Glossary
Silk road
Silk Road was the name of a decentralized market created by programming scientist Ross Ulbricht in early 2011. The idea was to allow the trading of any product anonymously. Payments were made using bitcoin, and items could be sent to P.O. boxes anywhere in the world. In a short time, Silk Road became a massive market for illegal products, especially drugs.
For better or worse, Silk Road helped popularize the use of bitcoins and it was its first actual use case. Until that moment, bitcoins were used by hobbyists, and most of them couldn’t find any practical use for the currency. Few companies accepted bitcoins as a payment method; generally, only companies owned by Bitcoin evangelists, such as Roger Ver, who is known as Bitcoin Jesus.
With the appearance of the Silk Road, the demand for bitcoins increased considerably, which led to a significant increase in their price. In early 2011, the value of 1 bitcoin was approximately 1 dollar. 2 years later, when Ross Ulbricht was captured and arrested, bitcoin was worth around 100 dollars. It’s impossible to calculate Silk Road’s actual influence on the bitcoin price, but it was significant. When it was closed by the authorities, the currency’s value plummeted but recovered quickly: bitcoin was already well-established.
The use of bitcoins to purchase drugs was the cause of great debate. Many rulers believed this would be their only use case, so the coin should be banned. Regulations began to appear. Shortly after that, in early 2014, Charlie Shrem, CEO of the largest bitcoin exchange at the time, BitInstant, was arrested on suspicion of facilitating the purchase of drugs and illegal products using bitcoins.
As bitcoins can be used almost anonymously, it is challenging to predict how they will be used. At the time, the simple fact that a consumer bought some bitcoins on an exchange and used them illegally could put the owner of the company that sold the bitcoins behind bars. The lack of regulation and the possibility of the currency being used illegally have led authorities to treat Bitcoin with suspicion.
Even nowadays, cryptocurrencies do not have their own regulation in many countries. The mere issuance of tokens can become a risky business that is suitable for scams and legal processes. Despite all the difficulties, 14 years after the appearance of Bitcoin, cryptocurrencies have become ubiquitous worldwide, and their benefits seem much more significant than possible harm.
