During colonialism, you could buy stocks in companies erecting colonial empires, like the dutch east india company, or the british east india company. They had ships, troops, and actually did engage in trafficking if you can call that, by avoiding the silk road and its large dangers/taxes.

They also engaged in massive transcontinental drug trafficking, and in many cases were vertically integrated. They owned the land/fields, the people/slaves, the plantations, the drug crops/opium poppies, the processing chain, and also the sales, and the troops/armies were used to force people to take/buy drugs. If you refused to buy or take the drugs, they would burn your entire country down to ashes, and of course, enslave the people there to make more drugs.

Sounds kind of like what certain world powers do with oil and mining these days.

That’s because nothing has changed except we learned that it is easier to manage regions if you dont annex them and instead let the nearest bystander run the country.

The people there accept it and it is cheaper and you still get the resources for all eternity, which is all you really wanted.

Could you name a couple of countries they burned down because nobody would buy or take drugs?

The Opium Wars between China and the British Empire were a result of China's attempt to shut down the opium trade.

https://www.britannica.com/topic/Opium-Wars

Hong Kong is a geopolitical football because the Mayor of Hong Kong tried to stop a foreign corporation from getting their citizens addicted to drugs.

In accordance with British commercial law, the foreign corporation returned with the British Navy and took it over. And then kept pushing the drugs successfully.

Search for the opium wars, fascinating (and terrifying) stuff.

Is this a roundabout way of trying to associate cryptocurrencies with criminal groups?

In case this isn't obvious, no, there's no trustless way to make an entity distribute its real world profits to holders of a crypto token. We're talking about mafias here, groups which specialize in hiding money streams. Only enforcement from a real world judiciary system can enforce dividend distribution.

It doesn't need to be trustless.

Is this a roundabout way of trying to associate cryptocurrencies with a prerequisite of trustlessness for everything that uses them?

This is just corporations using permissionless architecture, there have been companies doing this on blockchains for almost 10 years. I used to own shares of SatoshiDice for the daily dividends it paid onchain from 2012-2013.

The market enforces the behavior. A cartel that pays nice dividends will have a better share price and deeper secondary market, allowing them and their employees to always sell shares for more money. A corporation that doesnt perform well for shareholders doesnt have the same market.

I think I’m the one specifically drawing no distinction between criminal groups and liquidity, because they are unrelated concepts.

Unless, of course, the same tokens were used to conduct the drug transactions.

Then all the token holders have an interest in preventing non-tokenized transactions.

This is all ridiculous (and evil of course) but it has a certain internally consistent logic to it.

Why would they adopt a new system given they've got such a good grip on current one?

Thats why they would mine virgin cryptocurrency.

I think people are conflating which crypto is used for what here lol, but thats predictable. There would be two cryptocurrencies involved: the share, and the cash-surrogate as profits.

Forget about the problems, think solutions and it will be easier to iterate towards and perceive a system that works.

If these groups effectively control territory, then maybe formalizing that control rather than trying to fight against it makes sense. That way, instead of a cartel trying to infiltrate and bribe the local law enforcement, the law enforcement could be paid a competitive and transparent monthly fee in return for helping to protect the cartel's territory. (This would mean arresting competing cartel members caught there, and giving immunity to members of the locally approved cartel who are caught in shoot-outs with their rivals).

Part of the issue is that the cartels have always provided a sort of summer camp for psychopaths.

Charles Bowden wrote a bit about how absolutely terrifying it was to be anywhere in the proximity of these organizations.

By formalizing it, you would be essentially giving a formal role to guys who cut people's limbs off with chainsaws and post videos of it on LiveLeak.

Fighting the cartels leads to unimaginable violence, and leaving them alone just leads to them infiltrating every single level of the Mexican government, and carrying on with the violence anyway.

It is the sorrow of the country to be situated by an accident of geography between the single biggest market for meth and cocaine on the planet (who also happens to sell lots of military-grade weapons to anyone with a pulse), and the largest cocaine producing region on the planet.

