Bitcoin traders are sometimes accused of unfairly profiting from an opaque asset beyond the understanding of ordinary people. If that’s the case, then the U.S. government is now one of the biggest offenders. On June 27th, the U.S. Marshals Service auctioned off slightly more than twenty-nine thousand six hundred and fifty-six bitcoins—all seized from Silk Road, the online marketplace for illegal drugs and other illicit goods that was shut down by law-enforcement agencies last October. Rather than sitting on the loot indefinitely, the Marshals Service sold it to the public at the highest possible price. In doing so, the federal government formally acknowledged the commodity value of bitcoin.

Earlier in June, Canada passed a law making companies that deal in bitcoin subject to the same anti-money-laundering laws and registration requirements as the mainstream financial sector—a move seen as legitimizing bitcoin businesses. And, at the end of the month, California passed a bill that legalizes bitcoin and other alternative currencies, nullifying a provision of state law that declared the U.S. dollar the only valid currency for transactions. The Bank of Russia has changed its attitude toward bitcoin, and declared that it will no longer seek to prevent its use.

The economist Mark Thoma once wrote, “New economic thinking means reading old books.” He meant that we would do well to apply historical ideas to modern dilemmas. An old book that seems prophetic regarding bitcoin is “Denationalisation of Money,” published in 1976 by the Nobel Prize-winning economist Friedrich Hayek. Hayek advocated for multiple competing currencies, which would be independent from governments, rather than hundreds of national currencies. Over time, he wrote, “the appearance and increasing use of the new currencies would, of course, decrease the demand for the existing national ones.” The currencies left after a period of intense competition, he thought, would be more stable than those that came before.

Bitcoin is hardly in a position to replace national currencies. Even with recent price gains, the value of all bitcoins in existence is only about $8.2 billion. By contrast, there exist nearly $1.3 trillion dollars in global circulation. (If you include travelers’ checks, money kept in bank accounts, and so on, that number rises to more than $11.2 trillion.) Bitcoin isn’t a particularly stable currency, either. Its value has fluctuated wildly over the past couple of years. And while bitcoin competitors exist, none of them are nearly as popular. Yet bitcoin, with its worldwide network of users and its usefulness as a medium of exchange, does recall Hayek’s writings. Roger Dickinson, the Democratic state assemblyman who authored the California bill, said that it would be “impractical to ignore the growing use of cash alternatives.”

There is some evidence that individuals in economically troubled countries—if not governments themselves—are turning to bitcoin as a more stable investment than their own currencies. Last year, Sergio Ruestes, an Argentine filmmaker, released a brief documentary about some of his countrymen’s enthusiasm for bitcoin as an escape from the rapidly falling peso, and as a means of circumventing capital controls such as restrictions on international money transfers and monthly limits on the purchase of U.S. dollars. The Economist recently reported that Argentina is home to more bitcoin-accepting businesses than any other South American country.

As bitcoin begins to take hold in developing countries, more developed nations are seeing demand from individuals and institutions. A partial list of the Silk Road auction’s interested parties, accidentally leaked by the Marshals Service, included prominent investors, a hedge fund, and various bitcoin entrepreneurs. On June 30th, the Marshals announced that, of the forty-five bidders, who each provided a deposit of two hundred thousand dollars in order to participate in the auction, a single bidder claimed all ten lots. The winner, the venture capitalist Tim Draper, likely spent at least $17.7 million to acquire the bitcoins.

Draper is planning to use his digital wealth, in partnership with a company called Vaurum, to finance bitcoin-exchange services in the developing world. At a press conference, he praised bitcoin’s ability to “provide liquidity and confidence to markets that have been hamstrung by weak currencies.” He singled out Argentina and its out-of-control inflation. “We are all going to be so much better off because of bitcoin,” he said.

Brian Patrick Eha is writing a book about the global phenomenon of bitcoin for Penguin Random House. It will be published next year in North America and the U.K. He is a former editor at Entrepreneur.com and a freelance journalist who lives in New York.

Illustration by Grafilu.