exchange rate. And Roberts explained that vendors on the site have the option to also hedge the Bitcoins that buyers place in escrow for their products, so that they can't lose money due to Bitcoin's volatility while the drugs are in the mail. As a result, only about 1,000 of the site's more than 11,000 product listings were taken down during the recent crash."
Why blame the victim? The rise and fall in price (PLEASE, not "value". There's a difference, you know) is due to speculation, not to the currency itself. Dollars, euros and other fiat currency are just as vulnerable.
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
I sell physical goods and accept Bitcoin as a payment method. The volatility doesn't bug me at all. While it's only a tiny percentage of overall sales, it's still exciting to see a currency that can actually become a true bartering agent that is freed of non-market forces.
If a seller is concerned with volatility, they should consider not selling their received BTC for fiat currency. It's the number of "we accept bitcoin" sites that accept currency and then immediately convert it to fiat that is one reason for the downward pressure.
I blogged about it the other day, in how I wish governments would just make BTC to fiat currency transactions illegal. It would be a great step in reducing volatility and decoupling BTC from the regulated markets.
to bitcoin?
Sheesh, evil *and* a jerk. -- Jade
updated silk road url? anyone have a current one?
Paul Krugman is chirping about how any currency which doesn't come with built-in, simmering inflation must inevitably bring commerce to a standstill because all users will hoard it in anticipation of further increases in price. This explains why there was no business done in the United States at all in the years 1865-1913.
...three days ago. This isn't news. It's old as fuck in Internet time.
Me and a friend have just been talking about this while playing Minecraft (of all things).
There was that Litecoin site, as well as a few others.
Litecoin seems to be promoting itself as a more general lower-priced goods system since it is easier to mine coins overall.
Even if one of these systems fail, others could replace it in time.
There are sites for trading between different virtual currencies growing every month.
As more of these currencies come about, just that fact alone will allow virtual currencies to be more stable as there will be trading between all of them.
Currency falls, everyone rushes to it to get it low price, it grows back up to good levels as another falls, and it repeats.
It will happen much much faster than current backed currencies like dollars and pounds, but that fact will also allow it to flourish and evolve much faster.
Word of mouth can increase and decrease the value of each currency alone since they are basically virtual bartering systems.
Implied worth will make things fluctuate far more than fiat currencies, but that will also be its best feature since smart people could make money off it if they sell at the right times.
And as these events happen more and more, it will allow for more people to enter the market, strengthening the system with time.
So I am all for more systems to be added. The more, the better.
I own my sole to the company store has deeper meaning then just a song lyric. Mine companies used to pay people not just not enough to survive (so they had to borrow credit from the company store and then be forever in debt) but often in company currency, that could only be spend in the company store. It is a way to enslave people, not free them.
But ah... it was the GOVERNMENT that freed these people by enforcing that salaries should be payed in fiat currencies. So basically, you want to reverse that. Here are your wages, in bitcoins. No you can't convert them anywhere, you can only use them to buy goods from my friends, at whatever prices they set.
Nice.
When you meet a libertarian, remember, the oppression of government is not what he objects to, it is that it is the government doing the subjugation and not him. Remember what the south was really about, it was about freedom from a government that told them to stop denying freedom to other people. When a republican wants to make government so small, he can drown it in a bathtub, ask him what is going to replace it. Ten to one he thinks it is going to be him waving the biggest gun around. Libertarians are all against the government because they want to be the one doing the telling. And frankly unless you own a VERY big gun, no matter how bad the government may be, a local warlord is going to be even worse.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
With the very recent forceful closing of the BitFloor BitCoin exchange, and the inavailability of bitcoin-24, another (european) exchange, there seems to be a crackdown on BitC exchanges going on.
What is needed, is a decentralised method for trading BitCs for other currencies, or else BitCoins can be made to be worthless by shutting down the current centralised, easily identified exchanges. I'd suggest Ripple but that technical solution seems to be going nowhere at the moment, alas.
Maybe we deserve this world ?
Silk Road's creator, who calls himself the Dread Pirate Roberts, broke his usual media silence
Yegads, man! You're going to scare the horses. Your usual media silence is a wise practice. The general public doesn't know you exist, and doesn't know you use Bitcoins. Those are good things. The first rule of drug dealing is you do not talk about drug dealing. Just 'cuz I don't use your service doesn't mean I want to see more scrutiny aimed at you, or at Bitcoin.