There are countries that routinely chop peoples heads off in a form of due process that we would not recognize or respect for seemingly minor actions. Even the most developed nations have laws to chop off the hands of thieves.

We vilify and drone people with the same belief systems merely because they are not associated with an existing state, non-state combatants.

There is simply no distinction I can lean on that would lead me to avoid formalizing reality. The concept of the state simply isn't legitimacy to me, it is just consensus. Cartels already have that consensus and act like public enterprises in their region.

Do notice, I’m not arguing for anything to occur, I am recognizing that nobody has to ask permission to achieve access to the capital markets and noticing how that fits types of organizations that are not welcomed in established capital markets.

If I understand correctly what you are saying, you are arguing that we take the world as it is, not as we wish it to be. I very much respect that position.

However, I would argue that there is definitely not a consensus. The Mexican people are fighting with their lives against these organizations.

https://en.wikipedia.org/wiki/Grupos_de_Autodefensa_Comunita...

Mexico has a central government that is weak in some respects. Their judicial system is not what it needs to be. Certain transnational criminal organizations have taken advantage of this to establish enclaves of power.

That does not mean that they are recognized as legitimate political entities by the Mexican people and should be given some formal recognition of authority by the Mexican government or the country's neighbors.

Say my neighbor is in my front yard waving an AR-15 and screaming at me that trash day was yesterday and I need to bring my garbage cans in. I'm sure as hell not going out there to talk to him, but that doesn't mean I recognize him as the new de-facto mayor of my front yard. He's just the lunatic in my front yard screaming at me who I'm going to do my best to avoid, and hopefully at some point the cops will show up and get him out of my yard.

Right. Its a good message and diverges a bit from my point:

All organizations can access the capital markets now. It a waste of public resources from the “legitimate” states to try to whitelist transactions so stop burdening everyone over that because its pointless. The end.

I am curious how the market will value these enterprises if they begin giving steady dividends. The price discovery is fascinating.

I think there was sort of a formalization of territory when the Colombian cartels controlled the entire chain from production in the jungle to the sale in US streets.

The violence and territorial wars in Mexico since the early 2000s are as I understand it a direct consequence of the demise of the Colombian Cali and Medellín cartels, with numerous groups trying to fill the power vacuum left.

What you describe often is happening on a local level, but there will always be outbursts of violence somewhere as soon as someone threatens the "peace". Getting drugs into the US is just way too lucrative a business. The fighting will just keep shifting places as long as this is the case.

Cartels have a feudalists political structure. I don't think feudalism is really a thing in the modern world.

Your two sentences directly contradict each other.

What do you mean to say?

I think they meant the first descriptively and the second prescriptively.

Grain of salt and such, but here's a revenue figure I found in this very interesting 2020 congressional report "Mexico: Organized Crime and Drug Trafficking Organizations".

"By some estimates, Sinaloa had grown to control 40%-60% of Mexico’s drug trade by 2012 and had annual earnings calculated to be as high as $3 billion."

https://fas.org/sgp/crs/row/R41576.pdf

Ah, crypto markets are big enough to accomodate their needs via mining now.

Publicly traded? How does that work for illegal operations? And as far as I'm aware crypto currencies really aren't profitable anymore, ignoring needing an internet connection, leading to tracing the transactions back to this hijacked dam.

What do you mean by profitable? A cartel could raise capital through some erc token that gives the holder the right to some sort of dividend.

The only issue for an illegal operation would be paying dividends, where they need to get their illicit cash to the shareholders.

This is solved by obtaining cryptocurrency and issuing that to shareholders whose record of ownership is tied to a cryptographic tradable share such as using the erc20 standard or erc1404 standard (for programmers that haven't really had an opportunity to see whats going on, these are just classes you can inherit, for design patterns that lead to fungible tradable assets), but obtaining enough cryptocurrency has been a challenge for an organization operating at this scale, as the electronic payment system generally isn't an option even when HSBC is helping, and the physical cash system for crypto system still isn't large enough.

