Posted by Well, here’s a claim:
In December 2020, Visa, Mastercard, and Discover stopped processing payments for Pornhub, a website based in Canada that allows users around the world to upload and view pornographic videos. Cut off from traditional payment processors, Pornhub had to rely on cryptocurrencies. …
I find that deplatforming Pornhub increased the value of bitcoin by 45.7 percent. It increased the value of other cryptocurrencies accepted on the site by 19.1 percent on average. These results are consistent with the view that bitcoin is primarily valued as a medium of exchange and that the market for cryptocurrencies is characterized by large network effects.
I am not so sure about the size of that effect, or about “the view that bitcoin is primarily valued as a medium of exchange” for that matter. Still you could have a basic model of Bitcoin that says that it is primarily useful as a medium of exchange for transactions in the illicit economy, and that anything that increases the size of the illicit economy — for instance, by recharacterizing some activities from “licit” to “illicit” — is good for the value of Bitcoin. Like the Pornhub deplatforming. Or, of course:
After surging as much as 20% at the start of last week and briefly topping $45,000 on speculation that sanctions and a collapsing ruble would drive Russians into cryptocurrencies such as Bitcoin, the original digital token reverted to acting like just another risk asset by Friday. It was trading at about $38,390 as of 6:56 p.m. New York time on Sunday, close to the lowest since Feb. 28.
Bitcoin was born in the wake of the global financial crisis as an alternative currency outside the traditional monetary system. Since that time, it has been promoted as a means of exchange and a store of value that is detached from governmental control. Those use cases had become secondary as speculation become the primary use case until the war renewed the haven discussion.
“It’s a monetary asset that you can bring with you and not be subject to the banking system,” said Jeremy Schwartz, global chief investment officer at WisdomTree Investments Inc. “A lot of what’s happening in Russia I think helps illustrate for people the value of Bitcoin.”
Last week a huge swath of global commerce became more or less illicit more or less overnight. That was good for Bitcoin, for a while at least.
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