Currently, Bitcoin is in its seventh year and continuing its path as the freedom currency of the 21st century. 2016 is showing significant growth within the network as far as adoption, infrastructure, transactions, and value. The cryptocurrency still shows versatility and money characteristics like no other satisfying the needs of both the white and black markets.
Bitcoin has continued to prosper over the course of its life and has become a recognized safe haven for both black and white markets. A white market is the official and legal market performing out in the open so the public and lawmakers can regulate its conduct. The black market is a vast array of illegally trafficked goods and services that operate in the shadows of the global economy. At present and universally the digital currency Bitcoin fills the roles of a medium of exchange within both of these types of markets.
The White
The cryptocurrency that was born in 2009 has become a popular vehicle for wealth appropriation, that leaves this option in the hands of individuals and organizations without the need for a third party. However throughout the years Bitcoin has gained mainstream adoption slowly and has entered the realm of regulation, licensure, and money transmission policies. Legacy financial institutions are steady researching the technology behind the cryptocurrency while some are building upon the Bitcoin blockchain due to its resilience and network effect.
There are quite a few companies who are abiding by laws and complying with policies such as Anti-Money Laundering (AML), Know Your Customer (KYC) procedures. These new startups are following the rules of the nation states so in time Bitcoin becomes a form of money that is “established” within the borders of their country. With establishment from authorities, supporters of Bitcoin and white markets believe this will add more trust to the equation and citizens of the globe will be able to adopt the cryptocurrency without fear and worry of breaking laws.
As the industry grows, groups have started appearing such as the Digital Chamber of Commerce, and the Blockchain Alliance that is working directly with government entities to guide them with cryptocurrency and blockchain knowledge. Supporters of the shadow markets believe these organizations are the antithesis of Bitcoins catalyst of free markets trade and exchange. However, groups such as the Blockchain Alliance are formed to erase the precedent of a bad reputation when it comes to this technology. Lots of companies have joined this consortium of those who are teaching law enforcement and working with government to make sure Bitcoin is a white market vehicle for the 21st century.
Support for this is astounding as it can be seen from proponents cheering on a company when it receives a Bitlicense or nation states establish their opinion of whether the cryptocurrency is a commodity or currency. People who believe Bitcoin needs nation state approval applaud these definitions whenever they are announced. This is because Bitcoin can be seen now entering bankruptcy cases, people are paying taxes with the digital currency, and people are complaining to law enforcement about losses from the crypto-environment. It is safe to say that there are many who support the fusion between the white market and Bitcoin.
White market acceptance can also be identified by many legitimate investors using the digital currency as the next safe haven or hedge in the 21st century. Chris Burniske, lead blockchain investment manager at ARK Invest believes Bitcoin has a digital gold factor. At the moment the concept of the cryptocurrency being a new asset class is reaching the ears of investors. According to Burniske in a CNBC phone interview he suggests people are diversifying by using this new technology as a hedge stating:
“When you look at the global markets, there’s lots of fear, uncertainty and doubts. You’ve got people worrying about the equity markets [and] you’ve got people fleeing into bonds,” he said. “While gold has had a bit of a run in 2016, over the last five year period it’s been a terrible performing asset.— So you’ve got people starting to wonder where there are safe havens to store their assets. I think you have a lot of people saying ‘Hey we want to diversify a little bit’ making allocations to bitcoin’.”
The Black
Bitcoin use within the black market is still very prevalent over the course of its life. The use of the cryptocurrency within the shadow economy became apparent during the birth of the Silk Road Marketplace in 2011. The hidden website accessible through Tor had a vast array of illegally trafficked goods sold on the site daily. The site lasted roughly two years and had roughly 1,229,465 transactions on the site from 2011 till its closing in 2013. These black market sales amassed to be 9,519,664 Bitcoin’s until the site was seized and the operator was arrested.
In the world of cryptocurrency since this initial operation black market use with Bitcoin has continued even more so than people would like to think. When the Silk Road Marketplace was shut down immediately after many others, have taken its place. Some of them falling to the wayside with exit scams and other taken down by law enforcement and still the markets continue to arise. Currently, the Alpha Bay is one of the largest underground markets using Bitcoin to its advantage and has been operating for some years now. Between all the current dark markets the evolution of growth is continuing to progress, and a vast amount of cryptocurrency runs through these systems of exchange.
Proponents of libertarianism, counter-economics fans, and crypto-anarchists believe this is the rightful home for Bitcoin and cryptocurrencies in general. They have been preaching this since the inception of the digital currency, and some consider crypto-anarchy to be the original ideological foundation of its birth. Some would also say that Bitcoin gained its initial value from markets such as the Silk Road. They believe the shadow economy will always take precedence within the cryptocurrency environment. There are those who still cling to the values of vocal activists like the words crypto-anarchist Eric Hughes writes in the Cypherpunk Manifesto:
“We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money. — Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can’t get privacy unless we all do, we’re going to write it. We publish our code so that our fellow Cypherpunks may practice and play with it. Our code is free for all to use, worldwide. We don’t much care if you don’t approve of the software we write. We know that software can’t be destroyed and that a widely dispersed system can’t be shut down.”
The Ying and the Yang
Bitcoin is merely just software that has encompassed many solutions of the exchange of immutable data and wealth around the globe. Currently, it is serving purposes for those who bolster and deal in the black market and white market. Both sides of this evolution can be seen as clear as day. With hundreds of well-known banking institutions now salivating over this technology instead of making fun of it, times have surely changed. The white market is clearly slowly accepting this form of electronic trade in the form of consortiums of bankers, bureaucrats, and laws established that regulate its use. And there will still be those who see this as a form of establishment. People will continue to pay taxes with the digital currency, want to pay their parking tickets with Bitcoin and want the government to step in when they go bankrupt.
Of course, there always will be those who use the cryptocurrency and refuse to pay taxation by masking transactions, coin shuffling and other methods of anonymity. Dark markets are continuing to grow and as long as they exist they still will be used to avoid government interference especially when the majority of the globe considers these acts ‘victimless crimes.’ In a recent editorial by the publication Motherboard, the article detailed one user who uses the black market to sell illicit goods and was influenced by Ayn Rand. The news outlet asks bluntly whether or not he cares about the IRS invading his earned income. The person states:
“I don’t believe in that because it’s fictional. I never signed or accepted the Constitution, but bitcoin is real. It’s real money, and it can’t be stolen from me.”
Both the black market appeal and white market fascinations will continue in the land of Bitcoin almost side by side and parallel to each other. It will be interesting to see what the future will bring to the protocol when both markets are applied daily to its network. It seems proponents of both sides will use Bitcoin to their advantage but what is unknown is how it will work out for each ideology in a decade or maybe the next century. One thing is for certain the cryptocurrency operates outside of authority, central issuance and anything in between. It has fundamentally changed the way the society views exchange and value in both white and black markets worldwide.
Sources: Motherboard, Wikipedia, Business Insider, CNBC
Images: Crypto-graphics.com, Pixabay