Allinvain claims in subsequent posts to be an early adopter of Bitcoin. Having joined the forum on May 18, 2010, when the currency was worth only pennies, Allinvain certainly became interested in Bitcoin early on, but it's hard to say how intense the heist had actually been. The Bitcoin community remained fairly small for the first year and a half of the currency's existence, and only around the time of the sensational story on Launch. about Bitcoin-as-dangerous did the currency really acquire any real value. Look at the first spike in the currency's value, around the mid-May coverage on Launch. When Chen published his exposée on the Silk Road drug market on June 1, the graph turns into a hockey stick:
Chen commented on the impact of his Silk Road post with the headline: "Everyone Wants Bitcoins After Learning They Can Buy Drugs With Them." He takes some credit:
The Bitcoin market is notoriously volatile, and it's all but certain that there's a Bitcoin bubble. If anything, the revelations about Silk Road have delayed the popping of the bubble now that folks realize there's actually something you can do with the stuff besides buying alpaca socksand web design services. You're welcome!
The following dip represents a flurry of bad news for Bitcoin. The U.S. government, who can legally regulate Bitcoin transactions in this country, announces on June 8 that they would crackdown on Bitcoin, prompting the upside-down hockey stick. The Economist publishes their explainer on the currency, "Bits and bob," on June 13th, and the graph spikes again. The heist news appears not to have impacted the market, perhaps because despite the hyperbolic value quoted in headlines, not that much money was stolen.
But the peripheral stories are fun. One developer, Nick Carlson, interviewed Wednesday by Beta Beat explains how he performed development work for a wage in Bitcoins. Carlson knew that when he took a 12-hour job paying 60 Bitcoins--worth a $30 per hour at the time, paltry compared to his regular rate of $75 to $150--the wage would be an investment. Over time, and with enough exposure, the currency would appreciate, and it did. Those 60 Bitcoins could have netted him $2,000 at the market's peak exchange rate of 33 USD per 1 BTC. Rather than cashing out, however, Carlson bartered for a new Android phone and reinvested the rest. Carlson told Beta Beat:
If the currency is to be successful, it needs a wide and robust economy. At the moment, there aren’t many merchants accepting Bitcoin. I think that’s a reflection of the lack of software for businesses. We’re going to need to see software and services which make it easy for businesses to accept Bitcoin. Those sort of solutions have been slowly coming to market, but at a lower rate than I would like. As a developer, hopefully I can help in this area.
A few weeks ago, Beta Beat interviewed another Bitcoin believer, Bruce Wagner. Host of The Bitcoin Show, a web TV series that actually exists, Wagner compares what had previously been an experiment in virtual economics to the experiment in communications that became the internet. Despite the easy assumption that Bitcoin is a crazy bubble of hype worth nothing at all, Bitcoin could prove just as powerful as the internet itself with enough exposure and democratic support, he argues:
It’s a bubble, but it’s an unbreakable bubble, one that is just going to keep growing and growing and growing … It’s kind of like the early days of the dot-com. People heard about this thing called the Internet and they didn’t know what it was, didn’t know what to do, so they bought every [stock] that ended in a dot-com and of course they all lost their shirts. This is kind of like this, but you actually can buy a piece of it, like the Internet but you can own a piece of it.
Wagner argues his case for Bitcoin's legitimacy kind of poorly, but that utopian vision of a virtual currency sticks. Media exposure—more specifically Adrian Chen's Silk Road blog post—could be credited with creating millions of dollars worth of virtual wealth. Which is funny because that's sort of how the real wealth is often created. But Bitcoin's example media influence is so clear and linear, they should teach it in journalism schools or something. If enough people bet on it, Bitcoin could pay dividends, and with the right touches by influential forces, namely the media and the government, it would become somewhat of a standard. After all who else is betting big on a virtual, extra-national currency? Oh, that's right, Facebook is.
Correction: An earlier version of this post incorrectly misattributed the above quote from Bruce Wagner about the Bitcoin bubble to Dr. Larry White, an economics professor at George Mason University. While he has studied Bitcoin, White does not host a Bitcoin web show.
This article is from the archive of our partner The Wire.