Black Market v2.0: The Free Market is Making a Comeback, Here’s How It’ll Go Down…

Yesterday, we laid out three things which would happen if Trump fired himself and Big Gov. allowed for a truly free market.

Of course, it was merely a fantastical way to make a well-worn point. But here’s what we said…

Imagining we’re in unicorn land and the POTUS destroyed the regulatory State and fired himself, three main things would take place.

One, centralized and corruptible power would instantly have less of an impact on the markets. Two, artificial monopolies would crumble as a strong competitive environment forms. And three, transaction fees and barriers to entry into the marketplace would be pushed into the dirt and become negligible.

Freedom and prosperity would reign.

But, of course, as mentioned, that’s a fairy tale. There’s no use in sitting on your hands waiting for the State to do the right thing. Fortunately, according to many dark market experts and enthusiasts I’ve spoken to, we don’t have to.

These three economic events, thanks to permissionless innovation and sheer human ingenuity of the world’s doers and thinkers (not to be mistaken with the parasitical class and their loyal army of perpetual complainers) are ultimately inevitable. 

According to those on the fringes…

Yes… centralized and corruptible power will continue to become more and more powerless.

Yes… State-sanctioned monopolies will continue to become more and more irrelevant and fragile to market shocks.

Yes… transaction fees and barriers to entry will continue to be pushed into the dirt, to eventually become negligible.

Looking to the future, governments will be forced to compete with extremely competitive private marketplaces which will transcend borders and be virtually impossible to regulate or shut down.

So here’s the prediction I’ve heard several times while hanging out in crypto-circles…

In less than a decade, thriving borderless markets will exist where arbitrary middlemen and the regulatory State/tax man will be optional. Although there will naturally be resistance in the beginning, the cost of trying to regulate/tax these markets will be so high, the State will be forced to, on some level, tolerate it.

Maybe it’ll take longer than ten years for this to happen. It certainly won’t happen overnight. But it will happen.

And as the cashless society continues to push the mainstream market into centralized oblivion, cash-based businesses (like food trucks and bars) will adopt this technology to survive.

We’re moving into a world where individuals will have the option to trade freely, regardless of location. (You already can, really, but in the decentralized crypto-economy, it will become much safer, cheaper, easier and more reliable.)

If you’re willing to defy arbitrary restrictions in the market, you’ll have the option to buy what you want outside of the regulatory system. I’m not saying this to advocate illegal behavior, I’m simply stating the trend others see forming.

If you’re willing to resist a government which would dare entrap and imprison a single mother for selling homemade ceviche, then the decentralized marketplace is your oyster. (This story, by the way, is only the beginning of government pushback against the black market. Expect to see many more like this as both the War on Cash and the new black market matures.)

With every action, there’s a reaction. And when government tries to crack the whip, the new market will snap back harder. It’s already been happening behind-the-scenes for the past five years.

(And this, too, is certainly only the beginning.)

Just as Internet commerce had less-than-savory beginnings in the porn industry, so too does this new burgeoning economy. The borderless free market began in February of 2011, with the birth of a black market digital drug bazaar called Silk Road.

Silk Road operated on TOR, a software program which enables anonymous Internet browsing and communication. Before bitcoin, TOR, for the regular user, was just a way to hide browsing habits and keep certain information private. When bitcoin hit the scene, though, it opened up a new world for the black market.

According to the FBI, astonishingly, “From February 6, 2011 to July 23, 2013 there were approximately 1,229,465 transactions completed on the site. The total revenue generated from these sales was 9,519,664 Bitcoins, and the total commissions collected by Silk Road from the sales amounted to 614,305 Bitcoins. These figures are equivalent to roughly $1.2 billion in revenue and $79.8 million in commissions, at current Bitcoin exchange rates…”

What’s most incredible about Silk Road, though, is how well its system of self-governance based mostly on reputation functioned.

“On a site like Silk Road, where most of the goods sold are illicit,” computer security professor Nicolas Christin told Forbes, “one would expect a certain amount of deception to occur. Indeed, a buyer choosing, for instance, to purchase heroin from an anonymous seller would have very little recourse if the goods promised are not delivered. Surprisingly, though, most transactions on Silk Road seem to generate excellent feedback from buyers.

“If you imagine them selling paperclips and buttons, they’re a stable business that’s growing without advertising or being in the news, just by word of mouth,” says Christin. “That was the surprising thing: How normal the whole thing seems.”

Today, not only has the dark drug market survived, it is absolutely thriving in a way that must be horrifying to Drug War jackboots.

Despite authorities seizing 400 domains in 2014 in what they called Operation Onymous, this did pretty much nothing to curb the flow of drugs through the dark web.

Hundreds more, hungry to get in on the action, immediately took their places. The problem for the authorities is the technology which makes these things possible isn’t going anywhere. In fact, it’s being embraced by governments and corporations all over the world.

Moreover, with every push back, the dark markets only get smarter and their encryption methods only get stronger.

And just as the porn industry shaped the world of e-commerce, which is now the norm, Silk Road paved the way for v2.0 — an economy where the middlemen and the regulatory State will be OPTIONAL. 

According to Pavol Luptak, CEO of security company Nethemba, we should soon expect a universal sharing application which will allow anyone to provide any service to anyone without the need for a middleman.

We’re already seeing this happen with Liberland’s new e-residency app, which, as the president told us during our interview last month, aims to be a free market trading and rideshare platform.

It’s also happening on a community level, too, through Cell 411.

Cell 411, if you haven’t heard of it, is a “real-time, free emergency platform.” I met the founder last week when the team launched its 100% free rideshare app. Yep, it doesn’t charge drivers or riders a single plugged nickel to use it. Everything you make through the app (which allows you to accept cryptocurrencies), you keep. (We’re interviewing the founder next week. Stay tuned. In the meantime, check out Cell 411’s project here and, if you’re so inclined, become a driver!)

If decentralization and end-to-end encryption are utilized on these free-market apps, says Luptak, then the proliferation of anonymous cryptocurrencies (like Monero or Zcash), will strip the government of its power to intervene in mutual contracts and enforce taxation.

Once that framework is put into place, Luptak says, “There will be an economic incentive for an insurance that will protect sellers and buyers and help them to delegate the risk of State tax enforcement to a third party. Starting and running an anonymous, decentralized anti-government insurance company with a good reputation which can’t be shut down by government,” he says, “is technically FEASIBLE.”

The more government tries to regulate and clamp down, the more incentive there will be for decentralization and anonymization.

Even now, the pace of innovation in global cryptomarkets boggles the mind. Some dark markets, according to Luptak, “have better user security than Gmail or popular social networks.

“The time when crypto technologies make victimless crimes obsolete is coming,” he says. “The government’s fight with the sharing economy cannot be won, the sharing economy markets cannot be technically regulated or prohibited.”

We hope he’s right.

Until tomorrow,

Chris Campbell
Managing editor, Laissez Faire Today

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