These issues are solved by purchasing computational hardware instead to mine the equivalent amount of cryptocurrency. Mining is not very profitable because there are many people that don't mine for a profit, are the hints obvious enough. It can be at a huge loss as long the haircut on conversion to money is still better than the 20-30% haircut people tolerate in reintegrating illicit money to licit money without the advent of crypto. Regardless, it uses energy and a cartel is in a position to create energy. Either way, mining is extremely profitable for people with low energy costs, the idea of someone mining in their residential unit has been a misnomer for most of the decade.

Mining doesn't need to report your location. This is as simple as using a VPN to reach the mining pool. And if you have enough hardware not to need a mining pool then in many networks your IP address is not reported to the cryptocurrency network, but a VPN can still be a practical privacy measure for this, as you typically don't want cryptocurrency communities to know that you control much of the network.

The energy use itself will be the main giveaway, but only if someone finds an issue with the energy use.

"Mining or not" is still a red herring, its "can cartel obtain enough crypto or not to pay shareholders"

Regardless, in this model the newly minted cryptocurrency is paid out shareholders on record, the record being a share asset minted via the erc20 standard or erc1404 standard. Anybody would be able to buy a cartel share, and it wouldn't necessarily be flag worthy that some cryptocurrency was sent to an address that happened to have a cartel share. Either way it is down to the shareholder to further clean that crypto if they feel like they need to.

If something about this doesn't seem viable I think you also need to understand that not everyone needs fiat currency. These same shareholders don't necessarily ever need to go to a bank, as there are many investment opportunities in the parallel crypto economy, and enough people willing to exchange physical goods for cryptocurrency. The physical economy always being a tiny fraction of the investment economy. Not all shareholders need to worry about banks.

In the meantime, we get a clearer view of the universe of investible assets, and the drug market. Its only been one century of trying to draw a distinction between publicly traded companies as a higher standard of business processes and validation we respect, and marginalizing all others. Before, the East India Companies were the hottest things to trade, and were taking over countries specifically to sell them drugs. So people looking for yield won't draw a distinction, and the technology supports not needing to ask for permission.

The laundering of money using compute and electricity is a very interesting idea that I hadn't thought of before. It's certainly within the cartels power (as quasi-state entities) to obtain cheap/free electricity and start mining. Given the billions and billions in cash just sitting in warehouses, Cartels would presumably be very interested in any way, even with a 50 or more percent haircut, to turn this dirty money into clean money in a legit bank account. While a mining operation won't have enough capacity for probably even 1% of that amount of capital, you would have to imagine that cartel leaders would still probably be interested in such a scheme.

A fascinating idea, thanks for sharing

How much cash are we really talking about?

Miners earn in aggregate

$3.8 billion in ether @ $430 and an average of 3 Ether per block

$3.9 billion in bitcoin @ $11,500 and an average of 6.5 bitcoin per block

(Transaction fees are a significant portion of block revenue now due to the heavy activity on these networks, with Ethereum blocks often having more fees earned than the block reward)

So there is about $8 billion worth of cryptocurrency earned by miners each year, at current exchange rates and activity levels. Cartel just should not exceed 50% of that. Market can tolerate much more and they would be in fierce competition with other miners.

We live in a world where people want the exchange rates to double or increase by an order of magnitude, which means that 8 billion figure becomes 80 billion, it should be clear that we are on the cusp of a market becoming highly attractive to larger incumbent organizations.

Just taking over a dam - real life isn’t goldeneye

Okay. Then building energy producing resources themselves just like the state and respected corporate structures did. Maybe they could even employ people and build a surrounding town.

Just buy all the shares in an existing dam.

^Takeover bid* I believe they call it.

Hostile takeover bid is even a thing, and legal.

Or they could build one and even provide energy to a nearby town