So the big story bouncing around all week has obviously been the FBI shutting down Silk Road and hauling in the guy who was running it. Every outlet from CNN to the tech blogs I actually read has already run the "what is Silk Road and how did the feds catch him" piece about four times over, so I'm not going to redo that here. What I keep thinking about instead is the price chart.
I've been keeping half an eye on bitcoin since around the time I started this blog, back in late 2011, when it was trading for something like $3 and everyone I mentioned it to looked at me like I'd started talking about Beanie Babies again. I never bought any (still kind of annoyed about that, if I'm honest), but I've watched the price bounce around for two years now, and the assumption going into last week was pretty simple: Silk Road was one of the only places bitcoin actually got used for something besides speculation, so pull that out from under it and the price tanks. Maybe permanently.
It dropped, sure. Went from somewhere in the $120s down under $110 within a few hours of the news breaking on the 2nd. If you'd asked me that afternoon I'd have said yeah, that tracks, people are spooked, this is the start of the long slide back to irrelevance that people had been predicting since 2011.
Except it didn't slide. It bounced back inside of two days and then just kept climbing. I checked Mt. Gox last night before writing this and it's sitting north of $150, which is higher than it was trading before any of this happened. Higher than it's been basically all year, as far as I can tell from poking around the charts.
That's the part nobody predicted, and it's the part that actually matters more than the bust itself. The theory that bitcoin only had value because you could buy drugs with it was always a little too convenient, and a little too dismissive of everyone else who'd been quietly using it for remittances, or donations, or just as a hedge against whatever currency they didn't trust. Taking away the biggest illegal marketplace using it turned out to be a stress test, not an execution, and it passed.
I don't think this means bitcoin is definitely going to be a real currency in five years or whatever the enthusiasts keep insisting. I think it means the people calling it dead the moment anything bad happens to it have been wrong for two straight years running and might want to update their priors a little. There's a pretty specific kind of tech commentator who's been writing bitcoin's obituary every six months since 2011, and I'd love to see one of them explain this week away.
Unrelated tangent, because I can't write a post right now without mentioning it: GTA Online has been an absolute mess since it launched two weeks ago. My character got wiped once already, all my in-game cash gone, and half the time I can't even get into a session without the game timing out first. Rockstar built an entire online economy on top of a game that apparently couldn't handle a few hundred thousand people logging in at once, which, given how much money they clearly had for this thing, is baffling to me. I bring it up because it's the same two weeks as the Silk Road story and somehow got a fraction of the tech coverage, despite probably ruining way more people's evenings.
Anyway, watch the bitcoin price if you're into that sort of thing. I'll probably check back on it before the year's out, mostly out of morbid curiosity about whether I'm going to keep kicking myself for not buying any back when it was still basically free money nobody wanted.