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Offline Method-X

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Operation DarkMarket
« on: February 16, 2015, 03:56:11 AM »

This is a repost from forum.nullstreet.com

The Problem

1. Escrow. Merchants on DarkNet Marketplaces (Evolution, Agora, etc) have their BTC held in escrow until the goods arrive and the customer releases payment. During this time, merchants are exposed to Bitcoins volatility for 1 - 4 weeks. As a result, merchants have to inflate the price of their goods to compensate for Bitcoins potential volatility. This is the reason drugs on the DarkNet are priced higher than on the street.

2. Storing Profits. Merchants have to constantly cash out of BTC using localbitcoins because they don't want to expose themselves to Bitcoins volatility. Businesses need predictability to stay solvent. Storing profits as a merchant on the DarkNet is obviously a problem in need of a solution.

The Solution

Bitcoin makes a great payment mechanism but for the time being, it's a lousy store of value for DarkNet businesses who need price stability. If a DarkNet merchant could store their profits (and eventually escrow) in BitUSD or BitGOLD, I'm convinced this would:

a) Lead to rapid growth for any DarkNet Marketplace that adopts the practice.
b) Increase the value of BTS as BitAssets gain real adoption.

If BitUSD and/or BitGOLD were adopted as a hedging mechanism by DarkNet Marketplaces, the price of drugs would fall and eventually undercut the street value as merchants would no longer have to worry about Bitcoins unpredictability. I see a future where Bitcoin is used as a payment mechanism and then instantly converted into BitGOLD or BitUSD, allowing merchants to stay in a predictable, stable asset without leaving the pseudonymity of a cryptocurrency and without the headache associated with constantly cashing out on localbitcoins.

Ethics

A lot of people have a knee jerk reaction to the topic of drugs. I want to explain why DarkNet Marketplaces are completely ethical and benefit society as a whole.

a) They offer an eBay style rating system. If a person buys drugs "on the street", rating the dealer isn't an option. You have no idea what the quality of the product is. Are the drugs laced with something? Are they going to kill you? Probably not but it's nowhere near as safe as buying from a reputable merchant on the DarkNet. It's actually common practice for liberty minded chemists to buy some of the harder drugs on these marketplaces to test purity (and publicly post a review for harm reduction).

b) Most western countries have strong patent enforcement, which means you have to go through the traditional system and do not have access to generic versions of the drugs. If you live in the U.S. and do not have insurance, you're mostly screwed. For many, turning to the DarkNet is the only option for obtaining affordable, life saving drugs.

Of course, it's not all roses and butterflies. You can also buy heroin and other "hard" drugs as well. In a free market, this is expected; technology is agnostic and can be used for any purpose. For example, terrorists can use Bitcoin, but that doesn't mean Bitcoin is inherently evil.

Lateral Growth

Once BitUSD and other BitAssets take root on the DarkNet as a hedging mechanism, I predict we'll see BitAsset adoption in lateral markets. Use on the DarkNet will provide us with the network effect, liquidity and consumer confidence needed to jump into entire countries with unstable currencies (Argentina, Venezuela, Russia, etc).

Network Effect is bootstrapped by locating the most fertile soil to plant your flower seed. If you plant the seed in sand, no growth happens; if you plant the seed in the most fertile soil, eventually you'll have flowers everywhere. DarkNet Marketplaces are the fertile soil needed to bootstrap BitAsset network effect.

Operation DarkNet

So long as free speech is still an option in your county, Operation DarkNet is completely legal. It's an educational initiative aimed at raising BitAsset awareness in a niche that desperately needs our technology.

This is what we're going to do:

1. Raise BitUSD awareness on marketplace forums.
2. Create tutorials explaining in detail how to go from BTC --> BitUSD and back again.
3. Post articles on DarkNet blogs such as DeepDotWeb (I'll be a regular columnist from now on).
4. Advertise metaexchange.info once they have BitUSD liquidity.

This is a niche that desperately needs what we offer and they stand to benefit just as much as we do. For better or worse, Bitcoins only utility is for buying drugs on the DarkNet and the only reason it's retained it's value thus far. If BitUSD is adopted as THE hedging mechanism by major DarkNet marketplaces, we will instantly secure a solid number 2 position in terms of market cap. Investors want to see solid use cases so let's give them one.

I can't do all of this myself so I kindly ask that YOU join Operation DarkNet and help see this vision through to the very end.

EDIT: Changed name to "Operation DarkMarket".
« Last Edit: February 19, 2015, 06:02:30 AM by Method-X »

Offline LRENZ

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Re: Operation DarkNet
« Reply #1 on: February 16, 2015, 04:09:14 AM »
 +5% Good thinking. I support this initiative and will help promote the idea online.
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Offline fluxer555

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Re: Operation DarkNet
« Reply #2 on: February 16, 2015, 04:12:58 AM »
This is what we're going to do:

1. Raise BitUSD awareness on marketplace forums.
2. Create tutorials explaining in detail how to go from BTC --> BitUSD and back again.
3. Post articles on DarkNet blogs such as DeepDotWeb (I'll be a regular columnist from now on).
4. Advertise metaexchange.info once they have BitUSD liquidity.

Do we have people assigned to these tasks already?
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Offline bitAndy

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Re: Operation DarkNet
« Reply #3 on: February 16, 2015, 04:20:48 AM »
Fully support this! +5% Bitassets need utility & best of all it has the potential to lower drug related crime!

