Bitcoin’s Killer App Has Existed Since 2011
While there are plenty of venture capitalists in Silicon Valley searching for Bitcoin’s first killer app, there is a small contingent of users who understand that the real killer app has been around for years. If you go back to the early days of Bitcoin’s rise in popularity, you’ll find that the first large influx of non-technical users came after Silk Road became a popular area of focus for a few online magazines. These new users were not interested in the cryptography behind Bitcoin or the technical solution to the Byzantine Generals’ Problem. Instead, these users just wanted to buy marijuana and ecstasy over Tor.
Silk Road is What Brought Users to Bitcoin
Silk Road was first brought to the attention to a larger audience through a Gawker piece written by Adrian Chen, which was published on June 1, 2011. The Silk Road hidden service had only been live for a few months, but it was becoming obvious that this was something that was gaining traction in a hurry. As more people flocked to Silk Road in the days following the article, the bitcoin price skyrocketed from less than $9 to nearly $30 over the next week-and-a-half. Although it’s easier to make the case that bitcoin is about more than online drug sales today, it’s clear that many individuals who became interested in the digital money during this time were also interested in illegal activities.
Noted Bitcoin Researcher Tim Swanson published his own report on the kind of activity that could be found in “Bitcoinland” back in April, and he found that “[Darknet marketplaces] appear to still account for a large supply and demand of [bitcoin] as of April 2015.” His report was largely based on numbers made available through Coinalytics, and it seems clear that ransomware, gambling, darknet markets, and other black or grey market activities still account for a large portion of Bitcoin transactions. One of the more interesting graphics from Swanson’s report was a comparison between known BitPay and Evolution (a past darknet market) receiving addresses:
The Black Market is Only Growing
Many Bitcoin enthusiasts like to ignore Bitcoin’s “dark” past (and present), but they may do so at their own peril. These black market use cases are what provided the initial support for the bitcoin price; additionally, as Justus Ranvier recently pointed out, the black market is only growing. Bitcoin shines brightest when used in any sort of online transaction that has previously been censored, and these are the kinds of transactions where people who don’t care about the technology at all will be happy to use Bitcoin.
Bitcoin’s Most Useful Apps Will Be Black and Gray
Although most of the Bitcoin-related companies raising large sums of money are involved with building an exchange or wallet, many of the most useful projects will operate in a legal gray or black area. OpenBazaar could enable a level of frictionless online commerce that has never been seen, while apps like Abra can allow individuals to move US dollars across borders in a censorship-resistant manner.
Normal people are only going to use Bitcoin when it’s the most logical option. Up to this point, it appears that the most useful Bitcoin apps are the ones that allow people to get around various forms of financial censorship.