News this morning that the secretive illegal marketplace known as Silk Road had been taken down by the FBI sent Bitcoin, the currency used on the site, into a bit of a dive. But it's not the first drop the volatile online-only cash has seen since its value skyrocketed earlier this year, and it probably won't be the last.
The FBI seized control of the Silk Road early Wednesday morning after months of investigation and arrested its alleged ringleader, 29-year-old San Franciscan William Ulbricht (AKA "Dread Pirate Roberts") — and in the process, took control of thousands of Bitcoins.
These anonymous, online-only Bitcoins have been the subject of much controversy and scrutiny over the last year, especially since their value jumped to over $230 each in April. But that value has hardly stood still for a week at a time, dipping as low as $75 since then.
Wednesday's events caused a minor panic among Bitcoin holders, and by midday Eastern time not only had the price being paid for Bitcoins dropped by about 20 percent (the specific numbers vary by tracker), but trading volume was up massively, meaning people were trading at higher than average rates.
However, a true crash was averted, and the currency regained some of its value, bouncing back to only about a 10 percent drop; just during the writing of this article, it has dipped and bounced again. This could have resulted from people trying to sell Bitcoins they now viewed as unsafe, or a loss of confidence in a system being undermined by the FBI.
While these fluctuations must certainly be concerning for owners of Bitcoins, they are also quite common, and not necessarily tied to such dramatic events as the seizure of one of the Web's most notorious websites. When you take a broader look at Bitcoin's value, as in this chart from another tracking site, Blockchain.info, the scale of today's drops is put into perspective:
No one, then, is relying on Bitcoin as a steady and immovable investment like a mutual fund or stock.
However, interested parties chattered in the chat window on BTC-E's site about what to do with their hoards (all spellings original):
"No matter how you look at it, because of SR large portion of us customers will simply cash out and go to the 7/11 on the corner," wrote one.
Another offered a tip for anyone jumping ship: "gox [Mt Gox, a Bitcoin exchange] has bank direct deposit faster and cheaper if your tranfering a lot."
Yet another pointed out that things could get a lot worse: "its 7 in the morning in china, if you think this plummet is over then think again."
Whatever the case, it's an interesting day for Bitcoin enthusiasts. We'll keep an eye on the situation and update this report if there are any new developments.
Devin Coldewey is a contributing writer for NBC News Digital. His personal website is coldewey.cc.