Under-fire Bitcoin paying the price for virtual growth with Silk Road arrest
Online currency seen as easy payment system for criminals, as Silk Road arrest shows, but backers see crackdown as part of its evolution
The once-obscure bitcoin has been making news all year. There have been stories about the wild swings in the virtual currency's exchange rate, moves by financial regulators to shut down some bitcoin-related businesses, and attempts by its boosters to gain more mainstream credibility.
For the past two years, Silk Road has been the bogeyman for bitcoin critics. They pointed to the ability to buy drugs and guns on the site using bitcoin as evidence the virtual currency could enable terrorist and criminal activity.
The service gained widespread notoriety in 2011 when United States Senator Charles Schumer singled it out as the poster child for how bitcoin could potentially be used by terrorists and criminals.
"Literally, it allows buyers and users to sell illegal drugs online, including heroin, cocaine and meth, and users do sell by hiding their identities through a program that makes them virtually untraceable," Schumer said in June 2011, calling for a crackdown on the service.
"It's a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. It's more brazen than anything else by light years."
So, with the crackdown this week, it would seem like a dark day for the growing bitcoin community. But several Bitcoin observers took a more nuanced view of the Silk Road story.