In the context that you made the argument in, which is consumer demand for cryptocurrency, the type of utility we're talking about is utility for the user.
>>In the case where the exchange in question is low harm, we generally see society evolving toward legality. E.g., marijuana has been declining in illegality, so the need for evading state detection declines too. There are now multiple marijuana storefronts within walking distance of my house. Bitcoin doesn't help them.
Marijauna stores would benefit tremendously from a widely used cryptocurrency. Legal marijuana shops have enormous difficulty getting bank accounts.
The government pressured payment intermediaries into stopping donations to Wikileaks a few years ago. Cryptocurrency was a vital lifeline for the organization during the blockade.
Craigslists recently shut down its personals section, due to FOSTA. Adult entertainers are having their PayPal and Patreon accounts closed. Venezuela's economy has been totally destroyed by its government's interventions. Areas of China are being turned into an Orwellian dystopia: https://www.hrw.org/news/2018/02/26/china-big-data-fuels-cra...
Your claim that ways of circumventing centralized control of financial transactions is growing unnecessary is totally unfounded.
>>I suppose you could say I have an investment in government, which I call "being part of a modern, civilized community".
So to clarify, you're not part of any of the groups I mentioned earlier?
>>But there's no particular reason to think 80-90% of people will be excited about risking IRS penalties and jail time for tax evasion or money laundering.
Filesharing is used by millions of people, and it is illegal. There are many countries in which taxes are widely avoided, so we also know that happens. In some countries circumventing govermment control is a matter of survival.
Cash, by its very nature of being fungible and untrackable, makes anti money laundering laws almost useless, and cash is used the world over.
Your idea of a global surveillance state to enforce taxes on private transactions and to track criminals as the only way to coordinate the use of resources and prevent crime is not the only future open to mankind, and you yourself obviously don't believe it is or else you wouldn't put so much effort in trying to discourage the use of cryptocurrency.
We could go to a future where law enforcement needs a warrant to know the content of a transaction, and where taxes are levied on immovable property, instead of being tied to private economic activity, and a strong civil liberties and economic argument could be made that this would have total net utility.
And it's not just circumventing centralized control by governments. Private financial intermediaries track their users' financial activity extensively.
On top of all of this, simply having a mechanism to transfer value electronically through an immutable protocol provides utility in avoiding rent-seeking by large trusted third party intermediaries who've attained large network effects.
The idea that there is no conceivable utility in avoiding payment intermediaries that can censor/surveil you, except to commit crime, let alone crime that is socially harmful, is preposterous.
I agree some governments do bad things and would also like less of that. I just don't think Bitcoin solves any of those problems. China may indeed be turning into a digital surveillance state, but that makes digital currencies like Bitcoin ineffective given that they depend on a free and open internet.
I also agree that some countries are only haphazardly governed, with tax evasion as common. But I don't think there are many countries like that that a) don't have perfectly good ways already to evade taxes, b) have reliable electrical grids and internet grids, and c) have sufficient economic activity to make them trendsetters for the global economy. Is Bitcoin used beyond the level of anecdote in Venezuela? Possibly. Will that matter to the adoption of Bitcoin in most of the world? No.
I'm definitely not saying that there's no conceivable utility in cryptocurrencies. I'm saying that there's approximately no practical, demonstrated utility aside from some light financial and commercial crime. My main problem with the Bitcoin promoters is that the only thing they have is theoretical, imagined, conceptual utility. Selling the dream was fine 10 years ago. But at this point the reality is pretty clear.
China can't stop people in its borders from using cryptocurrency. Neither can Venezuela, where it is currently helping at least some people survive. Electronically transmittable information is just too hard to contain, even without an open internet.
With the greater utility that comes from a larger userbase and greater liquidity, and technological upgrades like better scalability, it's easy to imagine cryptocurrency helping a lot of people, who are currently repressed by major institutions like governments, protect and increase their wealth, leading to a free-er and more prosperous world.
>>My main problem with the Bitcoin promoters is that the only thing they have is theoretical, imagined, conceptual utility.
There are other, better cryptocurrencies than Bitcoin. But I do agree that much of the utility of cryptocurrency is imagined and theoretical.
>>Selling the dream was fine 10 years ago. But at this point the reality is pretty clear.
Cryptocurrency was a totally new paradigm when Bitcoin launched 9 years ago. It needs more time to be developed and tested before a verdict can be passed about the technology's inherent utility.
In the case where criminals profit from harm, the criminals may personally experience utility from Bitcoin, but the total net utility is negative. E.g., if I steal your new $30k car and sell it to a fence for $10k paid in Bitcoin, I have experienced a $10k gain. But since you experienced a $30k loss, net utility is negative. Ransomware, often seen using Bitcoin, is another example of net negative utility.
In the case where the exchange in question is low harm, we generally see society evolving toward legality. E.g., marijuana has been declining in illegality, so the need for evading state detection declines too. There are now multiple marijuana storefronts within walking distance of my house. Bitcoin doesn't help them.
I suppose you could say I have an investment in government, which I call "being part of a modern, civilized community". So I do object to Bitcoin's money-laundering potential on those grounds, and also deny that aiding freeloaders in tax evasion is much in the way of "real utility", any more than any other tax evasion scheme.
Even if we're willing to call Bitcoin's financial crime usage "real utility", I don't think it's "real" for the purposes of this discussion, which is about comparison with the early days of the Internet. The comparison is only meaningful if the early "real utility" is indicative of future utility for a broader audience. That was obviously the case for something like email (which 90% of Americans now use) or online shopping (80%). But there's no particular reason to think 80-90% of people will be excited about risking IRS penalties and jail time for tax evasion or money laundering.