Bitcoin may be let loose now Silk Road has been shut down

Now that Silk Road has closed without any discernible damage to Bitcoin's value, maybe we can accept it's here to stay.

You can't kill Bitcoin. It will not die. The Silk Road shutdown is the second event to challenge its stability and it’s come through with barely a scratch. And, despite the libertarian beliefs of many of its advocates, in part that’s due to Bitcoin going legit in the eyes of the law.

To recap, Silk Road was an online marketplace where users could buy and sell (almost) anything. Mostly that meant drugs, and in the criminal complaint filed by the FBI against its alleged owner/operator Ross Ulbricht it lists 1,229,465 transactions between 6 February and 23 July 2013 - or 7,362 transactions a day - all of which were conducted using Bitcoin.

Indeed, up until this year the story of Bitcoin and the story of Silk Road were essentially the same. The unstable bubble that grew over the first three months of 2013 to burst in April was driven at least partly by media commentary about Bitcoin being a bubble, and it had to be a bubble because there's no reason to use Bitcoin for anything other than gambling or drugs.

Except, Bitcoin recovered relatively quickly - and its price has remained stable right up until the FBI arrested Ulbricht in San Francisco. People no longer bother keeping lists of businesses that accept Bitcoin up to date because there are just too many, and it began to gain something quite crucial to its long-term survival - legitimacy.

Here's a graph that shows what I mean:

That's the trading chart for the past month on Mt Gox, the world’s largest Bitcoin trading exchange. That big spike is the market reacting to the news of Ulbricht’s arrest, and while the price drops for maybe a day, it’s soon back to the level it was before the FBI’s announcement. That’s not panic selling by Bitcoin users, worried that their assets will soon be worthless.

Now look at this:

Perhaps this is more tenuous as evidence, but that’s the Google Trends data for mentions of Bitcoin versus mentions of Silk Road. They both jump as the arrest is reported around the world, but Bitcoin by not as much. It's as if Bitcoin isn't as central to the story of Silk Road as it once was. The irony here, for a currency that sidesteps government authority, is that governments may have helped in this.

The stereotype of the Bitcoin advocate is someone who’s a libertarian, an Ayn Rand fan, a minarchist who feels that a return to the gold standard would solve most of the world’s economic problems. Bitcoin - the ever-deflating, decentralised, uncontrollable currency - is meant to be the 21st century gold standard. However, despite Bitcoin’s clear ability to be used to circumvent the law, many of its functions can be easily absorbed by the rest of the legitimate economy.

Bitcoin’s central blockchain records every transaction, and if a user is public about owning a wallet there’s no way they can send or receive funds without a note being generated. That’s great for tax agencies. “Tumblers” - which split up transactions into tiny amounts and mix them with other payments to make them so hard to trace even the NSA can’t manage it - can be used for laundering cash, but they’re not built into the infrastructure.

Several governments have given their blessings for Bitcoin. There's been a meeting at Number 10 about drawing up a regulatory framework, and the German government has recognised it as "private money". The US government has subpoenaed large exchanges to get an idea of what kind of tax evasion might be happening, and those exchanges haven't really resisted. Some of them have actually started doing what most other industries do, and started sending lobbyists to Washington DC.

Brian Patrick Eha at the New Yorker asked the question "Could the Silk Road closure be good for Bitcoin?" two days after the arrest of Ulbricht, before it became clear that Bitcoin's price had, at least, been unaffected. He quotes Adam Levine, the editor-in-chief of the Let's Talk Bitcoin! podcast:

It seems inevitable that regulation will be a part of mainstream legitimacy for Bitcoin," Levine said. "The thought is, even if it changes it for the worse a little bit, it will gain much more in legitimacy.

That’s going to worry a lot of the people who built Bitcoin up to where it is now, but could be the price it pays for actually fulfilling some of its hyped potential.

A Bitcoin keychain. Photo: BTC Keychain/Flickr

Ian Steadman is a staff science and technology writer at the New Statesman. He is on Twitter as @iansteadman.

