Bitcoin shows signs of recovery despite Silk Road shutdown
Bitcoin value has already begun to recover after the virtual currency's price plunged following the FBI raid on a black market website, seizing Bitcoins worth $3.6m.
Bitcoin value has already begun to recover after the virtual currency’s price plunged following the FBI raid on a black market website, seizing Bitcoins worth $3.6m.
The FBI arrested the alleged founder of Silk Road, a black market website which accepted only Bitcoin.
Ross Ulbricht, who went by the alias of "Dread Pirate Roberts", appeared in court 2 October charged with conspiracy in narcotics trafficking, computer hacking and money laundering.
Patrick Muck, lawyer for the nonprofit group Bitcoin Foundation, said the events would not affect the long term value of Bitcoin. He said: "Over time the value of Bitcoin will be determined by its useful purposes."
"Day to day price fluctuations based on events in the news are not really an effective or accurate measure of the value of the system."
When the initial news of the arrest hit the markets, Bitcoin value plummeted from $140 per Bitcoin to $109.7, a drop of 21.6%. At the time of writing, value had climbed back up to $126.2, just 10% off the price per Bitcoin before Silk Road was shut down and its assets seized.
Online marketplace Silk Road has been operating for two and a half years, during which time drugs, hacking kits and other black markets products were traded for Bitcoins.
The FBI estimated that Silk Road handled 9.5m Bitcoins over its short life, taking 600k in commission. In a statement, FBI special agent Christopher Tarbell wrote: "Bitcoins are not illegal in and of themselves and have known legitimate uses.
"However, Bitcoins are also known to be used by cybercriminals for money-laundering purposes, given the ease with which they can be used to move money anonymously."