The value of Bitcoin virtual currency has increased 20-fold in the past year and hit an all-time high of $309.68 on Mt. Gox, the world’s largest Bitcoin exchange. Growth sustainability is at risk as new 'Silk Road' makes it a target of the US government.
Bitcoin’s extraordinary rise has garnered attention from
investors from Cyprus to China wanting to get in on the soaring
prices. But its success on the online 'Silk Road' has made it,
along with drugs, a target for the US government.
The re-launch of the illegal online drug operator Silk Road could
threaten the ‘Bitcoin boom’ as the FBI continues its crack down
on Bitcoins used to barter for contraband products.
On Wednesday an almost exact copy of the notorious internet
marketplace Silk Road “has risen from the ashes”, the new clone site
announced.
Government officials will be quick to try and nip operations of
the reincarnated site in the bud; dubbed the ‘Black market
reloaded’.
Bitcoin took a 15 percent nosedive in value when the US Federal Bureau of
Investigation (FBI) blocked the criminal internet platform. The
dollar value of the virtual currency Bitcoin slumped from about
$145 per coin to $123 after the FBI shutdown the ‘Silk Road’, and
a future break-up could bring further instability to the
currency.
Government officials vowed to shut down the online drug trading
platform as early as 2011, but the FBI didn’t bust the network until September 2013.
So far, Bitcoin has been a high-margin and high-risk investment.
Since the currency hit $123 on October 3, it has risen to about
$309, nearly 3-fold.
Prices are rising on increased investment interest, especially
high-demand from China, but the volatility still has others
believing it’s a big bubble, ready to pop at any moment.
In 2011, Bitcoin prices jumped from about $0.30 to $32.00, and
then fell back to a low of about $2.00, the WSJ reported.
Since its inception in 2008 by a man using the alias ‘Satoshi
Nakmoto’, Bitcoin has now gone mainstream; it can be used to buy
coffee, pay for online dating services, and can even be retrieved
from an ATM. According to Bitcoincharts, which follows the
anonymous currency, there are nearly 12 million Bitcoins in
circulation.
Tyler and Cameron Winklevoss, who are most famous for their early
investment, and later fallout, with Facebook, seem to think it’s
a worthy investment. They have an $11 million stake in Bitcoin,
want to set up an exchange, and have it be traded just like
stocks and commodities. They filed a request with the US Securities and
Exchange Commission in July.
An estimated $1.2 billion in Bitcoin flowed through the internet
marketplace for drugs and criminality. The FBI reportedly seized
the equivalent of $3.6 million in Bitcoins in a raid, and has
since promised to crack down and seize the remaining $80 million
in Bitcoins the website’s founder, Ross Ulbrict, 29, has
accumulated running the online drug platform.
Users of the new ‘Silk Road’ buy and sell cannabis, cocaine,
heroin, firearms, and possibly order assassinations.