Some think the Silk Road takeover sounds the death knell for libertarian-nourished Bitcoin, a stateless, cryptocurrency that has been making headlines the past couple of years.
This is false. In fact, the affair has made its position stronger. Not only has the nascent crypto-currency passed yet another test to its resiliency, the affair jolts a pervasive prejudice against the coin – that it was only used to facilitate slimy, anonymous transactions.
Wednesday, the feds extinguished Silk Road, the notorious underground marketplace that was best known for facilitating illicit drug transactions. In part, the raid has been painted as the moral duty of the government to undercut the influence of a grisly marketplace filled with sketchy drug dealers. (For a more nuanced version of the lamentable repercussions read here or here.)
Transactions made on the Silk Road were made exclusively with Bitcoin. Some journalists think the currency was fueled by mutual dependence and that shutdown of the marketplace will have dire connotations for the currency.
Except it hasn't.
In an interview with the The Washington Post, Patrick Murck General Counsel of the Bitcoin Foundation said, “If you believe that the useful purpose for Bitcoin was to conduct illicit activity, you'd expect the price to be zero without the Silk Road. And it's not. Last I checked, it was around $110.”
Monday evening its price had nipped-up to $137. As it turns out, Bitcoin is used for other purposes, including legal purchases.
Using Bitcoin is by no means widespread or easy to use. But it is decentralized enough that it is possible for almost anyone. A honeymoon couple from Utah is currently filming their first 90 days of marriage. They are using exclusively Bitcoin. They've purchased a hotel an Atlanta, gas, smoothies, etc. “This is a historic documentary,” Jeffrey Tucker said in an interview with Rand Radio. “It'll be really fun to have a documentary out there that shows a time, you know, when it took a little time and energy to figure out how to buy services with Bitcoin.”
Tucker, editor of Laissez Faire books, thinks the currency's success is inevitable. He compares Bitcoin to email, inconceivable 30 years ago. “After all, not even the Jetsons had email. Elroy brought notes home from his teacher on pieces of paper,” he wrote.
Shaking Bitcoin's outlier reputation will move the economy one step closer to this end.
While Bitcoin's “Silk Road Age” reputation comes to a halt, it's PR is maturing. The Bitcoin Foundation, the “respectable public face” of Bitcoin is moving to standardize, protect and promote the currency. Its website says: “As the Bitcoin economy has evolved, we have all noticed barriers to its widespread adoption — botnets that attempt to undermine the network, hackers that threaten wallets, and an undeserved reputation stirred by ignorance and inaccurate reporting.”
It has even held meetings with agencies of the U.S. government to mollify opposition.
Bitcoin is not going away. Now it can add Silk Road to its lengthy list of conquered hurdles. Not only has Bitcoin survived government raids and fluctuations, it has expanded rapidly if erratically and unexpectedly. ATMs have popped up in Canada and the specialized ATMs are expected in the U.S. by the end of the year.
Bitcoin is not a currency used exclusively for anonymous drug purchases. Nor is it simply a hard to use currency, that conspiracy theorists grudgingly use to “stick it to the man.” It has settled in Iran, amidst U.S. sanctions, Argentina, amidst high inflation and an unstable currency and Cyprus, amidst the highly publicized financial crisis. It has demonstrated its usefulness as an alternative currency by saturating the globe.
Perhaps digital currency is a budding, subversive apparatus that will transform the world's economic landscape right under our noses. You never know.