Silk Road kingpin Ross Ulbricht’s recent conviction and life sentence was more than simply a crackdown on a massive online black market for illegal drugs. It was a nail in the coffin of the radical new “cryptocurrency” Bitcoin, as Bitcoin was the glue that held Silk Road together.
Or was it? How significant the rise and fall of Silk Road was for Bitcoin is a matter of some debate, as is the purpose of Bitcoin itself. Controversy, however, is nothing new for Bitcoin. In fact, it seems the story of this digital currency consists of nothing but controversy.
In fact, perhaps the greatest challenge for Bitcoin is divining the technology’s true purpose. Early innovators often espoused radical Libertarian goals for revolutionizing the banking system and with it, the world economy. By disintermediating third parties, Bitcoin promised to usher in a new world order of free market commerce.
Only the Bitcoin story didn’t work out that way. Bitcoin soon became a haven for criminals – not just Silk Road, but any number of money launderers and other shady types who gravitated toward an anonymous, relatively safe method for conducting financial transactions, in particular across national borders.
“Because of its openness, Bitcoin will continue to be used by shady actors,” explains Nathaniel Popper, New York Times reporter and author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money. “In some ways, the good comparison is cash. Bitcoiners love saying the main medium for illicit transactions is still probably $100 bills because it can be an anonymous form of transacting that’s untraceable, and Bitcoin still has that quality as well.”
In fact, just this week news came to light that an Australian company paid hackers a ransom in Bitcoin. Clearly, Bitcoin is the extortionist’s currency of choice, as it combines the anonymity of cash with the global convenience of traditional wire transfers.
Read the entire article at http://www.forbes.com/sites/jasonbloomberg/2015/06/05/bitcoin-in-search-of-purpose/.
This article is the first in a series on Bitcoin and blockchain technology. The author welcomes briefing requests from innovators in this space. Email him directly at bitcoin@intellyx.com.
Intellyx advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Antana.
