It reads like a thriller novel. A young man finds a way to organize a big segment of the U.S. drug trade. In a matter of a few years, he’s earned tens of millions of dollars. Along the way he takes out a few murder contracts on people. Like all plain vanilla endings, police show up and shut down the entire operation preventing saving the day and lives.

However, there is a twist. It’s real. On Oct. 2, the FBI apprehended Ross Ulbricht, the digital kingpin and mastermind behind the Silk Road.
The Silk Road was a prime place for many people to buy drugs anonymously. This Silk Road was a “hidden” website located on the “deep web,” which roughly refers to a place where websites are not indexed on the Internet. Therefore, users need access to private routers.

The website, the drug users and the dealers were all able to stay hidden in this matrix of ones and zeroes. However, traditional forms of digital payment such as Paypal, credit cards and checks all come with digital paper trails.

However, the site’s users could achieve anonymity by using Bitcoin.

Bitcoin is an anonymous digital currency regulated only by the people who use it. There is no financial intermediary such as a bank or a government tracking the use or creation.

Although the original function of the Bitcoin was to be more or less a way to eliminate bureaucracy, cut down on invasion of privacy and be a true demonstration of free markets, the digital currency soon became a popularized way to buy drugs. With tens of millions of dollars being transmitted between dealers and users, it was only a matter of time before it got shut down.

But now that the Silk Road does not exist, there is less of a stigma using this digital currency and the legal marketplace accepting this currency will grow.

It is very important for something like Bitcoin to exist. For countries that may soon hold unsustainable debt, having a currency with no attachments is ideal.

Of course, there are many different kinks to be worked out. Bitcoin is a form of money in its infancy stage at best.

But when observing it with a long-range view, it’s a bit easier to see why Bitcoin could ultimately be a good alternative form of payment. Imagine a normalized currency that is uninfluenced by politics or war. A currency where there is no worry about exchange rates after buying.

And while the currency form could force the government to act more responsibly with fiscal policy, it will be several years before Bitcoin could threaten to replace any country’s currency.

But you can’t help but wonder how central banks will react when citizens use their ‘real’ currency less frequently and start using Bitcoin. Because money printers make money above the cost of producing, the government will push the use of traditional forms of currency.

Beyond that, the sky is the limit. Much like the rise in the use of credit cards and then later Paypal, there is unlimited and untapped potential for the Bitcoin market. With the opportunity to purchase anything from cupcakes to hotel stays both online and in person, there is much good that could be accomplished. The removal of the Silk Road is just one step closer to legitimizing a new rule of order aka Bitcoins. And that can only be a good thing.

Fran Walker is a senior finance and accounting major. Her column appears weekly. She can be reached at [email protected].

Published on October 14, 2013 at 1:11 am