Offline Method-X

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Re: Operation DarkNet
« Reply #4 on: February 16, 2015, 04:26:33 AM »
This is what we're going to do:

1. Raise BitUSD awareness on marketplace forums.
2. Create tutorials explaining in detail how to go from BTC --> BitUSD and back again.
3. Post articles on DarkNet blogs such as DeepDotWeb (I'll be a regular columnist from now on).
4. Advertise metaexchange.info once they have BitUSD liquidity.

Do we have people assigned to these tasks already?

I'm just making this announcement now, so not all details are in place.

1. We'll need a dedicated person for his task. Their job will be to frequent the Evolution and Agora forums, helping to educate merchants on how to hedge into BitUSD.

2. Riverhead and myself.

3. I'll be doing regular articles for DeepDotWeb and I'll try to get something on Zero Hedge. If others could help, that would be awesome.

4. To be determined.

Offline Bitcoinfan

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Re: Operation DarkNet
« Reply #5 on: February 16, 2015, 04:34:02 AM »
Immediate challenges are technical functionality:  getting escrow to work with ease of use and having cart functions.  @Jsidsu what do you think?

Offline Method-X

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Re: Operation DarkNet
« Reply #6 on: February 16, 2015, 04:37:35 AM »
Immediate challenges are technical functionality:  getting escrow to work with ease of use and having cart functions.  @Jsidsu what do you think?

All Tor based marketplaces are centralized and use their own escrow system (nobody uses the multisig option in practice). Both Agora and Evolution could use MetaExchanges API to facilitate BTC <--> BitUSD conversion. The only real problem is liquidity. Theoretically they could even fork MetaExchange and do everything "in house", including provide BTC <--> BitUSD liquidity.
« Last Edit: February 16, 2015, 04:59:32 AM by Method-X »

Offline Bitcoinfan

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Re: Operation DarkNet
« Reply #7 on: February 16, 2015, 04:59:17 AM »
Yeah same barriers.  Wouldn't that indicate they would have to develop their own bts specific escrow system and cart.  Concern is this needs some hands on from the devs to help transition to bts.

 This is compelling btw
« Last Edit: February 16, 2015, 05:08:20 AM by Bitcoinfan »

Offline Method-X

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Re: Operation DarkNet
« Reply #8 on: February 16, 2015, 05:16:44 AM »
Yeah same barriers.  Wouldn't that indicate they would have to develop their own bts specific escrow system and cart.  Concern is this needs some hands on from the devs to help transition to bts.

Their backend ends to be capable of holding bts no?  This is compelling btw

All they need to do is hold BitUSD on their end. That's it. The customer would pay in BTC like they're used to and the hedging (BTC <--> BitUSD) is seamlessly taken care of on the backend (assuming sufficient liquidity is provided of course). Even the merchants don't have to know how the escrow hedging works because the conversion can be done both ways. Once the goods are received and the customer releases funds to the merchant, the BitUSD can be converted into BTC.

Not many people know this but the original Silk Road 1 did hedging from 2011 to 2013. Read this article.

Offline jsidhu

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Re: Operation DarkNet
« Reply #9 on: February 16, 2015, 05:39:46 AM »
Wouldnt the hedge mechanism is the mobile wallet do the job here? They would be using the normal bitcoin wallet forked to alowmthem to hedge in bitassets... Any bitasset they want. Oil gold usd silver etc.. Better support other fiats too for global use. This way we dont need another custom interface and integration use what we got
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Offline Method-X

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Re: Operation DarkNet
« Reply #10 on: February 16, 2015, 06:15:59 AM »
Wouldnt the hedge mechanism is the mobile wallet do the job here? They would be using the normal bitcoin wallet forked to alowmthem to hedge in bitassets... Any bitasset they want. Oil gold usd silver etc.. Better support other fiats too for global use. This way we dont need another custom interface and integration use what we got

For storing profits, sure (assuming sufficient liquidity). Using BitUSD as an escrow hedge is the area that interests me most.

Offline aloha

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Re: Operation DarkNet
« Reply #11 on: February 16, 2015, 10:21:18 AM »
Fully support this! +5% Bitassets need utility & best of all it has the potential to lower drug related crime!
  +5%

Offline triox

Re: Operation DarkNet
« Reply #12 on: February 16, 2015, 11:39:46 AM »
 +5%
I believe that silkroad singlehandedly saved Bitcoin from obscurity in late 2011. When the price fell into single-digits I remember shutting down my miner and thinking "OK, this was a cool idea, too bad nobody cares". I imagine the general outlook was similar.

I believe at this point the silkroad demand alone formed the base of BTC value. A 'backing' of sorts.

When the price rebounded in early 2012 I thought: OK, as long as dark markets exist BTC will not fall to zero.

Offline Xeldal

Re: Operation DarkNet
« Reply #13 on: February 16, 2015, 03:54:28 PM »
 +5%

Offline Rune

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Re: Operation DarkNet
« Reply #14 on: February 16, 2015, 04:40:00 PM »
BitUSD has a lot of promise as a behind-the-scenes system for hedging against bitcoin volatility. I think the focus on using bridges for dark markets is the right way to go, especially if they could get a system so transactions are sent through a bridge and into escrow as bitUSD. The average user still only understands bitcoin, but with bridges that's all they ever have to understand or deal with while others can get the benefit of bitUSD.

 

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