US gov't Silk Road auction: Sole winner of 30,000 Bitcoin revealed

US gov't Silk Road auction: Sole winner of 30,000 Bitcoin revealed

Summary: The instability of Bitcoin value is well known, but could the cryptocurrency prove valuable in shoring up emerging markets? The sole winner of the Bitcoin auction believes so.

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Credit: CNET

Venture capitalist Tim Draper has been revealed as the sole winner of the US government's Bitcoin auction, and plans to use the funds within emerging markets.

The Silicon Valley investor purchased almost 30,000 Bitcoins in the auction, the result of federal agencies exposing and closing down Silk Road, an underground marketplace which used the virtual currency to hide trader tracks. While Silk Road did offer legitimate items for sale, it is most well known for the sale of drugs, weaponry and other illegal goods.

The FBI closed the marketplace down last year, and seized 29,656 BTC in the process. The federal agency then announced the sale of the confiscated cryptocurrency; an auction which attracted 45 bidders who submitted 63 bids during the 12-hour auction on June 27.

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The Marshals Service accidentally leaked of a list of people who were interested in bidding, but Draper was not present on the list.

Therefore, it came as a surprise when the investor revealed himself as the winner of the entire stash.

Draper is working with Bitcoin exchange Vaurum to invest the Bitcoin into emerging markets — the virtual currency planned to act as a buffer while investments are made. In a blog post, Vaurum CEO Avish Bhama said Bitcoin liquidity will be provided in emerging markets, and it is hoped that the coins will be "put to good use."

Draper offered the following statement:

Bitcoin frees people from trying to operate in a modern market economy with weak currencies. 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. We want to enable people to hold and trade Bitcoin to secure themselves against weakening currencies.

Draper and Bharma hope that the scheme will boost global cryptocurrency adoption, and fledgling markets will provide the opportunity to establish stable Bitcoin economies — especially as Bitcoin is not subject to the same transaction fees or bank regulations as traditional currency, since it does not bow down to a central bank.

"It's still quite difficult to get access to Bitcoin in these developing economies — and that's exactly where it is needed the most," Bhama writes.

At the time of writing, Draper's Bitcoin hoard is worth roughly $19,560,000.

Topics: Emerging Tech, Government US

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