Bitcoin is an online digital currency that has for long been used by libertarians, computer scientists and even criminals as was the case in Silkroad. Just 3 yrs. ago, it seemed like anyone could use this cryptocurrency to make purchases without being tracked down by law enforcers. At that time people thought the digital currency was totally anonymous and FBI didn’t have a chance of finding out who was transacting it.
However, Federal Bureau of Investigation agents and other law enforcement bodies had a rather different opinion. They found ingenious ways of seizing Bitcoin and even making arrests where possible. Ross Ulbricht, a 31-yr.-old Texan responsible for creating Silkroad was captured by cops. His Silkroad marketplace was estimated to have facilitated sale of narcotics worth $1 billion. The Silkroad creator was given a life sentence in 2015. Others criminals from various places around the world were also incarcerated for similar charges.
Though most people who use Bitcoin currency are law-abiding citizens motivated solely by privacy concerns, the anonymity it provides can also be a powerful tool for facilitating crime as was witnessed in Silkroad. Academic researchers helped create the data encryption and software systems which make Bitcoin possible, they are now helping authorities nab criminals such as those behind Silkroad.
Sarah Meiklejohn, a computer scientist at University College London, says that these experts operate in a new field incorporating aspects of economics, forensics and computer science. There aren’t many of such experts and they all know each other. She mentions when Bitcoin first emerged, law enforcers were “panicking,” with most officers thinking the technology was dangerous and making it difficult for them to perform their task.
But as arrests and convictions were slowly being made, with one example being the Silkroad case, there emerged a steady shift towards viewing cryptocurrency more as a tool for nabbing cybercrimes. FBI Assistant General Counsel, Brett Nigh, earlier said in an interview that even though Bitcoin operated in a new strange world, investigators could still follow the money without much ado.
This was evident in how the Silkroad investigations were carried out and Bitcoins seized. Investigators had collected every piece of data from Silkroad – from images and text describing Silkroad products to Bitcoin transactions on the blockchain.
Unlike standard money issued by Federal Reserve banks, cryptocurrency like Bitcoin doesn’t have any physical form or gold backing hence making it rather untraceable. This is why Silkroad managed to survive for many years before it was finally shut down. Created back in 2008 by a mysterious man named Satoshi Nakamoto, it has been labeled an “intellectual artifact” and modern frontier of economics.
Bitcoins are amounts associated with certain addresses, unique strings of letters and numbers. For instance, “1Ez69SnzzmePmZX3WpEzMKTrcBF2gpNQ55” represents almost 30,000 BTC seized from the Silkroad site. They were estimated to be worth nearly $20 million at the time. The U.S government auctioned off these Silkroad Bitcoins after seizing it.
Those Bitcoins have since been split up and changed hands several times, but there’s a consistent recording showing their every movement. Both past and present ownership is documented in a “blockchain,” this being a popular public ledger available across the internet.
The task of keeping this cryptocurrency running smoothly and preventing cheating is left to a volunteer workforce, known as Bitcoin miners. They crunch the numbers required to verify the transactions, and also apply a math calculation formula known as “proof of work” to ensure individual miners are honest.
The calculations needed to pass a Bitcoin transaction are so thorough that only specialized computers are used. However, all this effort doesn’t go unrewarded as the act of authenticating a 10-minute transaction chain earns the volunteer miner 25 new Bitcoins. This is how the cryptocurrency Bitcoin is minted.
Just like any other currency, the digital currency Bitcoin’s real-world value comes as people who use it to trade for products and services as was the case when Silkroad was still in operation. If you’re not already a miner, the only other way of acquiring Bitcoins is from somebody who owns them. Several companies have come up that sell Bitcoin at a fee, and also provide ATM machines where users can convert them into cash.