#AceFinanceNews – Australia – March 22 – The authorities are considering extradition to the US of an alleged moderator of Silk Road, a website that used to connect those who wanted to buy illegal goods, such as drugs, and pay for them with digital currency, like Bitcoin.
Last December, three men involved with the Silk Road website were charged with conspiracy to engage in drug trafficking, hacking and money laundering.
Extradition of one of them, native Australian Peter Phillip Nash, 41, from Queensland state, has been demanded by the US.
The bitcoin logo (Photo credit: Wikipedia)
The Bitcoin system, governed by complex mathematical algorithms, has been at the centre of recent debate as financial leaders grapple with how to regulate so-called virtual currencies.
As the total number of Bitcoins approaches a hard mathematical limit of 21 million, the coins become more computationally intensive – and costly – to calculate, a process known as mining.
“In order to equate Bitcoins with securities, it is essential to first understand what value a financial instrument represents,” said Andrei Shamrayev, deputy director of the central bank’s national payment system.
“[A Bitcoin’s value] is only fixed by the amount of time spent on its ‘mining.’”
The bank said last month that Bitcoin users – who are often also issuers of the currency through mining – could face jail time under laws restricting anonymous financial transactions intended to combat money laundering and the funding of terrorism.
Timur Batyrev, director of the bank’s national payments system, likened the currency Monday to a pyramid scheme fueled by speculative transactions.
“There will be people who are prepared to influence the exchange rate of Bitcoins in order to maximize profits.
Chiefly these are people who own a lot of Bitcoins, but there will also be people who will pay for this profit,” Batyrev said.
Designed by an unidentified computer scientist operating on-line under a pseudonym, Bitcoins have exploded as a currency for illicit transactions and were the primary means of payment on the narcotics-focused Silk Road on-line marketplace raided by the FBI in October.