The founder of the Internet drug marketplace Silk Road has been arrested and the website seized:
According to the indictment, Silk Road was bigger than anyone had suspected: It boasted over $1.6 billion in sales from 2011-2013, which resulted in $80 million in commissions. (Researchers had previously estimated that Silk Road was doing about $22 million in total sales per year.)
Though Silk Road was a massive part of the Bitcoin marketplace, which is now fluctuating wildly, Kristin Salyer thinks the marketplace’s demise could benefit the currency:
Bitcoin no longer needs Silk Road. For one thing, there are other online marketplaces where Bitcoin could be used illegally. Perhaps more important, as Reuters reported yesterday, in the three months ended in June, Bitcoin startups raised almost $12 million from venture capital investors. Bitcoin may still be high-risk, but a customer base of legit startups and fewer drug lords probably bodes well.
Felix Salmon agrees that, if “Silk Road is now shut down and if no one else manages to enter the vacuum caused by its disappearance, then the FBI will at a stroke have managed to remove the single skeeviest aspect of bitcoin, and the main reason why people like Chuck Schumer are so suspicious of it.” However, he still thinks Bitcoin interest will eventually fade regardless:
Bitcoins are a fad, and they’re a fad which will pass, a bit like Beanie Babies. There was no one thing which caused the market in Beanie Babies to implode, it was more that people just moved on to other things. Bitcoin’s the same: newer, shinier virtual currencies will arrive, the techno-utopians will latch onto something else, and eventually the people holding bitcoins will understand that if an asset doesn’t throw off any cashflow, the only way to make money from it is to sell it at a higher price than you bought it. In other words, bitcoin is the ultimate speculative vehicle, one which you might be able to trade in and out of, but one which has no value at all as a buy-and-hold investment. Which is something to bear in mind when you read the next big Bloomberg article on bitcoins as an asset class.
The Dish 