Bitcoin is a new digital currency traded over p2p connections that is essentially untraceable and not connected to any bank. This has made it a favorite of the tech-literate crowd, but two US Senators are looking to crackdown on Bitcoin after reports that it is being used to buy illegal drugs online.
Senators Charles Schumer (D, New York) and Joe Manchin (D, West Virginia) have written to Attorney General Eric Holder and the DEA asking that action be taken to crackdown on the “Silk Road”. Silk Road is an online exchange that deals in drugs and Bitcoins. Since the Bitcoin transactions are anonymous, and Silk Road is accessed through Tor, authorities have no way to track down users buying drugs.
The DEA has stated that it is, “well aware of these emerging threats and… will act accordingly.” The sticking point being that there may not be an avenue of attack. Many of the Bitcoin exchanges where the currency can be purchased are outside the US. Even if the currency were outlawed, it is possible that shell companies could spring up to handle the actual transactions. Since the Silk Road itself is accessed through Tor, it could move as often as needed to avoid being shut down.
One user on a Bitcoin discussion board recently said of these actions that the government “can't stop a peer-to-peer service." Yeah, that sounds about right.