U.S. Marshalls have announced a sealed bid auction for 50,000 Bitcoins (BTC) seized from the computers belonging to Ross Ulbricht, the creator of the underground market Silk Road.
Last month, Ulbricht was found guilty of seven drug trafficking and money laundering charges in connection to his management of Silk Road. His Bitcoins will therefore go to the Department of Justice’s asset forfeiture fund, where it will await auction on March 5.
News of the auction comes at a time when some cryptocurrency enthusiasts are beginning to question whether Bitcoins are a desirable investment. This skepticism is in part motivated by Bitcoin’s drop in price over the past year. At the end of 2013, a single Bitcoin was worth $1,150; this week, its value fluctuated between 200 and 400 U.S. dollars.
Bitcoin enthusiasts are also increasingly worried about the cryptocurrency’s dubious reputation. As Tripwire recently noted in its exploration of the digital underground, Bitcoins are commonly used as a means of currency in the deep web due to each BTC transaction’s supposed anonymity. This makes Bitcoins a favorite among customers looking to purchase illicit substances, stolen credit card numbers, child pornography, and other illegal goods, common purchases which weigh against Bitcoins being accepted as a legitimate form of currency.
But even then, the cryptocurrency is not without its security concerns. Bitcoins are commonly hacked by malware capable of scanning digital currency e-wallets and emptying them of Bitcoins. In fact, two major BTC exchanges—Cavirtex and BTER—recently announced that they were compromised as a result of these types of attacks and/or other breaches of user privacy.
Combine all of this with the fact that Bitcoins are not FDIC ensured, and the cryptocurrency begins to look like a high-risk investment from a security standpoint.
However, here may be hope yet for Bitcions. Recently, the Cryptocurrency Certification Consortium (C4) unveiled a proposal that would seek to create an industry-wide security standard for Bitcoin wallets and exchanges. Whether this type of measure could help to adequately protect BTC users remains to be seen.
In the meantime, parties interested in participating in the March 5 auction can register to submit bids for Series A (10 blocks of 2,000 Bitcoins) and Series B (10 blocks of 3,000 Bitcoins)—just as long as their form of payment is cash only.
To learn more about Bitcoins, please view a short information video below: