What is the influence that the illegal drug site "Silk Road" gave to the virtual currency "Bitcoin"?

ByZach Copley

A dark site that trades illegal drugs on the net "Silk Road (Silk Road)"Was caught by the Federal Bureau of Investigation (FBI) the other day, and a person who is considered a publisher was arrested and indicted. What was being used for drug trading in this Silk Road was the virtual currency "Bitcoin (bit coin)"It turned out that the market transaction price was greatly influenced by the Silk Road.

[PDF] UlbrichtCriminalComplaint.pdf
http://thegenesisblock.com/wp-content/uploads/2013/10/UlbrichtCriminalComplaint.pdf

Analysis of Silk Road's Historical Impact on Bitcoin - The Genesis Block
http://thegenesisblock.com/analysis-silk-roads-historical-impact-bitcoin/

In early October 2013, a notorious illegal drug site "Silk Road" was closed due to a compulsory investigation of FBI and suspected Ross Ulbricht suspected as a publisher was arrested and indicted. Silk Road,Tor (Tora)In a dark site that can only be accessed by using highly anonymous software, trading and information exchange such as illegal drug sale and purchase information and murder request has been done, and the transaction of the site includes virtual currency "Bit coinIt was used.

Ulbricht's charges of numerous data documents attached to the accusation have revealed the magnitude of influence the Silk Road had on bit coins.

◆ Close relationship between bit coin market and silk road
On 30th December 2010, the market price of bit coin (Exchange rate with real currency) was 0.3 dollars (about 29 yen) per 1 BTC (bit coin), but on February 8, 2011 that 3 It will soar to double. According to documents on charges, Ulbricht suspects began posting on Silk Road forums and sites as January 27, 2011, which is exactly overlapping with the time when the bit coin price soars I will.


After that, the market price of the bit coin was going back and forth between 0.65 dollars (about 63 yen) and 0.8 dollars (about 78 yen) per BTC, but after two months TIME magazine and the New York Times By being covered in major publications, the popularity of bit coins increases at a stretch, trading prices and transaction volumes explode and increase, attracting the attention of media. further,GawkerHowever, as a result of exposing the existence of Silk Road, the bit coin price will rise bubble-wise. The market price of bit coin sharply rises to 1 BTC = 30 dollars (about 2900 yen) 100 times the beginning of the year on June 7, 2011, a close relationship of silk road and bit coin comes out to light.

US Senator Senators Charles Schumer and Joe Mantin sent a letter to Attorney General Eric Holder and asked "Shut down the Silk Road Network" on June 8, 2011 At the same time, I requested to investigate bit coins closely related to online drug purchase. As a result, the bit coin price declined by 66% after 3 days, plummeted to 1 BTC = 10 dollars (about 970 yen), and in November 2011 it plummeted to 2 dollars (about 194 yen).


In the following year's 2012, TIME magazine andWiredBy picking up the bit coin again, the bit coin heat is rekindled and its trading price keeps 1 BTC = 5 dollars (about 485 yen) steady until February. According to the document of charges, just during that time Ulbricht suspects completed the building of the Silk Road and it was a time when the company dives as a drug trafficker.

By June 2012, ASIC, the first bit coin company, will start product release, new bit coin exchanges will appear one after another, and the bit coin industry will expand dramatically. Although Gawker posted another article about Silk Road in July 2012, unlike before, the bit coin price has further risen. After that, the bit coin price moved at a high price for several months, together with the financial difficulties of Europe, combined with the unprecedented high price of 1 BTC = 260 dollars (about 25,200 yen) in April 2013, bit coin Will attract world attention more than ever.

However, just a couple of weeks with the highest value, the market is keenly aware of the strong relationship between bit coin and silk road. From April 24, 2013 to May 1, when the Silk Road was subjected to DDoS attacks, the bit coin price will fall down like a slope along with it. The declining phase of the bit coin price exactly matches the period during which the Silk Road attacked, so that the close relationship between the two coincides with the brightness.

However, the bit coin returns the value to 25% reduction before the attack after the Silk Road is attacked and dropped 35%. This indicates that the magnitude of the influence is smaller than the decline in the transaction price received by the bit coin each time negative information related to Silk Road is issued.


From the bit coin price movements on a series of reports that Ulbricht was arrested, you can see a decline in Silkroad's influence over bit coin price. When Silk Road closure was first reported, the bit coin rate dropped by 20 - 35% and then recovered to about 10 - 15% decline before news came down. This indicates that despite the fact that the publisher was arrested and closure of the Silk Road was decisive such as the FBI's seizure logo displayed on the site, the impact on the bit coin price was suppressed comparatively It can be evaluated.


◆ Bit coin Market's whereabouts
According to FBI's accusatory material, statistical material that clarifies the profit of Silk Road is included, according to which the total income of Silk Road from February 2011 to July 2013 is 9.5 million BTC It turned out that it was. Since the total market transaction volume of bit coins during that period is 225 million BTC, it is estimated that Silk Road was just 4% of the total bit coin market. It is also clear from the figures that silk road's impact on the bit coin economy has declined, and this figure is consistent with market response.

The direct factor that Ulbricht was arrested this time is said to have been merely a human error that he left a transaction record without using encryption software, and a highly anonymous dark site Since it was not decoded, it is expected that the appearance of the second and third silk road will continue in the future. However, although it seems that the risk of bit coin being used for trading at a new dark site is high, it is thought that the degree of its impact will further decline in view of the expansion of the bit coin market.

· Continued
"Silk road 2.0" appears one month after the illegal drug site "Silk road" is closed - GIGAZINE