Getty
Show Hide image

"There's nowhere to turn": What it's like to be gay and homeless

Many LGBTQ homeless people cannot ask their families for help. 

Ascania is a 41 mother with a 24 year-old son, who came to the UK from Jamaica in 2002. “I was raped at gunpoint in the area I lived in Jamaica," she says. "They’d found out in the community that I’m a lesbian. They hit the back of my head with a gun- sometimes it is still painful. I had to move from that area, then I went to another part of the island. I lived there for 18 months. People in these communities start to watch you – to see if there are men coming to see you. They begin to be suspicious. Luckily I had a chance to come to the UK before something else happened."

A friend, who was also gay, paid for a ticket for her to reach the UK. She started a relationship, and moved in with her girlfriend, but the girlfriend turned abusive. "It was a nightmare," she remembers. "It ended then I started to sofa surf. Sometimes I would go into pubs meet different girls, go back with them, and sleep over just so I had somewhere to spend the night."

Eventually, Ascania received help from St Mungo's, a homelessness charity, after the LGBT charity Stonewall put her in touch. The charity helped her get food from a food bank, and find somewhere to stay. 

While all homeless people can struggle with physical and mental challenges, lesbian, gay, bisexual, and transgender people face extra stigma, discrimination, and rejection by their families.

“That’s why I think LGBTQ projects are important," says Ascania. "From being on the gay scene, I meet all these people and they don’t know about the support available. They’re out there having a really rough time. They don’t know where to turn."

She feels that in shared accommodation, people like herself can be judged for their friends. 

Homeless charities point out that transgender people are particularly at physical risk due to a lack of acceptance and are sometimes turned away from shelters.

Melissa is a trans women in her early 40s. She is now living in transgender accommodation in London provided by the charity St Mungo’s and says she is successfully engaged with drug and alcohol services and rebuilding relationships with her family.

Before beginning her transition she was married with two teenage children and had been in trouble with the police. 

She says the stress of denying her true self led to self-destructive behaviour.

She said: “I was sleeping rough, in graveyards and stairwells. In 2012 I went to prison for nine months. My probation officer put me in touch with St Mungo’s and now I have a really nice place and I hope to become a project worker with the charity. I can see a path forward.”

According to Homeless Link, a national membership charity for organisations working with people who become homeless in England, the causes of homelessness include poor and unsuitable housing, insecurity in the private rented sector, transitioning/leaving accommodation or institutions such as prison, and loss of employment. These circumstances are often coupled with mental health issues, experience of trauma, relationship breakdown, and fleeing domestic violence or abuse.

Awareness of the specific needs of LGBT homeless people is starting to enter mainstream politics. Last month, LGBT Labour passed a motion at its AGM to affiliate to the Labour Campaign to End Homelessness (LCEH). The two organisations will hold a joint event at Labour's annual conference in the autumn.

Sam Stopp, a Labour councillor in Wembley, is chair of LCEH. He said party activists launched the campaign two years ago, because they wanted to do more than talk about the problem. He said: “LGBT homelessness has some specific aspects. If your parents do not support you and you are thrown out of your home that may require a different approach to help people rebuild their lives. There’s not just an economic reason but your sexuality has closed them off.”

Stopp hopes that by aligning Labour activists with homelessness charities, his organisation will be able to provide practical support to people who need it. 

Chris Wills from LGBT Labour’s National Committee, and chair of LGBT Labour North West, said: “The homelessness crisis is worsening. I live in Manchester, where every day I see more and more people sleeping rough – and that’s just the ones we know about, let alone the “hidden homeless”, who are reliant on hostels or going from one friend’s couch to another’s floor night after night.

“This year marks fifty years since the decriminalisation of homosexuality in England and Wales, and huge advances were made for LGBT equality under Labour between 1997 and 2010. Society as a whole has become more tolerant. Yet even now, coming out as LGBT to your family can still often result in you being kicked out onto the streets, or forced to flee the family home due to verbal and physical abuse.”