Bitcoin and Morality

Bitcoin — a currency by most measures — is consistently framed as ‘amoral.’ Let’s think about why currencies are not compatible with morality.

An unethical or amoral use for a unit of exchange says nothing about the unit, and everything about the user. Those who don’t understand Bitcoin seem to think its uses make it good or bad. Cash, silver, gold, diamonds & bitcoins: These are units of value that can be used to purchase things no matter how the larger society perceives them.

The fact that you can buy drugs, guns, and assasinations, with Bitcoins is indisputable. Bitcoin was not built for the narrow purpose to purchase ‘illicit’ things. Teddy bears, maple syrup and beef jerky are all for sale. It was built to be a secure network of exchange, secured by the computing power of its participants. Sure, Bitcoin’s creator endowed its very DNA with an offhanded critique of our current banking system, but Bitcoin is at its core lacking an ethical or moral position.

I can’t blame Gawker headlines for this persistent problem when it comes to the common man’s perception of Bitcoin. The currency is scary once you get know it. Let me introduce you to a world using Bitcoin:

Transactions can be anonymous (1). Sending money from neighbor to neighbor or Alaska to Istanbul is instantaneous and free (2). Money can be stored with a memorized passphrase, or stored on paper in a vault (3). Only complete disconnection from the Internet can stop a transaction from occurring or disrupt the network (4).

This seems pretty liberating to say the least. But of course, with all disruptive technologies, one can forsee problems.

Can you see why I want Bitcoin to be understood correctly, free of moral relativism? It is a unique unit of value built for the Internet age which has been derided since the beginning. Placing a moral judgement upon what is essentially an open source algorithm is like calling a tomato evil. Learn more about Bitcoin here.

“What is true for you is true for you, and what is true for me is true for me.” – Protagoras


  1. There are numerous mixing services.
  2. The double spend problem is real, but difficult to perform (read more). After 6 confirmations (usually after a few minutes) a transaction of coins from point to point can be reasonably trusted. See the comments for more discussion on this. A technical explanation.
  3. See Brainwallet. Pick a long, memorable phrase, and use that to generate a private and public key (this is printable).
  4.  The nodes, miners, and clients spread across the world make Bitcoin the largest distributed computing project ever. Ever.

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Measuring the Silk Road

Recently from Nicolas Christin at the Carnegie Mellon INI/CyLab:

We perform a comprehensive measurement analysis of Silk Road, an anonymous, international on- line marketplace that operates as a Tor hidden service and uses Bitcoin as its exchange currency. We gather and analyze data over eight months between the end of 2011 and 2012, including daily crawls of the marketplace for nearly six months in 2012. We obtain a detailed picture of the type of goods being sold on Silk Road, and of the revenues made both by sellers and Silk Road operators. Through examining over 24,400 separate items sold on the site, we show that Silk Road is overwhelmingly used as a market for controlled substances and narcotics. A relatively small “core” of about 60 sellers has been present throughout our measurement interval, while the majority of sellers leaves (or goes “under- ground”) within a couple of weeks of their first appearance. We evaluate the total revenue made by all sellers to approximately USD 1.9 million per month; this corresponds to about USD 143,000 per month in commissions perceived by the Silk Road operators. We further show that the marketplace has been operating steadily, with daily sales and number of sellers overall increasing over the past few months. We discuss economic and policy implications of our analysis and results, including ethical considerations for future research in this area.

Nicolas’ Conclusion:

We have performed what we believe is the first comprehensive measurement analysis of one of the largest anonymous online marketplaces, Silk Road. We performed pilot crawls, and subsequently collected daily measurements for six months (February 3, 2012–July 24, 2012). We analyzed over 24,000 items, and parsed over 180,000 feedback messages. We were able to determine that Silk Road indeed mostly caters to drug users (although other items are also available), that it consists of a relatively international community, and that a large number of sellers do not stay active on the site for very long. We further discovered that sales volume is increasing; currently corresponding to approximately USD 1.9 million/month for the entire marketplace, corresponding to USD 143,000/month in commissions for Silk Road operators. Informed by these measurements, we discussed some of the possible policy remedies. A surprising result is the tight coupling between Silk Road and the Bitcoin market – the daily sales on Silk Road correspond to almost 20% of the average daily volume of USD-BTC exchanges on Mt.Gox, the largest exchange forum. As a result, it seems like a potentially effective intervention policy would be to destabilize the value of the Bitcoin, to create instability in the marketplace.


PDF here.

97.8 percent positive feedback! Now that’s impressive.