Archive for the ‘banking system’ Tag

Queen’s head no longer required by crack dealers

Wednesday, April 3rd, 2013

A couple of weeks ago, my sister sent me an article on Silk Road. It has taken me until now to take the time to read it, because I thought I knew about Silk Road. It’s an online drug marketplace, much like ebay, where drugs change hands for money anonymously. “I’ve known about this for ages”, I thought to myself. “What can The Guardian teach moi about drugs?”

Far from reassuring me of my elevated status, my eyes have been opened. Admittedly not about drugs (see Guardian, I’m still your best bet for a drugs correspondent), but about the seemingly radical left-wing movement which Silk Road appears to be a part of.

It seems that The War On The War On Drugs is inextricably linked with The War On Bankers. A group of young, homeless people in Central London are attacking the rule-makers from their office-block squat, and have not only used their technological intelligence to facilitate the democratically safe purchase of drugs, where, like ebay or Amazon, sellers gain ratings based on the quality and delivery of their products – but also the world’s fastest-growing currency.

Bitcoin was originally developed by an unknown, pseudo-named character (or possibly group of people), Satashi Nakamoto. Claiming to be Japanese, but believed to be British due to his use of language, this person expressed contempt for the banking system, and so applied his knowledge of cryptography to create a virtual currency. As it doesn’t subscribe to central banking legislation, it doesn’t have to follow their rules. So it’s use on dark web economies such as unlicensed gambling and drug purchasing sites is commonplace. However, it’s lack of central control means it has alternative appeal – Wikileaks started using the currency to side-step imposed banking restrictions, and when Iran was recently isolated from centralised banking systems, causing its currency to collapse, Bitcoin gave Iranians access to international currency markets.

Now I know this seems to be straying from my usual theme of drugs, but for me the topics are inextricably linked. In the same way that the sharing of porn was attributed to the initial popularity of the Internet, it seems that the sale of illicit substances was the driving market force behind the popularity of this new currency concept. Untracable, unrestrictable, and decentralised, Bitcoin has been likened to a banking guerrilla movement. And, much like the Internet, while this degree of freedom is bound to be attractive to the grubbier side of life, it seems to me that the possible applications are revolutionary.

In the first place, from the perspectives of drug markets, it cuts out the middle men – stereotypically (for good reason) the self-serving gangsters who manage to evade the law through means of financial dominance and fear. It puts the power into the hands of the educated chemist or the tech-savvy bedroom geek, and removes the ability to force control and market dominance through the use of threat and violence. And for the purchaser, the only real risk is possible loss of funds – as opposed to loss of consciousness.

Secondly, this process is wholly democratic. Your face doesn’t have to fit, you don’t need a gun or a baseball bat, your popularity is all about the quality of your product and the service you provide. Much like ebay, the international word-of-mouth is a value reminiscent of the now eroded physical local community.

Thirdly – and possibly, from a wider-reaching and potentially immensely valuable perspective – it means that we do not need to be dependent on a financial system that has shown itself to be no better than the gun-wielding crack dealers. Corrupt, immoral, and self-serving, our faith in international banking systems has been demolished. This fully decentralised method of financial exchange operates a peer-to-peer system, and network rules are made clear and agreed by anyone using it.

And so whether Bitcoin is a flash-in-the-pan, or a currency revolution, there is no doubt that it offers hope of a new way forward. The editor of Bitcoin Magazine claims that Bitcoin is to money what email was to the postal system. Time will tell. But there is no denying that, with a value increase from 5 cents to $138 in three years (which is pretty much a 100% increase since The Guardian article was written less than 2 weeks ago, apparently in response to the situation in Cyprus), at a time when traditional currency is showing its fatal flaws, Bitcoin and its financial militants are something to watch with anarchist glee.

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