Bitcoins:

bitcoinsSilk Road existed as a way for those interested in purchasing just about any type of illegal drug without fear of being caught, its website tucked away safely (or so Ross William Ulbricht, better known as “Dread Pirate Roberts,” owner of Silk Road, thought) within the Tor network.

Bitcoins Are Just As Anonymous

Bitcoins were the method of payment required to conduct transactions on Silk Road, mostly due to the anonymity the currency provided. If you can't prove someone was shopping for drugs at a well hidden website, and there is no record whatsoever of anyone making such purchases, you can't get caught. Plain and simple.

The problem: Ulbricht was caught. Now, those who relied on the service to peddle their illegal wares are scrambling to sell those precious bitcoins, a way of wiping their hands clean before the FBI catches on, which leads to the decreased value of the virtual currency.

In a Reuters article, a security expert discusses the implications of an FBI investigation on the bitcoin market, pointing out that those who are using their bitcoins to conduct illegal transactions will be furiously trying to cover their tracks before their investigation into Ulbricht gets serious. They'll be checking all of Ulbricht's records, so will that lead them to the doors of drug dealers? That's the hope of the FBI.

What Will Become Of The Bitcoin?

While the value of the bitcoin is recovering somewhat, some experts believe the end of Silk Road means the end of the bitcoin. The site raked in 9.5 million bitcoins since 2011, spelled out in the charges against him, which is roughly $1.2 billion. Pretty amazing when you consider that there are only about 11.8 million bitcoins in circulation.

If people see that bitcoins aren't as anonymous as they once thought, when numerous arrests of drug dealers follow Ulbricht's, will they be as eager to collect and spend the currency?

Others feel this is the beginning of a bright future for the virtual currency. It stands to reason that when the illegal uses of bitcoins is shut down, people will begin to associate it in a more positive light. Without this ultimate in illegal activities associated with it, people will be more apt to see the good in the currency.

Wait And See

Whatever happens, this whole situation teaches people to look at bitcoins and the deep Web, in a whole new light. You aren't as anonymous as you think you are, so be careful what you're doing!

And with the ability to track criminals and their bitcoin spending habits, maybe more people will look at the currency as a legitimate thing. Only time will tell, after the dust settles with the arrest of Ulbricht and the arrests that are sure to follow.

One thought on “Bitcoins: Falling, Falling, Falling

  1. Japanese Bitcoin exchange MtGox went officially bankrupt after 750,000 of its customer’s Bitcoins and approx 100,000 its own Bitcoins had gone missing from protected wallets. Total missed Bitcoins was around 7% and worth approx $473 million. An attorney and bankruptcy trustee Nobuaki Kobayashi had confirmed this issue in his letter. He will continue to make an effort for taking necessary measures with respect to collaboration of receivables due from affiliated companies, etc.

    Several efforts were also made by various companies for purchasing MtGox out of bankruptcy.

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