Stop-Prism.org: Opt Out of Surveillance
Where did you get the BitC nomenclature? That is a new one.
Hey, Sirmixalot is on slashdot!
Ahhh Yes.. Without an exchange willing to convert my bitcoin to some other currency, there are few retailers who will be accepting payment in bitcoin for much of anything. Once folks realize that bitcoin cannot be easily converted, they will become valueless.
Of course, they have huge value to those who engage in illegal trading exactly because there is no government backing, but is that the kind of thing I want to be indirectly involved in?
I wonder if this is an effort to shut down the currency or is it an effort to control the market? Either way, the little fish had better be wary. The big sharks are obviously on the move and this thing could go south quickly. (or not...)
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
There is no obvious explanation for why the digital currency has fallen so far and so fast, although the market correcting after such a huge rise might be a good explanation.
The price of bitcoin rose much higher than the cost to mine bitcoins (i.e. price of computers and electricity). While some people got caught up in speculating, others saw this and started mining and selling instead, causing a crash. Bitcoins are volatile because people don't understand it yet. If they did, they'd realize that the value can not go far above the price of mining. Having said that, the price of mining is continually going up.
Once a few websites start publishing indices of the average cost of mining a bitcoin at any given time, I think that will keep this sort of speculation in check.
99% of the world's gold is sitting in a vault not being used.
So in terms of utility, it is useless^Wworthless.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
It's cloth, actually. Currency isn't printed on paper, it's roughly 75% cotton, 25% linen.
U.S. currency is printed on paper
Cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn.
Paper can be made of many things including cotton and linen. Paper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets.
If you want news from today, you have to come back tomorrow.
Why though?
What makes gold unique is that it is out of the hands of government. It cannot be manipulated (over the long-term at least) by political authority. Gold is a completely independent form of money, and store of value, which is not subject to the jurisdiction of any political authority. Gold stands on its own, and this is precisely what makes gold useful. It should not be thought of as an investment, but rather a form of insurance -- insurance against political malpractice (which not only occurs on a regular basis, but will never cease to occur).
Gold is the only form of money that is out of the hands of political authority, and ironically, this is precisely why every government holds gold -- they know what can result from their destructive policies, and they know how to insure against it. They're crooked, but they certainly aren't stupid.
Don't take it from me. Take it from the central banks. If gold was useless, then naturally, it would make sense to liquidate it to pay for more useful things. But take a look around. They won't do that, and for good reason.
They are little more than promissary notes. Units of Debt/Value that can be traded. The "value" of either can be destroyed in a day, and restored as quickly.
It may be that "money" as an arbitrary store of value has reached it's useful limit in a technological society. As self-replicating memes go, it has certainly gone from providing symbiotic utility to becoming a pathological agent on more than one occasion.
Current society, however, is built around it. Replacing it means a new social order - probably one in which no one person can accumulate a massive surplus of goods and services. This goes against our evolutionary programming in a big way, so I'm skeptical that we'll get a rational economic/monetary system until we have better intelligences to work with (i.e. AIs).
Please do not read this sig. Thank you.
decentralised exchange is pretty much impossible, the fact that you cannot handle conventional currencies in a decentralized manner is the very reason why bitcoin was created. if you could have a decentralized exchange, would you need bitcoin at all anymore?
I can't answer. But there are more valuable things then gold to own and the smartest richest people on the planet kind of technically more or less own them.
Like big corporations. Stock. Land. Contracts with the DoD. Things like that are far better to "have" then gold. I would say diamonds are a start as well. I wouldn't stock gold unless I was really into making jewelry or using it to produce electronics. And because of golds "volatile nature' I would stock just enough to run whatever business I was making translating it to something else.
So the answer is, gold has uses but its useless as a measure of wealth by itself in todays economy. Virtually everything you can invest in is a gamble backed by the governments you are working through for your rights to conduct commerce.
It's back up to $115 dollars/Bitcoin.
I prefer to think of the latest Bitcoin value bubble from a different perspective.
