Banking Blog

Finance Blogs » Banking Blog » US auctions Silk Road bitcoin

US auctions Silk Road bitcoin

By David McMillin ·
Wednesday, July 2, 2014
Posted: 11 am ET

Bitcoin is back in the news thanks to a somewhat unlikely seller: the U.S. Marshals Service.

After cracking down on the now-defunct Silk Road online marketplace where anonymous users used bitcoin to purchase drugs, the U.S. Marshals Service auctioned nearly 30,000 bitcoin in a 12-hour sale on June 27. The alternative currency was auctioned off in chunks of 3,000 with one slightly smaller block, but one winner managed to buy the entire amount. While the U.S. Marshals Service did not disclose the name of the winner, news has surfaced that Tim Draper, co-founder of California-based investment firm Draper Fisher Jurvetson, is the lucky man. Draper plans to partner with Vaurum, a company that helps banks and brokerages deal with bitcoins.

"Bitcoin frees people from trying to operate in a modern market economy with weak currencies," Draper said in a statement. "With the help of Vaurum and this newly purchased bitcoin, we expect to be able to create new services that can provide liquidity and confidence to markets that have been hamstrung by weak currencies."

"Of course, no one is totally secure in holding their own country's currency," Draper said. "We want to enable people to hold and trade bitcoin to secure themselves against weakening currencies."

Some bitcoin enthusiasts worried that a high number of bitcoins flooding the market might carry a negative impact for the currency, the value of bitcoin has soared since the auction. According to the CoinDesk bitcoin price index, one bitcoin was worth just over $582 at the end of last week. Today, it is valued at more than $642. At the current price, Draper just acquired about $19 million worth of bitcoin. Not bad for a day's work.

Want to learn about other alternative currencies? Check out 12 cryptocurrency alternatives to bitcoin.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.