“After buying about $500 worth of bitcoin, I spent about $300,” says Simone*, a student at a prestigious university in London. “I totally forgot about the other $200 sitting in my bitcoin wallet until it started popping up on the news. I checked how much I had, and my so-called investment had doubled, and now it’s tripled.”
The last few weeks have seen a surge in the value of the leading cryptocurrency bitcoin, taking the value of total in circulation to $280bn. A single “coin” now breaks the $17,000 mark. Despite institutional pushback from the likes of JP Morgan chief executive Jamie Dimon, who described it as “fraud”, its debut on the futures market – which allows investors to speculate on a future rise or decrease in its value – is the latest sign of its popularity.
Cryptocurrencies are decentralised financial assets, which use “consensus” power of a large user network to verify transactions, creating or “mining” those currencies without a third party. Bitcoin is the most recognisable and systemised, though many other competing currencies have sprung up, with some such as ethereum and ripple becoming better known. But while many bought into bitcoin as an investment, because they believed in its ideological underpinning or just out of curiosity, its surge in value has also created something of a windfall for another group – those who used it to buy drugs.
Simone got into bitcoin when she needed a prescription medicine her insurance couldn’t cover in the US, so turned to the so-called dark net – the part of the internet which Google cannot search and where tracking is almost non-existent. “It was going to be so expensive, so I ended up getting six months worth of drugs for about $200 total,” she says, adding that she wants more people to start using it because it was so helpful for her. She also still uses her bitcoin to buy study drugs and psychedelics.
Most of the people I spoke to were like Simone, acquiring bitcoin for purchases on the dark web due to its combination of relative ease of access and anonymity. “It was a currency of necessity for me – the reason I had it is simply because it is the only way to do those transactions,” says James*, a student in London. He has no bitcoin now, and admitted that it was strange to see it “blowing up” over social media and in the news. “The most I ever had was 2BTC, which was worth £600 at the time – it’s absurd to think about how much that’s worth now.”
“I got into bitcoin because me and my friends wanted some dance supplements for a rave that was coming up,” says Jack*, a student in Wales. “Stuff is hard to come by, and usually kind of pricey – so some friends in Loughborough and Manchester told me how to get on the deep web, so I thought I might as well give it a go.” He describes the process before adding that it was “too easy”.
Even more recent bitcoin buyers were taken in by how quick it was to get into. “It’s really easy – you can go on the website, or go to the store in Soho [known as a bitcoin ATM], like I did,” says Charles*, another student who had bought bitcoin to buy drugs and was now holding on to it because of its rise in value. “It’s anonymous and you can pay in cash – then you get an account number and password.” In October, he bought £450 and, at the time of writing this article, it had gone up to £688.76. “So I made £238, just waiting.”
Simone agrees, saying the people who got into bitcoin were either risk takers – “or people like myself, who got into bitcoin and made some cash by mistake by doing drugs”. James points out that the kind of person in possession of bitcoin ranges from tech and money-savvy dads, to drug dealers and users, and even hitmen. But people like Simone, Jack and Charles are probably like a significant number of those who own bitcoin, who invest small amounts, and then return months later to find that it’s jumped in value.
Despite publicity and excitement over what the growth of bitcoin means for international banking or the future of finance, these surges could be propelling dangerous cycles on the dark web, perhaps even creating an incentive for criminals to take their operations digital. Drug barons and other criminals who have already made the leap will have watched the fruits of their labour grow in value, assuming the didn’t immediately cash out after getting paid.
Jack Smith, at the website Mic, has highlighted a similar issue through his work on @NeoNaziWallet, a bot which tracks cryptocurrency transactions between suspected neo-Nazis who have been thrown off mainstream fundraising sites. He found that their wealth had increased rapidly thanks to the bitcoin boom. By its very nature bitcoin is hard to track, so it’s almost impossible to tell how much criminals on the dark web might have benefited.
The shady aspects of what bitcoin is often used for are not lost on those who have bought in. “Although it’s socially acceptable to have BTC all of a sudden, I found it very stressful to buy when it had illegal connotations,” says Emma*, who works for a shipping company and has seen her bitcoin increase in value from £15 to £107. And yet everyone seems to own some bitcoin, or have at least a friend who does. For some, the association with illegality isn’t really a concern. “Just because [buying drugs is] illegal doesn’t really make it worse than some of the legal things wealthy people do or have done,” Jack says.
Among both experts and those who have accidentally ended up with a rapidly appreciating investment, opinions vary on what the future holds for bitcoin.
Charles believes that the only real risk is that it will become illegal and accounts will be frozen. “They are afraid of what they don’t understand – I think 99 per cent of bitcoin buyers are under 35 or 40, and people who work in financial institutions are much older.” Others, like Emma, are anticipating a change in banking regulations and are planning to sell soon.
Despite differing predictions about how the currency will evolve, none of those whom I spoke to think it’s going away any time soon. Many sent me an update on the rising value of their investment, even if we had only spoken an hour before, seemingly aware the surge in popularity was creating a bubble. The only question is deciding on the right time to sell.
Simone is planning to sell what she has by the end of the month. “I get a kick out of making money as much as the next person. But, at the end of the day, I’m just someone who was in the right place at the right time.”
*Names have been changed