The value of a single Bitcoin broke $200 once again on October 22. This is just the latest in the erratic saga of virtual currency that has drawn international attention since the takedown of online drug market, Silk Road at the beginning of the month. Bitcoin value has not been this high since April, when it spiked to about $266 per bitcoin before plummeting to $50, according to the Washington Post. These events raise serious questions about the future of virtual currency.
On Silk Road, all transactions were done in Bitcoins, making the black market site a massive source of the currency’s traffic. NBC news reported that following the takedown of the drug trafficking site on October 2, the value of Bitcoins dropped by 20%.
Following the takedown of Silk Road, some writers remained enthusiastic about the takedown’s long term effects on Bitcoin. Brian Patrick Eha of the New Yorker speculated that “with the bugaboo of Silk Road banished, Bitcoin might soon acquire a relatively clean-cut image.” Eha predicted a surge in funding for companies that would use virtual currency for an array of legitimate transactions.
Despite the optimism of some, dangers still lurk within the uncharted territory of digital currency. The Guardian reports that Bitcoin users have become a new target for hackers while an article on Wired.com warns that many people have had difficulty converting their Bitcoins into cash. And although Silk Road is gone, a number of illegal sites are already cropping up to take its place.
It’s tough to say exactly when (or if) the value of Bitcoins will stabilize. Only time will tell if digital currency is a viable, long term option for investors. In the meantime, the story of virtual currency will—if nothing else—prove something of a cliffhanger for investors and techies alik