Will Silk Road Kill Bitcoin for Good?

Blog » Will Silk Road Kill Bitcoin for Good?

The world’s favorite virtual currency has been on a rollercoaster ride this year. On 1 January, one Bitcoin was worth $13. By April, they were trading for $266, before a sudden, spectacular collapse.

The virtual currency has had a history rich in peaks and troughs. Fortunately, Forbes have constructed a guide to the many and varied downturns: An Illustrated History of Bitcoin Crashes to guide you through them.

However, there is one subject that few people touch on. And that is the volume of real-world (ie, not speculative) transactions that are *cough* legally problematic, and the impact that will have on Bitcoin’s future.

Buying drugs, weapons, or other contraband are all possible with Bitcoin. The most infamous marketplace is Silk Road, an enormous drug marketplace that’s had more column inches than most legit e-commerce startups. It’s also a prime mover in the Bitcoin economy to which few sites can compare.

What would it mean for Bitcoin if Silk Road goes out of business? We explore that in this infographic…

Will Silk Road Kill Bitcoin for Good?

Bitcoin is a decentralized, open-source digital currency. It was introduced in 2009 and is the largest of any digital currency.

$1.4 Billion is the total value of Bitcoins in circulation.
$88 is the current value of Bitcoin
-56% drop in Bitcoin value

Silk Road is an online black marketplace for all sorts of items, most of which are considered illegal in many countries.

$22 million is the total amount of annual sales
$54,000 average income for a Silk Road vendor.
20% of Bitcoin exchanges to US Dollars are from Silk Road vendors.
+2100% increase in annual sales

“Silk Road is, in fact, a mainstay of the Bitcoin economy.” — Vitalik Buterin – BitcoinMagazine.com

What if Silk Road is Shutdown?

Without sites like Silk Road, Bitcoin could become more of a highly-volatile commodity and less of a currency with its values determined by speculators. Anyone using Bitcoin as a currency could see huge deflation as Bitcoin values increase.