Bitcoin boom: Virtual currency hits all-time high of $309

The value of Bitcoin virtual currency has increased 20-fold in the past year and hit an all-time high of $309.68 on Mt. Gox, the world’s largest Bitcoin exchange. Growth sustainability is at risk as new 'Silk Road' makes it a target of the US government.

Bitcoin’s extraordinary rise has garnered attention from investors from Cyprus to China wanting to get in on the soaring prices. But its success on the online 'Silk Road' has made it, along with drugs, a target for the US government.

The re-launch of the illegal online drug operator Silk Road could threaten the ‘Bitcoin boom’ as the FBI continues its crack down on Bitcoins used to barter for contraband products.

On Wednesday an almost exact copy of the notorious internet marketplace Silk Road “has risen from the ashes”, the new clone site announced.

Government officials will be quick to try and nip operations of the reincarnated site in the bud; dubbed the ‘Black market reloaded’.

Bitcoin took a 15 percent nosedive in value when the US Federal Bureau of Investigation (FBI) blocked the criminal internet platform. The dollar value of the virtual currency Bitcoin slumped from about $145 per coin to $123 after the FBI shutdown the ‘Silk Road’, and a future break-up could bring further instability to the currency.

Government officials vowed to shut down the online drug trading platform as early as 2011, but the FBI didn’t bust the network until September 2013. 

So far, Bitcoin has been a high-margin and high-risk investment. Since the currency hit $123 on October 3, it has risen to about $309, nearly 3-fold. 

Prices are rising on increased investment interest, especially high-demand from China, but the volatility still has others believing it’s a big bubble, ready to pop at any moment.

In 2011, Bitcoin prices jumped from about $0.30 to $32.00, and then fell back to a low of about $2.00, the WSJ reported.

Since its inception in 2008 by a man using the alias ‘Satoshi Nakmoto’, Bitcoin has now gone mainstream; it can be used to buy coffee, pay for online dating services, and can even be retrieved from an ATM. According to Bitcoincharts, which follows the anonymous currency, there are nearly 12 million Bitcoins in circulation.

Tyler and Cameron Winklevoss, who are most famous for their early investment, and later fallout, with Facebook, seem to think it’s a worthy investment. They have an $11 million stake in Bitcoin, want to set up an exchange, and have it be traded just like stocks and commodities. They filed a request with the US Securities and Exchange Commission in July.

An estimated $1.2 billion in Bitcoin flowed through the internet marketplace for drugs and criminality. The FBI reportedly seized the equivalent of $3.6 million in Bitcoins in a raid, and has since promised to crack down and seize the remaining $80 million in Bitcoins the website’s founder, Ross Ulbrict, 29, has accumulated running the online drug platform.

Users of the new ‘Silk Road’ buy and sell cannabis, cocaine, heroin, firearms, and possibly order assassinations.