2

I wasn't able to find actual data on this. I'm under the impression that

  • the majority of transactions represent ownership transfer between investors, traders and exchanges
  • the majority of remaining transactions represent purchases of goods and services
  • the majority of purchases made with Bitcoin are for something illegal

It's very easy to see why someone would want to buy drugs with Bitcoin. It's not easy to see why someone would want to buy coffee with Bitcoin. If I want to buy coffee with Bitcoin, isn't it easier to first exchange that Bitcoin into fiat currency, and pay for coffee with that?

Does anyone have any data regarding what percentage of Bitcoin use is legitimate?

|improve this question
2

Silk road wallet hold 144,000 Bitcoins. It had 1,2B USD in annual volume. This was 2014.

Since then darknet markets have flourished. See Measuring the Longitudinal Evolution of the Online Anonymous Marketplace Ecosystem.

This is mostly for illegal drug related and other purely criminal activity like payment fraud (stolen credit card). This does not include ransomware bitcoins (1B USD). This does not include e.g. bitcoins involved in tax evasion and asset hiding. This does include bitcoins lost in exchange hacks or stolen from exchanges. Furthermore, most peer-to-peer and remittance trading could be accounted as money transmitting business and against local regulations.

Bitcoin transactions are not very useful in casual purchases, thus there has been little mainstream consumer adoption. Bitcoin shines in anonymous online payments and most day-to-day and/or point-of-sale payments don't require this level of anonymity or the complexity it brings along with it.

|improve this answer
-1

Legitimacy is subjective, and varies legally from place to place. Even if we establish a clear and agreed upon definition, blockchain analysis is not good at telling us what was purchased with a transaction or why a transaction was made. A transaction paying for drugs online will look the same as a transaction paying a friend back for lunch.

I do not think that it is simple, or perhaps even possible, to determine how much Bitcoin usage is for illegal purposes. Perhaps you should look into how studies are performed on the size of black markets using traditional currencies. I don't see why it would be different for Bitcoin.

|improve this answer
  • You don't see why it would be different for Bitcoin? If there is virtually no incentive to use Bitcoin for innocuous purchases - and a lot of incentive to use it for illegitimate purchases - wouldn't that lead to mostly illegitimate use? – Atte Juvonen Aug 9 '16 at 0:43
  • The purpose of the laws is to have legitimacy written down in the letter of law very objectively. It might be up to a good debate whether this always successes or not, but this question is not about arguing what's legal and what's not. There are established international and national frameworks to resolve this. – Mikko Ohtamaa Aug 9 '16 at 1:08
  • @Atte, for the record, I use it to buy coffee sometimes, and I get a 5% discount when I do. That feels like an incentive to me :) Also, I'm not trying to argue a point...only answer a question. Even the document Mikko linked had to scrape dark markets in order to measure the size and volume of these markets, but there's still the possibility that there are other markets that weren't scraped. I still don't think you are going to find much in the way of hard data...only rough estimates. – Jestin Aug 9 '16 at 2:10

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.