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MagicSquare8-9 t1_ize5al9 wrote

How did bitcoin ended up gaining any values at all initially before it had enough momentum to get going?

How widespread are the practice of using multiple wallets to manipulate the market, and is it possible to deal with that problem through cryptography?

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novapbs t1_izg1c07 wrote

Ok, here's the thing: I said this above ("you could use BTC to buy good drugs on the dark web") and it sounds sarcastic but I swear to you it's not. Many of the early theorists of cryptocurrency were politically radical libertarians and extremists (with various ideologies -- agorism, anarcho-capitalism, etc etc). And they'd given this issue a lot of thought. A general consensus among them was that a viable digital currency needed a way to enable something that people wanted to do that they couldn't accomplish with existing monetary systems or technologies. So what can we offer that existing money can't?

Answers included: untaxable transactions. Secret, anonymous transactions. Global, cross-border transactions free of fees. Information marketplaces for secrets, pirated data, cracked software. Black markets for drugs, firearms, and other contraband. And finally, a safe haven from a widely predicted coming financial collapse.

So BTC, when it arrived (in the middle of a global financial collapse!) ended with a patchwork of value propositions: first, it's technically cool and interesting to play with. A lot of early BTC stuff was people using it for the sake of using it -- like getting Doom to play on your graphing calculator -- b/c it was challenging and fun. But other people adopted it b/c it fit with their politics: it was alternative to central bank currencies, it would gain value as the dollar collapsed (always predicted any day now), it was untaxable. And still others -- the first really substantial group of adopters -- got into it b/c you could buy contraband with it, with the Silk Road and other dark web marketplaces. And not just buy drugs but buy BETTER drugs: excellent quality, safe, without putting yourself in danger. Finally, there were a lot of early applications for communities that weren't well served by existing financial systems, like sex workers, remittance workers, and refugees.

I would say, bluntly, that none of those really had a chance to take off before the tidal wave of get-rich-quick speculation came in and washed them all out.

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