On Oct 2 Ross Ulbricht, the founder of illicit online drug marketplace Silk Road was arrested by federal authorities for drug trafficking and reportedly trying to order a murder. After Ulbricht was arrested, the Feds tried to seize his stash of the digital currency on which his site effectively runs, bitcoins.
The Feds have encountered a bevy of problems after seizing Ulbricht’s bitcoins. It’s not just that they aren’t sure how to classify the seizure of Bitcoins. After all, are they an asset? Money? Or just worthless numbers on a screen?
But more than figuring out what bitcoins really are, the Feds have a bigger problem: they can’t even get to them in the first place. Ulbricht’s bitcoin hoard (valued at roughly $80 million), which could contain up to 5 percent of the total bitcoins in circulation, are stored in a digital “wallet” that is encrypted so well even the FBI can’t crack into it.
The deluge of coverage bitcoins have experienced since Ulbricht’s capture, and the subsequent shutting down of Silk Road, piqued our curiosity. While bitcoins certainly have found a home as currency used to facilitate illegal trades, they are also gaining mainstream attention.
The Winklevoss Twins of Facebook Inc. ($FB) fame have filed with the SEC in hopes of starting a Bitcoin ETF. In late September SecondMarket set up the Bitcoin Investment Trust, allowing traders to speculate on bitcoin in “real” money. And while the closure of Silk Road caused a panic and the loss of a third of the value of the currency, their price relative to the dollar has almost returned to pre-Silk Road bust levels, suggesting the legitimate marketplace for the currency has more life with sophisticated, legitimate speculators than previously thought.
For average investors, bitcoin raises a lot of broad questions about the nature and value of money, and the relationship between the traditional market and a cryptocurrency that lacks a central bank or backing government.
For us at Equities.com, however, the question is more simple: how the heck do you buy a bitcoin?
– See more at: http://www.equities.com/editors-desk/currencies-forex/how-does-the-average-investor-buy-a-bitcoin#sthash.ckdsjpwh.dpuf