Five years after the closure of the Silk Road, bitcoin has changed dramatically. No longer does society see it as an underground currency used by addicts, dealers and pornographers. Today it is the third pillar of futurism alongside Virtual Reality and Artificial Intelligence. Not only is it the digital cash that will power the online economy, but it is developing entirely new business models and economic systems. One thing that hasn’t changed from that day is that the creator of the Silk Road is in jail for the rest of his life.
In a few ways, bitcoin is still in the same place it was before the Silk Road shut down. It is still looking for its killer app that will get the masses on board. But it now has multiple avenues from where that can come from. Ideas that were previously pie-in-the-sky futurism are now either in use or just around the corner.
Rather than Bitcoin being the realm of technologically inclined criminals, it is now thought of as the realm of any business that is forward looking technologically. Like the internet in 1998, every company of note has a “blockchain” plan, even if their company has no need for one. They are still considering its possibilities and don’t want to be left behind.
The government, meanwhile, is finally taking bitcoin seriously. Five years ago, and even more so before the Silk Road’s closure, it was largely seen as a technological anomaly, destined to be shut down the same way eGold was a few years earlier. Today, while most government officials don’t understand bitcoin, they at least understand that it can’t simply be turned off. And the regulators have begun to understand that Bitcoin isn’t the big bad anonymous wolf it was hyped-up to be.
“In the last five years, we have seen blockchain tracking analysis improve tremendously, with very effective solutions in place to track the flow of cryptocurrencies on the blockchain. This is why governments and legislators are no longer as wary of cryptocurrencies as cash is far more difficult to control.” Explained David Hanson, Co-CEO of blockchain-powered gaming distribution platform Ultra in an email to CoinJournal
“Bitcoin adoption has also been steadily gaining momentum and public perception has improved drastically — where it was previously seen as an underground crypto-anarchist project, it is now viewed as a new asset class. This change in perception is very much due to a greater understanding of what the underlying technology is about, leading to the on boarding of many more new users in recent years which has transformed the face of the Bitcoin community.”
And so because of that, they have begun work on how to live with bitcoin, how to regulate it. Printing money is no longer the exclusive purview of the government and they have come to accept that. The government even took care of the seized Silk Road bitcoins, auctioning them off in lots, rather than destroying them or holding them forever as evidence.
Although, if they held them long enough, maybe we could have paid off our national debt in a few years.
Five years ago, it was exciting when a new company or bank announced a blockchain program, or invested in a blockchain company. I wrote multiple articles that excitedly welcomed the likes of Goldman Sachs, NASDAQ and UBS to the cryptocurrency world. Today, those kind of announcements are so commonplace, they hardly register. The amount of money flowing into the bitcoin space is almost unfathomable. At least $1.3 billion in venture capital was invested into space in the first five months alone according to TechCrunch.
That increased attention also exasperated problems. Contrary to popular belief, scaling didn’t suddenly become an issue in 2017. It was talked about going all the way back to Satoshi’s days. And so of course it was an issue five years ago as well. But it wasn’t until 2017 that the symptoms of full blocks started rearing its ugly head. Fees skyrocketed and the community split into two large (though one was and remains overwhelmingly larger) groups with two blockchains and two currencies. Bitcoin Cash was born last year but the seeds of discontent that led to its formation were planted long before.
Be it due to circumstance or coincidence, soon after the blocks filled and fees skyrocketed, scaling fixes started being implemented. SegWit adoption has grown significantly and the Lightning Network is now actually being used. It all but eliminates fees for its participants. Bitcoin has scaled and its developments continue.
Meanwhile, it’s no longer the criminal element that scares off reluctant businesses. According to Jason Truppi, Partner at TLDR Capital, it is the government that is giving them pause.
“We believe that most institutions are more hesitant to use bitcoin, not because of it’s past, but because of it’s unknown regulatory future and market volatility. Until the SEC and other well recognized regulatory bodies make solid rules and laws regarding the use of crypto in the number of traditional financial processes then Bitcoin will remain on the sideline for institutional investors.”
But it is also important to remember Bitcoin’s roots, and what got it to where it is today. The Silk Road gave Bitcoin its first use case, even if an illegal one. The Internet was once a place dominated by scammers and pornographers. Today, it is still used extensively by scammers and pornographers. It is just also used by virtually everyone else in the world.
Bitcoin, or at least Cryptocurrencies in general, are the same way. The criminal element will never leave it completely and that is not necessarily a bad thing. Cryptocurrencies will be used to buy illegal substances and gamble online and buy porn. That is a side effect of the increased privacy and freedom bitcoin provides. You have to take the bad aspects if you want the good. Would the internet be helped if we somehow started banning everyone who sends out a spam email? Perhaps in the short term but over the long haul we would likely find that the cure is worse than the disease.
It has been five years since they shut down the Silk Road. Which just means its been five years since they put Ross Ulbricht in a cage, eventually promising to never let him out. Today, the industry is happy to put it behind us and forget Ross.
We need to onboard mainstream users and part of that is moving past the “criminal element” but that doesn’t mean abandoning the principals of freedom and anti-authority and Bitcoin was built on and was best embodied with the Silk Road. Worse, we haven’t seen the elimination of the criminal element we have just replaced it with a new brand of criminal, an amoral one.
The new brand of criminal in bitcoin is one who preys on the weak and naive. The Josh Garzas and Mark Lyfords of the worlds. The dozens of scammy ICOs that fill up my inbox every week. Promises of Lambos and Moons. Five years ago I called San Francisco the epicenter of Bitcoin in the west and compared it to the same place in the late 60s. “Be sure to wear some flowers in your hair” became “Be sure to carry a keyboard under your arm” but just as the old preyed on the new in Haight Ashbury, they are doing the same in the cryptocurrency world, no physical relocation necessary. Just log on with cash in hand and give it up.
It has been five years since the Silk road was shut down. Five years since the death of the criminal element in bitcoin. And now five years later, despite proclamations otherwise, the new criminal element is thriving.