

Cryptomarkets Are Gentrifying the Drug Trade - edward
https://news.vice.com/article/cryptomarkets-are-gentrifying-the-drug-trade-and-thats-probably-a-good-thing

======
Aqueous
"assurances to please liberal or socially-conscious users, such as knowing
that their opium is "fair-trade" and their cocaine "conflict-free"" -

As gleeful as I am that there might be a way out of - or at least around - the
drug war, I find these assurances incredibly dubious with no actual regulatory
or independent oversight making sure that the substances in question are
actually fair trade or conflict free (and obviously there won't be any until
the war on drugs ends and addiction is more sensibly treated as a health
problem rather than a criminal problem.)

There is also absolutely no way - by design - to tell that the person selling
you these substances is telling you the truth.

This is where a purely libertarian position tends to run into trouble. In a
system where there are serious negative externalities involved (is the
production of this drug causing environmental damage? is it causing innocent
children to die? is it grown without pesticides? will it kill me?) you have
absolutely no recourse to protect yourself or others especially if something
goes wrong.

~~~
derefr
I think the libertarian position is:

1\. in a free market,

2\. with seller reputation,

3\. where the seller is the direct producer/grower/manufacturer, rather than
the producer retailing through many false, reputationless identities,

4\. "fair-trade" and "conflict-free" drugs will simply _outcompete_ the other
kinds.

Which is to say, if the consumer is willing to pay $X, then any money $N used
to pay for guards and guns and drug mules (the "conflict" part) is $N less
available for actual chemists and equipment and materials.

The guards and guns and drug mules _are_ a sound investment for A. putting
down rival operations to ensure a monopoly, or B. avoiding state action at
scale, but if A is made impossible (by Tor) and B avoided by technological
advances (running headless drug-manufacturing cells rather than a centralized
organization), they cease to be rational investments.

Without these considerations, "conflict" drugs would have either a higher
markup (decreasing marketshare), or a higher ratio of fake/cut product--a
lower quality--meaning a worse reputation for the seller (decreasing
marketshare). The conflict-free drugs would naturally rise to the top of an
efficient marketplace.

The simplest comparison is another marketplace commodity which could, for all
you know, be cut and low-quality all the time, but which very likely isn't:
gasoline. Gas stations which sell at a higher markup go out of business. Gas
stations which sell inferior product get a bad reputation, and go out of
business. The market takes care of itself, without a regulator having to
intercede at any point. (Commodities markets like this are in fact the shining
example of where free markets are optimal for consumers, because they get very
close to having the "complete information and distributed intelligence" that
the Efficient Market Hypothesis assumes. The less commoditized the goods in a
market are, the further from efficient it will be.)

~~~
nerfhammer
gas stations are actually

* subject to several different types of fraud against which consumers have little way of protecting themselves. Can you tell if the pump is dispensing the octane rating you actually selected or a slightly lesser-quality fuel? Or if the meter on the pump is tampered by just a small percent?

* have relatively little reputation to worry about if you're near any road with any kind out-of-town traffic, such as a highway.

* very regulated for both fraud and environmental reasons

~~~
baddox
> Can you tell if the pump is dispensing the octane rating you actually
> selected or a slightly lesser-quality fuel?

Isn't that true for any conceivable gas station, from the most laissez-faire
to the most centrally regulated? Unless you can physically perform the
experiments required to test the octane rating yourself, the only thing you
can do is trust. You either trust the reputation of a gas station or gas
station chain which you frequently purchase from (and have had no previous
issues with their gas), or the reputation of some third-party consumer review
organization in a laissez-faire economy, or the reputation of the government
regulatory agency in charge of gas stations.

In all three cases, the organization you are trusting has some incentives to
lie/cheat, and some incentives to be honest. Deciding which system has the
best incentives on net, and thus is the most trustworthy, depends on the
details of how each system works, and is a nontrivial economics problem.

------
kanja
Did they seriously spoil the ending of breaking bad in the first sentence?

~~~
AdmiralAsshat
In five years I'm sure it will be like "spoiling" the plot-twist in Empire
Strikes Back: no one will ding you for spoilers because the plot will be
common knowledge.

~~~
lotharbot
Right -- in five years. Just like nobody will ding you for telling them what
happens to Romeo and Juliet, or that thing about Darth Vader, because by now
it's assumed that anyone who cares to experience that thing un-spoiled has
already finished.

The last episodes of Breaking Bad have only been on Netflix for about 6
months. It's completely plausible that people who decided to start watching
after the series reached its critically-acclaimed ending might still be a
couple seasons shy of the ending. Hold your spoilers for another 3-6 months to
be safe.

------
rwmj
Couldn't law enforcement flood the market with (fake) sellers, using lots of
sockpuppets, and thereby entrap buyers, who have to give their real addresses?
This would be enough to severely reduce confidence in the market.

I guess that somehow reputation protects against this, but also it's possible
to have a circle of buyers and sellers giving each other false reputation.

~~~
glomph
This is a known potential problem. The solution is long term reputation and
also a relatively high initial bond to the site to make an account.

In terms of circles of buyers and sellers they can use all the algorithms that
people like ebay have been perfecting for years. Not a new problem.

Obviously not water tight, but it seems to be working well enough for these
sites to function.

------
bluedino
>> Had Walter White sold his blue meth on Silk Road rather than through drug
kingpins and criminal gangs, there wouldn't have been much to Breaking Bad

I'm not so sure about that. There were plenty parts that would still have
happened.

1\. They would have still had to find a location to make meth

2\. They still would have had to find the supplies to make it with

3\. They still would have had to find large quantities the supplies to make
the stuff

4\. Distribution is still an issue. You can't just take 10lbs of
methamphetamine to the UPS Store in 50 different boxes every week.

5\. Walt still has to launder the money

6\. Walt has to hide how he's making millions of dollar from Skyler and
everyone else

7\. Walt is still going to feel like rich powerful person and have to deal
with that

8\. Rival druglords would still be involved. They'd employ high-tech help to
track down Heisenberg

