Silk Road And The Potential To Disrupt A Truly Evil Industry   
      
   Summary: All types of businesses including drug distributors are vulnerable to   
   the disruptive economic forces of the Internet... and Bitcoin can help   
      
   By Tom Foremski for Tom Foremski: IMHO | October 3, 2013 -- 05:26 GMT (22:26   
   PDT)	   
   	   
   The FBI's shutdown of web site Silk Road is a hollow victory in the hugely   
   expensive war on drugs, which has consistently failed to stop the drug trade,   
   or stop criminals from amassing huge amounts of wealth and ordering more than   
   60,000 murders in    
   Mexico alone.   
      
   Silk Road had some positive aspects. The FBI admitted that Silk Road vendors   
   provided high quality drugs. And the prices were far below the street.   
      
   Based on advanced Internet technologies, it was able to create a protected   
   market that kept money out of the hands of violent street gangs and   
   international criminal syndicates. It also protected buyers (lots of US   
   citizens) from the poisons that    
   adulterate street drugs.    
      
   If it had grown large enough, Silk Road, or a collection of similar online   
   services, would have begun to seriously challenge the revenues of local and   
   international mobsters on a scale that the war on drugs has consistently   
   failed to do.   
      
   It's much better to have drug distributors such as Silk Road and competitors   
   fight over Google keywords in online auctions than murder and behead each   
   other.   
      
   The beneficiaries of this FBI takedown are the international criminal   
   syndicates, hit men, and the corrupt networks that enable the drug trade to   
   cross borders in staggering quantaties.    
      
   The FBI has unwittingly done them all a big favor and kept the Internet from   
   disrupting a truly evil international industry.   
      
   But this story is not done yet. It's just the beginning. The next generation   
   of Silk Roads is on the way and they'll be smarter, stealthier, and even more   
   efficient at disrupting the drugs business.    
      
   Bitcoin's future…   
      
   Bitcoin is a key technology in this tale of potential business disruption. Its   
   ability to enable a large market with relatively friction-less payments has   
   attracted the attention of a legion of entrepreneurs with ideas for other   
   applications. Bitcoin has    
   benefited greatly from its nefarious affiliations.     
      
   Businessweek's Joshua Brustein reports that the Silk Road bust is good thing   
   for the virtual currency.  He quotes several entrepreneurs saying it removes a   
   negative perception.   
      
   However, Bitcoin's future has nothing to do with drugs. It's as if the future   
   of cash was in doubt because its anonymity allowed people to buy drugs, and   
   worse. Bitcoin's value dipped after the bust but it recovered quickly showing   
   that most Bitcoin    
   backers knew that the drug connection is a red herring and were happy to buy   
   them at a discount from dumb sellers.   
      
   The burgeoning interest in the currency is due to its unique properties,   
   especially its property of scarcity.   
      
   Abundance destroys monetary value but scarcity attracts it and retains it.    
      
   That's why De Beers warehouses huge quantities of diamonds so that they remain   
   scarce and maintain their market value despite the fact that diamonds really   
   aren't all that scarce, thanks to new sources and new mining techniques.   
      
   There isn't a warehouse full of Bitcoins being kept out of the market to   
   maintain a high value because it would be impossible. But De Beers could   
   decimate the value of all diamonds at any time, by having a 50%-off warehouse   
   sale.   
      
   A government couldn't use Bitcoins for quantitative easing, for example.   
   "Printing money" is impossible with Bitcoins.   
      
   In the digital world of the Internet everything is easy to copy. But not   
   Bitcoins.    
      
   It's these qualities that make it interesting.... and valuable.   
      
   Topic: E-Commerce	   
      
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