There are no two ways about it; this story is basically an endorsement for Bitcoin. How else can you read this story? A little bit of a recap first. As we have reported earlier, one of the biggest online markets for illegal drugs, Silkroad, was put under by the US Government. They shut down the website, jailed its operator and seized lots of Bitcoins.
Bitcoins as you probably already know is an otherwise untraceable digital currency that can be used to buy all sorts of illegal stuff. Anything from child pornography to online drugs, to getting people assassinated, you name it. Bitcoin is the currency of choice for people who don’t want to be identified and who don’t want to get taxed. Interestingly enough, because of its ability to avoid the international banking system, more and more people are parking their hard-earned real world cash in the form of Bitcoin. There are Bitcoin exchanges where you can change Dollars, Yens, Euros, and what have you, into Bitcoin currency. Once you have Bitcoin currency, it’s almost impossible to track your money down. Of course, if you are operating a Bitcoin currency exchange, local authorities might be able to tax you. For more details on this CR story, Singaporean taxing authorities recently release policies on Bitcoin transactions.
Yet, amid all other issues, Bitcoin has been exploding in value ever since the Silkroad seizure. Remember, when Silkroad crashed due to the raid by the federal government? The value of the seized Bitcoin in its digital wallet was anywhere from 3.5 to 4 million dollars. Now, the value of that seized hoard of cash is around 25 million dollars.
It doesn’t take a genius to realize that if you want to invest in something that will beat inflation, Bitcoin might be it. Another thing that you need to keep in mind when thinking of investing in Bitcoin is the fact that, if you lose your Bitcoin if you format your computer or your computerfs hard drive and you can no longer retrieve your data, for example, then your Bitcoin is gone for good and can no longer be replaced. The way Bitcoin is coded, once it’s made and stored, it cannot be replaced. It’s not like a US dollar where if the US Government wants to print a hundred million dollars, they just basically create money out of thin air. Bitcoin has a fixed value and there is only a fixed amount of Bitcoins in the world. If for whatever reason, people lose, destroy, or can no longer access their Bitcoin, they are out of luck.
But the good news is that for the rest of the Bitcoin holders, the value goes up. It’s standard economics: the smaller the supply, the higher the demand, the higher the price. This is why any news regarding Bitcoin seizures and Bitcoin losses, only tends to push the price higher and higher. Also, it would not be surprising to know that people who are looking to evade taxes whether they are drug dealers, assassins, shady overseas companies or third world companies that just want to store their money in a fairly safe form that can appreciate with time are seriously eyeing on Bitcoin. Since, Bitcoin is getting so much media attention, expect the exchange rate of Bitcoin to continue to shatter records.
This latest Fed auction might be a great opportunity for people looking to get into Bitcoin investing. If you want to get your hands on the 144,000 Bitcoins that are in the account of the operator of Silkroad, you might have to wait a little bit longer. The operator, Dread Pirate Roberts, is disputing the forfeiture of his Bitcoins. If he fails, there’s a lot of Bitcoins entering the market. Considering the huge increase in Bitcoin value, we can expect that hoard of Bitcoin to go really fast.