Earlier this week the biggest online black market place has been seized and shut down by the FBI. The founder of Silk Road, Ross William Ulbricht, was arrested and charged with narcotics trafficking, computer hacking, and money laundering. So what do Bitcoins have to do with any of this?
You might be asking yourselves what is a Bitcoin in the first place. A Bitcoin is a digital currency first introduced in 2008 and what makes it unique aside from the fact that it only exits in the virtual world is that there is no government regulating it in any way. The transfer of Bitcoins from one owner to another is done through the use of peer-to-peer networks, therefore no fees are charged, the transfer is done immediately and anonymously.
Silk Road, the biggest online illegal market place was one of the biggest user of Bitcoins, “The FBI estimated that in two-and-a-half years of operation, the underground website generated 9.5m Bitcoins worth of sales”[1] this equates to about $1.2 billion worth of sales.
The closing down of Silk Road could be seen by some as a big hit for Bitcoin, the currency “slumped 8.6 per cent following a raid on Silk Road”[2] However the way I see it is that the closing down of the illegal market place is a positive thing for Bitcoin. This will allow the currency to distance itself from criminal activities and it will enable to become a global currency.
Source 1: http://www.ft.com/intl/cms/s/0/27ca2d60-2b89-11e3-a1b7-00144feab7de.html#axzz2h6V9eCYN
Source 3: http://www.theguardian.com/technology/2013/oct/07/fbi-bitcoin-silk-road-ross-ulbricht