Quote from: squidface on May 07, 2013, 02:01:04 AM

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Drugs are more expensive as as a result of government intervention because the demand for them hasn't gone down, but supply has. Their utility is the same as it always was.

Bitcoin's utility goes down the more difficult it is to obtain and use as a result of government intervention. [...] Different story, entirely.

What you described is exactly what happened in the drug market, too. Sure, demand went up because more people used drugs. Supply went down.

"Bitcoin's utility goes down the more difficult it is to obtain and use as a result of gov't intervention" ... The supply of drugs went down as a result of government intervention. You are perhaps arguing that demand for bitcoin will go down because utility has decreased and/because supply has also gone down? How come that didn't happen with drugs? How come supply and utility/ease of use (i.e. you have to be VERY CAREFUL when transporting them, and anytime you buy them you risk imprisonment) went down but demand went UP?

Ahh, I say, but that doesn't matter as much as we think it does, much like the appeal of drugs doesn't count on the ability to bring them places or buy them without fear of imprisonment. What bitcoin does best is also what gold and silver do best. Gold and silver have limited utility (when was the last time you went to a store that accepted gold and silver, except in backwater areas of Utah?) yet they have performed better as a store of value than EVERY SINGLE fiat currency in the entire world.

So my argument is that the following: "Bitcoins will go down in value if you can't buy them anonymously on an online exchange and use a bitcoin debit card to buy gas i.e. reduced utility due to government regulation" is false because there is and will be incredible demand to simply use a quasi-commodity that isn't controlled by Ben Bernanke.

There will always be a demand for monetary freedom. If you have to convert back to dollars via your friend Joe's OTC (parallel: go out on the corner and find a drug dealer to get your marijuana) it's still a lot better than sitting there while your Argentinian Peso loses 25% every year (day-to-day volatility aside, bitcoin has a better track record in terms of long-term trend value retention.) I guess it all comes down to how bad people want it as a place to throw fiat to save it from Bernanke and use as a cash OTC currency vs a place to throw it to buy gas and cigarettes at the corner store and speculate/day trade 24/7 on MtCox. I suspect the former will eventually become most folks' preference, especially as the global financial situation continues to deteriorate...