A loose collection of vendors who accept Bitcoin recently organized "Bitcoin Friday" in which they all announced special one-day-only deals for customers who bought things with Bitcoin. Some testimonials from the proprietors of such businesses have been posted on this blog:


Most of the vendors don't give hard numbers about revenue, but it is possible to make some order-of-magnitude guesses about many of them. The context is, of course, that the vendors and the pro-Bitcoin blogger (David Perry) are trying to drum up enthusiasm. They report their results with glowing positivity.

But, those results look pretty skimpy in absolute terms. David, from Grass Hill Alpacas (I own a pair of his Alpaca SOCKS, paid for in Bitcoin, and I can recommend them as delightfully comfortable. Unfortunately I loved mine to death and now they have holes in the bottoms.)...  Where was I? Oh yeah, David from Grass Hill reports that he made $800 in sales that day. No doubt that is great news for him, but it looks to me like it is typical of the results from the "Bitcoin Friday" vendors — they appear to have moved at best a few hundred USD worth of merchandise on that day. And, they uniformly report that their sales were much higher on Bitcoin Friday than on a typical day.

Now, according to https://arxiv.org/abs/1207.7139, Silk Road facilitates the sale of about $40,000 worth of merchandise per day. That number has probably grown by about 50% since July, when that data was gathered. Also, it completely excludes "Stealth Mode" listings, which might be even larger than public listings [†]. We're also leaving aside "Black Market Reloaded" and other competitors to Silk Road.

It sounds to me like even on the biggest sales day in the history of non-illegal merchandise, all of the "Bitcoin Friday" vendors listed in this blog entry didn't sell even 1/10 of the volume that the illegal sites move every single day.

My tentative conclusion is that this validates the widely-held suspicion that Silk Road is responsible for more than 99% of all transactions in which Bitcoin is exchanged for anything other than a different currency.

How does this compare to the other large-scale use of Bitcoin transactions — foreign currency exchange/speculation?

[Disclosures: I've done some forex/speculation and am currently holding a few Bitcoin. I've never bought or sold illegal drugs, either on Silk Road or any other marketplace, either for Bitcoin or any other currency.]

The big player in forex is Mtgox. It hosts the sale of a large amount of Bitcoin for USD every day:


It looks like even on days with relatively low volume, more than $100,000 worth of Bitcoin changes hands in return for USD on Mtgox. The average daily volume over the last couple of months looks to be closer to to $300,000.

So already forex is almost an order of magnitude bigger than illegal drugs in volume, and we haven't even begun to look at competitors to Mtgox or trading for currencies other than USD. Here is a list of exchanges, currencies, and trading volumes:


Eyeballing the top 15 or so on the list (they appear to be sorted in descending order of volume), I'd say all of the rest added together probably come out to about $150,000/day.

Tentative conclusion: as far as Bitcoin markets, forex is about an order of magnitude bigger than illegal merchandise, which is at least one and maybe two orders of magnitude bigger than anything else.

[†] I've asked the denizens of the "SilkRoad" bulletin board on reddit to clue me in about whether stealth listings are huge or minor compared to public listings. No telling if they even have a clue about that, or if they'll share any such clues with me. We'll see! http://www.reddit.com/r/SilkRoad/comments/1380h6/is_the_total_of_private_listings_bigger_or/
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