Author Archives: Tunmise Olayinka

Bad Guys, BitCoins, and the Black Market

Fear of a Black Market

Several days ago, my colleagues misters Onies and Daniele and myself were heavily debating whether the professed societal benefits of BitCoins actually outweighed the probable negative social costs. It  was my position that the opportunity one to reverse the trend of income polarization greatly outweighed the negative externalities. However, I was greatly enlightened by our subsequent discussion. One thing that we only as of late realized is that BitCoins, in the same manner it opens markets and lowers barriers to trade, also enables to construction of parallel markets, colloquially  known as “black markets”.

Now, the potential for the rise of these parallel, and usually illegal markets is serious threat that we believe all must consider. This slightly paradoxical since BitCoins are meant to free transactions from the grip of state power and domestic monetary policies. However, although one client might wish to operate outside the traditional market boundaries, it is highly unlikely that he would similarly wish to reside outside of the societal boundaries he enjoys within his domicile. Let us highlight one aspects of the parallel market economy that would be greatly catalyzed by the widespread adoption of BitCoins:

The illegal drug trade:

The mass production of illegal drugs is widely recognized as devastating plague to all peoples of all cultures. A study administered by the United Nations found that in 2005, the global drug market generated approximately $321.6 billion United States dollars., representing almost 1% of  worldwide commerce. Now, as my erudite colleague so lucidly described,  BitCoins easily lends itself to money laundering and the general obfuscation of transactions. Unsurprisingly, one the most significant bottlenecks in the drug trade is the laundering of money from first-world markets to their final destination, generally in clandestine territories far from the reach of the law. A simple internet connection and some capital investment could completely eliminate the most signification obstacles to the flow of currency. Given their savvy and unrelenting determination, it is clearly of the essence that technology such as BitCoins be safeguarded from these depraved men.

Seized weapons and drugs. Hopefully they aren't worth their weight in BitCoins.

It is apparent that there are many issues regarding the illegal drug trade and the viability of BitCoins. However, as you probably already know, it is only one of the many dastardly industries that would broadly benefit from BitCoins. For example, those who run prostitution rings would greatly benefit as it would eliminate all tangible evidence of their perverse pimpery. Amanda Kloer, an abolitionist and author out of Washington, D.C., importantly notes that many of our greatest criminals were only convicted of money-based crimes such as tax evasion. If we let a pivotal tool of law enforcement be squandered by a potentially inviable product, the only appropriate emotion would be shame.

Bitcoins and the Potential to Uplift Millions

I recently posted about the possible advantages of BitCoins from a financial perspective, and mostly on the level of macroscopic institutions , nation-states, and corporations. However, let me not remind you of the fruits it can bear to individual people.  While the myriad economic boons and pitfalls of BitCoins are apparent, we cannot forget the implications it holds for the future of society and its potential to empower individuals. For example, one of the most serious obstacles to mitigating the stark income inequality we see between countries would be the universal implementation of BitCoins. It would necessarily establish a common market with which individuals, not corporations nor nation-states, could do international business, and possibly thrive. If a man in Namibia, a country with the second highest level of income inequality in the world, could sell his wares or services at an equitable price to someone in Germany, it would lead to an astounding increase in one’s quality of life.

Wouldn't you love to give this hard working laborer some of your BitCoins?

Furthermore, we previously mentioned that BitCoins as a global reality would greatly diminish, if not entirely eliminate, the nation-state’s ability to conduct monetary policy. This arguably may diminish their purchasing power, but from another perspective, it would simply level the international playing field because essentially, raising ones purchasing power with respect to all others is identical to simply lowering everyone else’s, as purchasing power parity is of course relative. I believe that is only the fallacious modernist view of currency that promotes the status quo, and indeed, provides the constant support for the gold standard. Restricting currency to single nations that can control policy has enormous precedent, and that alone will be a driving force against BitCoin’s adoption. However, unlike previous era’s, I believe we are now quite firmly in a postmodern age where we no longer turn to local powers to effect our desires and in turn, repress the desires of those outside their domain. Rather, I find that BitCoin’s embodies the individualist yet cosmopolitan spirit that lurks within us all. I think it is clear our current level of income inequality is intolerable and unsustainable:

So much of the world's wealth is concentrated in the hands of a few. Maybe a libertarian currency regime can help change that.

BitCoins are a representation of humanity’s desire to broach the confines of history and precedent, and move forward toward a conception in which all barriers to social elevation and self actualization have been eroded. BitCoins might not provide us as much financial security in the short-term, but it would definitely empower us overall.