Quote from: casascius on March 10, 2011, 05:16:06 PM

Quote from: carp on March 10, 2011, 03:32:03 PM

Sure but, if you can mix them in with coins that have passed through other hands, is that not just as good?
Possibly better, since backwards attacks are possible. Consider this, you buy drugs with btc from a mined address.

Now the rest of your coins, mined from that block, are all tainted with your drug transaction, and can still give you away back to that transactions when you otherwise sell them.

Maybe you worry less about this? Maybe not? In any case: https://en.bitcoin.it/wiki/Anonymity

Is an excellent link

Suppose the overall majority of BTC trading ends up being drugs (a plausible possibility if word of BTC spreads like wildfire across drug users)... there won't be enough "clean" coins to really dilute the history.

In fact, there'd be a disadvantage for large sellers: if BTC were overwhelmed with drug-related popularity, a "fed" could merely spend 5 BTC on a little pot, and then watch where that 5 BTC went, and as those 5 BTC got combined and mixed around, they could arguably claim that every other BTC that the original 5 touched or mixed with soon thereafter is also drug money. So if 45000 BTC hit a local exchanger that included that 5 BTC, they'd be making life miserable for the exchanger.

I highly doubt this scenario, since the majority of drug sales are small transactions. Most any tobacco smoker can buy it by the carton and save money, but, the vast majority choose to pay a premium to buy it by the pack, each and every day, rather than to buy a carton and have a supply for most of a month. As far as I can tell, this holds true for most other drugs, including alcohol. There are always exceptions, but, the majority do it like this.

Also, block processing can take up to 10 minutes each, unless you are willing to take transactions on faith that the confirmations will come, we are looking at up to 20-30 minutes just to hand over the money. This, almost certainly, means that btc will not replace cash for in person transactions.

So where does that leave us? Mail order transactions (I believe someone posted a link to a site called "silk road" recently which facilitates exactly this). This is not appealing to most users, not just for trust reasons, and security reasons, but, because it doesn't meet their immediate desire.

aside from that.... Lets say that some major distributors come online, and there is a sizeable wholesale trade (I see this as a bit more likely). The vast majority of cash *IS* used in drug transactions, right now. It may not be the majority of the markets that its used in, but, the actual dollars themselves, nearly all of them, move through drug transactions at some point.

Every few years the news media rehashes the figure of what percentage of US money tests positive for just cocaine....and its really most of it (I forget the percentage they toss around).