It wasn't Bitcoin that was being volatile - it was the IMF and the ECB allowing the banks in Cyprus to confiscate private accounts (after they warned their top 100+ depositors so they could bail in time) that caused the entire existing money system to become suddenly less valuable. Gold and other less confiscatable (more secure) ways to store money also spiked. Bitcoin being one of the easiest currencies to move around (try sending gold instantly over the internet) got the most benefit. It also has the advantage over gold in that there's a known fixed amount. There's tons of gold left in mines that were shut down in the 1940s waiting for conditions to be right to mine again, but everyone with gold in their vault would not like if it was mined back to $35 an ounce - which technically wouldn't be that difficult. There's also lots of scam artists in the gold business.
http://www.cmi-gold-silver.com/gold-confiscation-1933-fdr-confiscation
That the EU, Canada and the USA started the process of passing laws to allow this to their own banks has kept the Bitcoin value relatively high.
As someone who had acquired a few Bitcoins when they were less than $15, I'm amused by all the recent bullshit talk of instability and volatility and other FUD.
I also see this as another sign that the government dept-backed world currencies are heading for a world of hurt. I would expect anyone with stock in said currency to resist change wholeheartedly. I also see the technology that backs Bitcoin as fairly solid - its greatest weakness is that it depends on internet access for transactions.
Because gold is a hedge against currency manipulation. The price of gold in fiat currencies has been up in the last decade due to fiat currencies being printed a LOT more. Many central banks are repatriating their gold (that's being stored in other countries) because they are losing trust in other central banks due to this massive printing (such as the Fed and it's monetarist policies like Quantitative Easing, and zero interest rate policies). The trend is to acquire as much gold as they can (China, Russia, India are all doing this) due to the scarcity of it.
I'm just surprised that central banks all hold a crapload of gold if its worthless and useless as a measure of wealth.
Why though?
Assuming the GP's figure is close to accurate, "99% of the world's gold is sitting in a vault", it explains itself.
The rarity of gold IN CIRCULATION combined with its physical properties (ie. it's desirable for many applications) sets its base price, and the higher the rarity (assuming there's still enough out there to be useful), the higher that price. So, stockpile a lot of it and lock it away, and what remains grows in value.
This is actually the same thing that happens to bitcoin, and is a big part of why they claim it self regulates... As bitcoin is removed from the market (bought and moved into savings), the price of bitcoin on the exchange goes up. Supposedly, the market would still work with just one bitcoin on the exchange. If it got to that point, adding one bitcoin from savings back into the exchange would earn someone a healthy chunk of money, but the price of bitcoin would drop in half instantly. This is supposed to mean that having a big pile of it doesn't help you, because if you have 100 bitcoin, it's not worth 100 x's the current price as each one put into the exchange reduces the price of the rest of bitcoin on the exchange. IMO, that doesn't make sense, and would make speculation increase (buy one, hope price goes up really high, sell high, wait for it to drop again as others try to do the same, repeat). This paragraph probably has a LOT of details wrong, misworded, etc, but the main point is still there... bitcoin chose it's block creation algorithm such that it approximates the rate at which commodities like gold are mined. (see : https://en.bitcoin.it/wiki/Controlled_Currency_Supply).
Anyway, if all the gold was released into circulation, the price per ounce would certainly drop, but that doesn't mean it wouldn't be just as useful as currency. It's value is based highly on what is in circulation, and that total value (amount_in_circulation * price) would probably be about the same. That's what bitcoin is counting on, and it plays a very similar rarity game.
Besides one obviously fake spike and drop, the value hasn't changed much more than 20% in either direction lately that I've seen. Yeah, the dollar differences are insanely high compared to the last 2 years but from a percentage standpoint, the value hasn't changed much. Overall, it's still up significantly from 3 months ago.
So they stockpile it away to make it artificially rare so that it has high value. This still does not make sense, why would they do this?
Citation please. I'm thinking you're dead wrong on this one.
That's not why central banks store gold. Rather, it's a store of wealth, just like they have fiat currency reserves. But the problem with fiats is that they can go to zero; and gold maintains wealth even when any number of fiats become worthless. Central banks spread and lower their risk when they hold a portion of their reserves in gold.
Of course, they have huge value to those who engage in illegal trading exactly because there is no government backing, but is that the kind of thing I want to be indirectly involved in?
Bitcoins have value to those who trade on the Silkroad and other similar websites, not because there is no government backing, but because they allow the buyer and seller to remain anonymous to each other, and the provide a degree of anonymity which is not possible with traditional methods of electronic banking (you can follow the paper trail to see that I transferred Bitcoins to the Silk Road, but you can't see whether I bought anything, or who from).
Of course, cash (notes/coins) have huge value to those who engage in illegal trading - for precisely the same reason, but you don't hear people wanting to shut down cash anytime soon...
