Bitcoin: goes mainstream, breaks $31, bounces off $10

Bitcoin trading range - 6/6 to 6/12 2011

Its been a big week for Bitcoin,  everyone’s favorite p2p digital cryptocurrency.  There was a spot on CBS a post on Smart Money and two Senators pushed for “something to be done!” Most all of the recent buzz can be linked to the Gawker article about Silk Road, an underground digital market place that sells drugs.  But in this case the buzz was big enough to attract some interest from the main stream media, albeit from the weird offshoot of needing to fill a 24 hour news cycle.

All of the attention sent the trading range for Bitcoins moving up past $31 on the 10th and 11th, down to just under $11 today and then back to around 20.  I guess this one is going to jump around between hype and bubble for a while.

The CBS appearance was via a video interview with Bitcoin project developer and founder of Bitcoin watch, Jeff Garzik.

“Garzik stopped by to talk about how the currency is being used on Silk Road, the online black market for any drug imaginable, and how he is working with the government to turn Bitcoin into a universal online currency.” 

Um, ok. And great CBS doesn’t have an embedable version and has prevented embedding on the version it put on Youtube.  Why put it on Youtube and turn off embedding?

  • “Is this the future of money?” 6m 38s
  • “We are working with the government” 7m18s

The Smart Money posts, “The Bitcoin Triples Again,”  covers some of the potential risks:

“It’s not clear that U.S. law enforcement agencies could regulate Bitcoins if they wanted to. The currency runs on software similar to the file-sharing software used to download music and movies, technology the entertainment industry has been trying unsuccessfully to quash for years. There’s no headquarters, main server or central bank to visit, just a network of thousands of users. It’s also not clear whether U.S. regulators would have jurisdiction over a global, virtual currency. Last week, a spokesman for the F.B.I. said he was unaware of Bitcoins and would check into the Bureau’s position on them. Subsequent calls for comment have not been returned.”

And just in time to show a massive misunderstanding of technology and how the tubes works, a few US Senators rallied to shut down the “Silk Road network,” and had this to say about Bitcoins:

“The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days.”

As was pointed out in a commenter to one of my first Bitcoin posts, Bitcoins are traceable: “…[p]urportedly untraceable” is incorrect. Every transaction and bitcoin is accounted for. Check out blockexplorer.com and learn a little about it. There is a level of psuedo-anonymity, but bitcoins are not completely anonymous.”

Taking the Senator at face value, Business Insider blog The Daily Reckoning had this to say:

“Now that the pair have their straw man, we can be sure it will be used as a pretense to attack free-market currencies themselves. Stay tuned as the story unfolds on that front…

For now, we wonder what users of bitcoin are to do now that the self-appointed invigilators of free market activity are on their case? Well, for the past few weeks at least, they’ve been rejoicing. The currency has almost quadrupled in value since the Silk Road issue came to the fore.

Bitcoin enthusiasts may wish, therefore, to thank Senators Schumer and Manchin for, without their commitment to proffering illogical, largely ignorant remarks in the nation’s mainstream press, bitcoin might have taken a while longer to reach the critical mass on which it must now surely be verging. “Bravo, Senators,” we can almost here the cyber underground chorus, “Thanks for the free publicity!

About Daniel Davenport

Daniel is a digital media executive with internet and broadcast experience. Daniel is currently the executive strategy director at THINK Interactive.

Trackbacks/Pingbacks

  1. Chad Pankewitz: Ruxum, Bitcoin and Namecoin | thinkd2c - July 19, 2011

    […] issues.  The main trading platform MT Gox went down, people got accounts hacked and the general instability of Bitcoin valuations cause many people to wonder if it was done before it really got […]

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