Bitcoin, the online virtual currency, has long been associated with the dark side of the web. The anonymity it provides has made it a favourite haunt of drug dealers and anyone else looking to sell illicit goods or services.

But even more alarming examples of underworld exploitation of Bitcoin have started to emerge, among them claims made anonymously to a writer for Forbes magazine this week that he is the mastermind behind a website called Assassination Market, which purports to encourage individuals to pay into crowd-sourced funds with Bitcoins that in turn can be used to reward those who murder top government officials.

The idea – assuming it is not a scam merely to dupe gullible followers out of increasingly valuable Bitcoins – is as simple as it is grotesque. The larger the funds grow, the greater the payment to those who successfully rub out federal officials whose actions appear most heinous to the site’s users. To receive their bounty, shooters must prove they are behind a successful hit.

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So far those allegedly targeted on the site, which runs on the encrypted Tor network which guarantees anonymity, include Federal Reserve chairman Ben Bernanke, President Barack Obama and NSA director Keith Alexander. The largest bounty on offer is for Mr Bernanke’s head – 124.14 Bitcoins, roughly $75,000 (£46,500) or more if the value of the currency keeps rising.

Contacted by Forbes writer Andy Greenberg, the creator of Assassination Market identified himself as Kuwabatake Sanjuro and said the purpose was to destroy “all governments, everywhere”. He said he conceived of the site after reading news reports of the NSA’s spying operations, leaked by Edward Snowden.

“Thanks to this system, a world without wars, dragnet… surveillance, nuclear weapons, armies, repression, money manipulation, and limits to trade is firmly within our grasp for but a few Bitcoins per person. I also believe that as soon as a few politicians get offed and they realise they’ve lost the war on privacy, the killings can stop and we can transition to a phase of peace, privacy and laissez-faire.”

There are about 12 million Bitcoins in circulation as of now – they exist not as physical units of currency but as a denomination expressed by software – and can be used for internet-based purchases of pretty much anything from books to bicycles. But for now they are not regulated by any government or central bank.

Most publicity about the darker side of Bitcoin has centred on the October arrest of Ross William Ulbricht, 29, also known online as “Dread Pirate Roberts”, who is charged with running a deeply encrypted online site called “Silk Road” that allegedly served primarily as a kind of Amazon for drug dealers and their clients. The FBI also believes soliciting hit men to commit murder may also have been part of its remit.

The criminal complaint against Ulbricht said he had used his site to encourage the killing of a user he was in a dispute with. “I wouldn’t mind if he was executed,” he allegedly wrote on the site, even sharing details of the potential target.

The price of Bitcoin soared following remarks by US officials at a first formal congressional hearing on Monday into its emergence as an alternative to traditional currencies.

But any enthusiasm was tempered by exchanges on Bitcoin allowing criminals to elude the law. “Virtual currencies... most notably Bitcoin, have captured the imagination of some, struck fear among others and confused the heck out of the rest of us,” said Senator Tom Carper. He said Bitcoin is used for crimes that include “selling weapons, child pornography and even murder-for-hire services”.