Backup not found: (A)bort (R)etry (P)anic
With the very recent forceful closing of the BitFloor BitCoin exchange, and the inavailability of bitcoin-24, another (european) exchange, there seems to be a crackdown on BitC exchanges going on.
What is needed, is a decentralised method for trading BitCs for other currencies, or else BitCoins can be made to be worthless by shutting down the current centralised, easily identified exchanges. I'd suggest Ripple but that technical solution seems to be going nowhere at the moment, alas.
ahh.. erm. you mean like a decentralized credit card processor? dream on. you could do it on tor forums if you wanted. no business is going to touch it without exchanges that turn it into dollars instantly though.
world was created 5 seconds before this post as it is.
we know people will turn to crime to feed their drug habits
We know that, do we? Oh, of course! Because the drugs are illegal, and to feed the habit, they must break the law. But it gets better, 'cause when we catch them we put a nasty mark on their record that knocks them out of most jobs and property rental options. Sounds like the drugs really messed up the addict's life.
legalization can not drive prices down lower than what they are now
Wow, can I buy some drugs from YOU? I've never said it, but this time I think [citation needed] is really needed. Off the top of my head costs would drop: 1. Significantly cheaper transportation 2. Industrial scale production 3. No more confiscated product/people/equipment/property to subsidize. The only thing that could keep costs even remotely close to where they are now is very heavy taxation.
enabling the rights of the addict
This is how I know you're just trollin'. Or perhaps some kind of brainwashed fucktard. To counter, I simply point out the "hidden" population* of recreational drug users that are (drugs aside) law abiding, productive and, well, perfectly nice good people. What of their rights?
* Hidden in the sense that these kind of people rarely get caught. They use common sense (like not smoking a joint in the middle of downtown) and don't commit any other crimes that call attention to drug habits. You'll never see them high at work, etc. Google will help you find studies on them (I can't be bothered to do that much work when replying to a troll). Also, you probably know a bunch of them. If you say you don't, I'd say how would you know?
Then I'm in!
Vote monkeys into Congress. They are cheaper and more trustworthy.
Just a joke here. Maybe the aliens value gold more then us humans?
I don't know why, it seems paper is cheaper and lighter weight to gamble with =) Maybe because its cheap and diversifying your investments is smart? I may not be the best investment but it is one that might have some value if you could sit on it in a post apocalyptic medieval world...
Could be left over from pre 1800's era trading...
Could be the banks are just holding on to that gold for people who think it is.
I think the smartest answer is while gold is cheap its one of those things that is good to hold on to because as the market fluctuates you can sell it back out and buy more back cheaper later. So the banks having a lot of gold right now just means they've been winning at that game. The good banks wouldn't be dumping all their assets into gold though.
Maybe its just one aspect of manipulating fiat currency through their savings. This way they have oil, gold, and other means of controlling the value of fiat currencies by manipulating the markets. This is how I would use it. Call it gold ammunition for the economy. That would explain why they hoard it.
Who's got the power?
think massively parallel computing power
think specialized hash computation arrays
think of the precomputed rainbow table warriors
think oligarchy (of computer power = money)
think no public accountability of resource usage or mission
once these people take an interest in bitcoin it's 'done'
Who's round and jolly and all full of fun
Who's shaped like a great big hamburger bun?
Who's got a job that's a super-breeze?
I'm sure you guessed it, it's Mayor McCheese!
<blink>down the rabbit hole</blink>
Bitcoins provide a degree of anonymity which is not possible with traditional methods of electronic banking
Really? I don't think they necessarily provide anonymity. All transactions are public record, which is pretty much how the BTC system works. You sign a transaction with your key to transfer money (bitcoin) to somebody else and that gets recorded in public records. These transactions are *anything* but private. If you know somebodies public key, you can go back and trace any transaction they have made by looking though publicly published data. All you need to do is start an archive of bitcoin transaction blocks and you can have a complete transaction history for every bitcoin ever traded. All you need to do is a little detective work and you could start tracing down who's who by data mining the transaction logs.
What bitcoins *do* provide, at least for now, is a way to transfer large sums outside of a government's tracking and reporting laws. A practice which is rapidly getting brought under the laws folks think they can avoid by using bitcoin. That is the push towards getting exchanges to start reporting their transactions just like they do other currency trades. I would expect BTC regulation to only increase if it truly is used for illegal purposes.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101