Will Bitcoin Die With the Online Black Market 'Silk Road'?
‘Silk Road’ was an online underground black market where thousands of drug dealers and hitmen offered their products and services.
This Wednesday, the site went down and displayed the banner posted by the Justice Department, FBI, IRS, DEA and Homeland Security, which stated: “This hidden site has been seized.”
‘Silk Road’ used bitcoin as the primary method of payment, which is considered to be hard to track. However, federal analysts followed over 1.2 million transactions over an 18-month period before seizing the site. The FBI stated that the sales during the 18-month period generated 9.5 million bitcoins, equivalent to about $1.2 billion.
When the website was seized, the exchange rate dropped from about $140 per bitcoin to around $110 per bitcoin. Currently, the rate has gained back to $127 per bitcoin but the numbers are fluctuating both up and down.
With many predicting the end of bitcoin, there has been significant amount of panic selling over the past two days. However, others claim the closing of the ‘Silk Road’ will be good for bitcoin.
Advocates state that Bitcoin has grown too large to be significantly dependent on ‘Silk Road’ or its role a payment method for purchase of illegal products or services. In addition, investors believe that closing of ‘Silk Road’ will allow bitcoin to be legitimatized in the eyes of the public.
“I think it’s a huge positive,” said Fred Ehrsam, the co-founder of bitcoin. “This kind of takes the biggest target that people might speak negatively about when it comes to Bitcoin, and takes it off the map.”
Ross William Ulbricht, the creator of ‘Silk Road’, was arrested in San Francisco and will appear in court to face multiple charges including trafficking of narcotics and money laundering. Many state that he built the website poorly and made many clumsy mistakes such as revealing his real name and e-mail address – leading to his downfall.
Despite all the commotion, everything may return to square one as new and improved platforms pop up to replace ‘Silk Road.'
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