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Silk Road kingpin Ross Ulbrichts recent conviction and life sentence was more than simply a crackdown on a massive online black market for illegal drugs. It was a nail in the coffin of the radical new cryptocurrency Bitcoin, as Bitcoin was the glue that held Silk Road together.

Or was it? How significant the rise and fall of Silk Road was for Bitcoin is a matter of some debate, as is the purpose of Bitcoin itself. Controversy, however, is nothing new for Bitcoin. In fact, it seems the story of this digital currency consists of nothing but controversy.

In fact, perhaps the greatest challenge for Bitcoin is divining the technologys true purpose. Early innovators often espoused radical Libertarian goals for revolutionizing the banking system and with it, the world economy. By disintermediating third parties, Bitcoin promised to usher in a new world order of free market commerce.

Only the Bitcoin story didnt work out that way. Bitcoin soon became a haven for criminals not just Silk Road, but any number of money launderers and other shady types who gravitated toward an anonymous, relatively safe method for conducting financial transactions, in particular across national borders.

Because of its openness, Bitcoin will continue to be used by shady actors, explains Nathaniel Popper, New York Times reporter and author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money. In some ways, the good comparison is cash. Bitcoiners love saying the main medium for illicit transactions is still probably $100 bills because it can be an anonymous form of transacting thats untraceable, and Bitcoin still has that quality as well.

In fact, just this week news came to light that an Australian company paid hackers a ransom in Bitcoin. Clearly, Bitcoin is the extortionists currency of choice, as it combines the anonymity of cash with the global convenience of traditional wire transfers.

If Bitcoins true purpose is to facilitate criminal activity, then perhaps Bitcoin itself is or should be illegal. However, the US Government for its part pointed out that Bitcoin in and of itself wasnt illegal, but clearly required regulation. Theres no way the good attributes of Bitcoin will succeed without a strict regulatory regime, points out Clay Nelson, until recently the Director of Business Development for Bitcoin startup BitPay.

Original post:
Bitcoin: In Search Of Purpose - Forbes