Posted by: DeepDotWeb October 22, 2013
By Kevin H. Danielsen
Bitcoins (BTC), an unregulated internet-based currency, saw a massive spike in value over this past weekend, speculatively due to “China’s Google”, Baidu, accepting it as a form of payment. The currency is now trading at $200 on October 22.
This recent bitcoin rally occurred despite the recent FBI confiscation of 26,000 bitcoins, valuing at roughly $5.2 million to date, from the underground online bazaar, Silk Road. The mastermind behind Silk Road, Ross Ulbricht, was arrested this month for his company’s illicit activities.
Silk Road operated through a network known as Tor, or “The Onion Router”, which kept its dealings anonymous. Silk Road was an online marketplace that operated in the ‘Darknet’, using Tor’s capabilities to keep its buyers and sellers from being discovered by law enforcement. From selling heroine to hiring contract-killing services, Silk Road was able to mask its dealings -largely enabled by Tor, and closing transactions in bitcoin currency.
Because of the nature of anonymity surrounding bitcoin transactions, the FBI is uncertain as to how much BTC currency Ulbricht still controls. The Feds already knew about Ulbricht’s $120 million, 600,000 bitcoin account; however, they are still in the process of attempting to track down the owner of another bitcoin wallet valuing at over $17 million. They have not been able to uncover the account access information to the bitcoin wallet in order to follow the paper trail.
Despite so much controversy surrounding the bitcoin in this month, the currency has received blessing from “China’s Google”, Baidu. The Chinese-based internet search giant has approved accepting the currency for their security and firewall services, known as Jiasule. While the FBI seizure of Silk Road caused the bitcoin to dive 15 percent, it is largely believed that Baidu’s acceptance of bitcoin has caused the rally.
On October 2, the bitcoin traded at a low-point of $110, but on Tuesday, October 22, bitcoin has already seen prices as high as $205. This merely adds to the nature of volatility surrounding the currency. Because the BTC is totally reliant on peer-to-peer transactions, and is not subject to governmental or centralized banking regulations, its value is dominated by speculation. The value of the bitcoin has seen major price swings, since its creation in 2009.
Because it is unregulated, the bitcoin was outlawed in Thailand this past July. CNBC’s Matt Clinch writes in a July 2013 report:
“Virtual currency bitcoin has been banned in Thailand, according to a prominent bitcoin exchange that operates in the Southeast Asian country.
According to Bitcoin Co., a Bangkok-based website that trades the digital currency, it had been in the process of registering with governmental agencies but the application was turned down and the currency has now been made illegal.”
Bitcoin seems to be completely enveloped in controversy. Its subjection to speculation, the fact that governments have not been able to control it, and its attraction to Darknet marketplaces have certainly taken its toll on the currency’s value. Nevertheless, countries like China seem to be embracing the bitcoin, as the internet search titan, Baidu, now accepts it as a form of payment.
While the future of the bitcoin may always remain uncertain, it is apparent that both online hitmen-heroine bazaars and major corporations have found a use and a place for the BTC in their operations.