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Why Would You Want to Be Anonymous? Or, Bitcoin and the Great Silk Road Bust

Theodore Iacobuzio |

It’s a fair question. Now that Silk Road has been busted (the details are ultra gamey) is there any reason for Bitcoin, the anonymous online currency backed by nothing but its users (i.e., not by any state), to continue in existence? After all, the only other reason to hold it is for fun, speculation, and… anonymity. The first two do not promise great volume. Is the last always sinister?

That depends, it seems to Global Insights, on how important your personal information is to you. Just this week we went public with our own look at these issues in The Digital Sharing and Trust Project. One important segment, Proactive Protectors, is very concerned with actively guarding their online identity. And while they are by our estimate 17 percent of the global market, 17 percent of the global market is a lot. Seventeen percent of anything is a lot. Enough to keep Bitcoin going, one would think.

As I say, we’re about to find out.

Topics: Payments Strategy

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12 Comments

  1. Voice said on October 9, 2013 at 8:33 am | Reply

    Why Would You Want to Keep Using Credit Cards? Or, Credit Cards are an Extension of The Federal Reserve’s Inflationary Currency

    Why would anyone continue to use the existing banking system? Unless you’ve failed to research some basic history of how inflation works with the US dollar, I don’t see why anyone would want to be stuck on that sinking boat. The Federal Reserve decides how fast to run their printing presses – and they’re not going any slower! The WORLD is going to use Bitcoin as their next payment system. Not a plastic card or some static account number.

    Buy your Bitcoins today, before they’re $100,000 per BTC. We’re still in the gold rush era of Bitcoin, those who snooze lose.

  2. Joshua W said on October 9, 2013 at 8:44 am | Reply

    The use of Bitcoins carries virtually no fees, and they are accepted in any country. I think the real question one should as is why wouldnt you want to use them?

    Consider this, Bitcoin payment processor Bitpay has over 10,000 merchants signed up! Another processor that serves primarily smaller US businesses (Coinbase) has 11,000 merchants signed up! That is over 21,000 legitimate businesses who think Bitcoin has a place in their future.

  3. Josh said on October 9, 2013 at 8:48 am | Reply

    I think the ability to send and receive Bitcoin as an individual or merchant with no fees is an incentive.
    I believe the ability to sent and receive with complete anonymity is still an incentive.
    I believe that if you believe current FIAT is backed by anything other than speculation you are naive.

  4. YAP said on October 9, 2013 at 8:56 am | Reply

    I want to be anonymous, because I don’t want any information of me to be public, especially about my spending habits. It’s only my business and no one else should have the opportunity to access it.

    Furthermore, I don’t trust a third party to hold any information about my life. I don’t trust their security measures. It takes only 1 bad person and they can pretty much make your life a nightmare.

    An example: I visited my bank to authorize a transfer. The employee opened my account, looked at me and asked what do I work to earn such amounts of money (I work in IT as a software developer with above average income).

    I was shocked and utterly disappointed that this happened and lost confidence in centralized payment solutions forever. (And this is just one example)

    You can paint bitcoin in a bad light, but the truth is it’s the way forward and a lot better than any banking service I used. It’s the first independent money with frictionless transfers.

    We have real numbers on the volume Silkroad handled and it was only 4% of the bitcoin economy.

    You should also add what % of the banking system involve illegal trade! It’s way more than 4% going by numbers surfaced like the HSBC money laundering scandal.

  5. John Doe said on October 9, 2013 at 9:12 am | Reply

    “Bitcoin, the anonymous on-line currency backed by nothing but its users (i.e., not by any state)”

    A currency not backed by any state is a currency that is not subject to corruption. Not being backed is a GOOD thing.

    Additionally, US dollars are not backed by anything this week, and maybe next. If the US can’t print more of them, they are essentially un-backed.

  6. John Devor said on October 9, 2013 at 10:01 am | Reply

    Don’t forget that it protects against inflation and transaction fees are pretty much zero and transactions can be irreversible.

