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.

Show Hide image

Why a group of Brunel students walked out on Katie Hopkins instead of no-platforming her

"We silently walked out because Ms Hopkins has the right to speak, but we also have the right to express our discontent."

Earlier this week, columnist and all-round provocateur Katie Hopkins turned up to Brunel University to join a panel in debating whether the welfare state has a place in 2015. No prizes for guessing her stance on this particular issue

But as Hopkins began her speech, something odd happened. Around 50 students stood up and left, leaving the hall half-empty.

Here's the video:

As soon as Hopkins begins speaking, some students stand up with their backs to the panelists. Then, they all leave - as the nonplussed chair asks them to "please return to their seats". 

The walk-out was, in fact, pre-planned by the student union as an act of protest against Hopkins' appearance at an event held as part of the University's 50th anniversary celebrations. 

Ali Milani, the Brunel Student Union president, says he and other students knew the walk-out would "start a conversation" around no-platforming on campuses, but as he points out, "What is often overlooked (either purposely or as a result of the fanfare) is that the conversation at no point has been about banning Ms Hopkins from speaking on campus, or denying her right to speak."

Instead, students who found her appearance at the welfare debate "incongruous" and "distasteful" simply left the room: "We silently walked out because Ms Hopkins has the right to speak, but we also have the right to express our discontent."

Milani praised the student body for treading the line between freedom of speech and expressing their distaste at Brunel's decision: 

"They have respectfully voiced their antagonism at the decision of their institution, but also . . . proven their commitment to free of speech and freedom of expression."

The protest was an apt way to dodge the issues of free speech surrounding no-platforming, while rejecting Hopkins' views. A walk-out symbolises the fact that we aren't obliged to listen to people like Hopkins. She is free to speak, of course, albeit to empty chairs. 

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.