Quote from: Hook^ on July 16, 2011, 06:06:20 AM

Quote from: RandyFolds on July 16, 2011, 05:31:45 AM

On a side note, how can draw any conjecture on the size of the 'underground drug economy'? Any number you come up with is complete BS speculation. I have never answered a poll about how much weed I sold last fiscal year, nor can I imagine that many other black market operators did so honestly. Any number that LE of governments throw about are extrapolations based on what they caught, which is impossible to calculate because they have no idea what percentage they missed...

I am no economist, but I know your model is oversimplified to the point of irrelevance. The vast majority of the world's wealth is not tied up in paper. I doubt that there will be explosive growth like the month of June again, but I do not doubt a steady stream of takers lining up until some confidence-shattering catastrophe.

I am using the estimates of governments. They use educated estimates based on things like how much they bust, the size of grow fields in South America, spies in the drug cartels, etc. Even if they are off by a factor of 4 and the drug economy is 20% of the world economy (A very high number), it still won't allow for increases like the ones we have seen since the beginning of Bitcoin.

You are correct that most of the wealth is not tied up in paper. But that isn't relevant to the discussion. What matters is the amount of economic activity measured in existing currency and extrapolating that to bitcoins. The results are very unlikely to be off by more than a factor of 10, so they are still relevant to fact that bitcoins will almost certainly never grow larger than 10,000 times their current value.

just accounting for currency completely ignores leverage. i know of several folks who've bought btc on credit.

it would take just a small fraction of the worlds leverage to drive btc much much higher.