  7. Mike Hearn said on October 9, 2013 at 10:09 am | Reply

    I think we (the Bitcoin community) need to do a better job of highlighting the advanced technical applications of the protocol. Too many people have got the message that Bitcoin is just about fast, cheap payments, but it can do a lot more than that:

    http://bitcoin.org/en/innovation

    More flexible dispute mediation than chargebacks, micropayments (fractions of a penny sent hundreds of times per second), Kickstarter style crowdfunding with no infrastructure or middleman needed – all kinds of exciting things can be built when you have truly programmable money.

  8. Michael said on October 9, 2013 at 10:13 am | Reply

    So are you saying that Federal Reserve Notes are backed by a government? What does that even mean? If I hold a dollar, I can redeem 1 government? And before you say that they are backed by the “full faith and credit of the United States of America…”, just stop it already. That is a meaningless platitude.

    The question isn’t one about backing. The question is more fundamental than that; what makes good money? 5 things – Scarcity, Authenticity, Divisibility, Transferability, and potential for Safe Storage. Bitcoin has all of these in spades (if used correctly), with the added benefit of Anonymity (if used correctly).

    The Federal Reserve has trucked along for a long time without these properties because they have an ace up their sleeve, Merchantability, the likelihood that someone else will be willing to accept it. This has for years essentially been forced onto people.

    Until you can compete with Bitcoin in terms of being good money, it will continue to grow and crowd out everything else in terms of Merchantability. The ace up the sleeve will no longer be relevant because the game will have changed. Laugh and scoff now, find yourself in the poorhouse later, stuck with ever devaluing aces, dollars, and commercial paper.

  9. Jason Quinn said on October 9, 2013 at 10:17 am | Reply

    Bitcoin doesn’t make you anonymous automatically, it just gives you to opportunity to be anonymous. I do like however how I don’t have to hand over all my personal information to use it because I am sick and tired of the government trying to track every little thing I do. I don’t need Uncle Sam looking at my credit card purchases or bank statements because it’s none of their business how I spend my money. Until I get to see reports detailing how the NSA’s black budget is spent they can go F themselves. Also, for merchants bitcoin is wonderful because there are already companies offering to process payments for flat monthly fees and 0% transaction fees. Hey Mastercard, when are you going to start offering 0% transaction fees? Can you compete with that? Another advantage is that transactions are irreversible, so you don’t have to worry about stolen credit card information and chargebacks. Hey Mastercard, when do you plan on reducing fraud to 0% on your network? Sorry MC but you are a dinosaur sinking into the tar pits of financial history. My advice is to jump on the bitcoin bandwagon while you still can.

  10. CryptoJunky said on October 9, 2013 at 10:30 am | Reply

    The Bitcoin protocol allows its users to do things that were previously impossible or very expensive. For instance, I can send money instantly to any other Bitcoin user anywhere in the world for free. Previously I would have had to use a payment processor such as Mastercard or Paypal, which by nature need to charge a fee. Bitcoin is much more than anonymity, it is digital cash that doesn’t require an intermediary.

  11. Nate said on October 9, 2013 at 10:37 am | Reply

    It is silly to assume that it makes sense to give every online business your private details. It only seems normal because people are used to it. The status quo is equivalent to giving a cashier your entire wallet, letting them take it into a back room, rifle through it, and hand it back to you with the right amount of money taken out.

    We should give our private information to businesses that require it, not as a way to prove our identity.

    The motivation to use bitcoin is that it is a complete redesign of money, and has unparalleled properties and usefulness in the digital age. Bitcoin leverages the power of the internet to promote individuals to “first-class” financial entity status.

  12. Anonymous said on October 9, 2013 at 10:38 am | Reply

    Fun and speculation? So you are telling me there is no benefit to sending money across seas for 0 fees vs spending $25+ for bank wire transfers? How about Bitcoin’s instant transactions vs the days/weeks it would otherwise take? Are you just spreading FUD because credit card companies are getting scared Bitcoin will take over? Also, why not remain anonymous? Credit card fraud is huge these days. You know where most criminals get their data on users to pretend to be them? From Facebook and such. This is why people need to be more careful with what they share on the internet.