Before I get to the humorous FBI trolling story referenced in the title, I want to write a few overdue paragraphs about the whole Silk Road affair and the future of Bitcoin. The garbage that was being emanated from across the internet about what would become of Bitcoin in the wake of the news that the feds has arrested the founder of the Silk Road, Dread Pirate Roberts aka Ross Ulbricht, represented the height of ignorance. As soon as I heard the news, witnessed the price plunge and heard the hyperbole being spewed by commentators I tweeted:
The ignorance of people saying this is “game over” for Bitcoin is astounding.
and
This is game over for the most successful online illegal drug market. It is not the end for Bitcoin. Other nations will take the lead on BTC.
I also said I’d be happy to take Bitcoin donations in light of their sudden so called “worthlessness,” and I told folks they could send some to LBK’s Bitcoin donation wallet. Unfortunately, no one took me up on the offer.
Now I want to be clear. Although the price has shot back up and is only down slightly since the FBI raid (see chart below), I wasn’t making a near-term call on the price direction. I was merely saying that those claiming “Bitcoin is over” as a result of the Silk Road shutdown are clearly quite ignorant on the subject, and were just spouting ill-informed nonsense.
As far as price, there may still be dangers ahead. We know that the FBI already has taken 27,365 BTC from user accounts, and in the event they can get their hands on the $80 million in BTC commissions earned by Mr. Ulbricht, this could represent 5% of all BTC outstanding. Should the feds get their hands on all of these, they could certainly cause intentional, large sell-offs in the market should they desire. While I think there will be plenty of buyers on such a move lower (as we saw on Wednesday’s plunge), it is something to be aware of.
Personally, the biggest surprise in the entire Silk Road raid saga to me was the fact that the guy running it was doing so from within the U.S. I had always assumed he was located outside of this Banana Republic for the obvious reasons of government thuggery and insane incarceration rates for non-violent crimes, particularly drug crimes.
Looking ahead, if the U.S. moves to demonize BTC, or make transactions in it more difficult, Bitcoin businesses will simply all move abroad and other countries like Germany, which is already taking a leading role, will dominate. It could be potentially the largest loss of future business and entrepreneurship in U.S. history, merely because a tiny faction of corrupt financial oligarchs want to protect their money monopoly turf.
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