Silk Road collected 9.5 million bitcoin—and only 11.75 million exist

Silk Road collected 9.5 million bitcoin—and only 11.75 million exist

By Tim Fernholz @timfernholz 9 hours ago

Silk Road, the illicit online marketplace that first brought bitcoin to notoriety in 2011, was shut down today and its alleged founder was arrested. The criminal complaint revealed that the site had collected revenues of some 9.5 million bitcoin since 2011, the equivalent today of $1.2 billion in sales and $80 million in commissions for Ross Ulbricht, who allegedly ran the site under the moniker “Dread Pirate Roberts.”What’s crazy about that number is that today there are only about 11.75 million bitcoin in circulation. There were even fewer when Silk Road first began—the supply of bitcoin will steadily increase until there are 21 million in existence. That suggests a huge amount of bitcoin activity went through Silk Road, a reminder that the currency’s primary use so far (besides as a speculative investment vehicle and point of departure for futuristic payment schemes) was buying illegal things online. Users could access Silk Road through Tor, software that anonymizes online activity, and order everything from marijuana and books to LSD and oxycontin, paying in bitcoin.

Obviously, this doesn’t mean that 82% of bitcoin were used on Silk Road. Over the course of its existence, the Silk Road likely recycled its earnings back into the market in exchange for more broadly recognized—and useful—currencies. Ulbricht was arrested with just 26,000 bitcoin.

But it gives you a sense of how important Silk Road is to the bitcoin economy. The Federal Reserve currently estimates that there are $10,771 billion in circulation. For a single company to dominate the US dollar the way Silk Road does bitcoin, it would need to have earned $8,745 billion in revenue over the two and half year period, or $3,498 billion a year. To put that in perspective, the number one company in the Fortune Global 500, Dutch Shell, earned $481.7 billion last year, less than 5% of what it would take to equal Silk Road’s position.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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