Back in December 2014, Lawfare bought a Bitcoin. We did so with the idea that owning one might provide the impetus for some writing about the national security implications of blockchain technology. That plan never came to real fruition for a host of reasons. But it did make us a profit! We purchased the coin for just a little more than $300. We sold it just the other day for more than $2600.

Of course it could be a speculative bubble and one suspects that is part of the explanation for the increase in value. But other factors have also played a role. Bitcoin has increasingly come to be a storehouse of value, akin to gold, for those who seek security in turbulent times – and none can doubt that times are turbulent just now. Japan made the decision to monetize bitcoin and make it useable as a currency. Chinese investors have begun to see it more as a commodity. A number of consumer facing organizations have begun accepting bitcoin in payment for services, increasing its utility. All of these factors create demand for a product of which there is a limited supply – a story that tells us that prices will rise. (And also that transaction costs will rise. When we bought the coin, our transaction fee was $3; when we sold it the fee was $39).

To this one must add another factor (one that does sound somewhat in the tone of national security). Bitcoin has also become increasingly useful in Dark Web transactions. The recent flood of ransomware attacks (of which WannaCry is only the most recent and the most infamous) would have been impossible without Bitcoin as a means of anonymous payment. This too contributes to the demand for Bitcoin and, likely, the run-up in value.

It also, however, gives one pause and strikes a note of caution about the future of Bitcoin. One has the anecdotal impression that malignant uses of Bitcoin are outstripping in frequency its use for benevolent purposes. If that anecdotal suspicion is borne out factually, then the time of government’s hands-off approach to Bitcoin may soon come to an end.

One can imagine any number of responses. The most benign would be stringent regulation. More severe might be de-legalization. In extreme need, one can even imagine governments investing in the technical capability of destroying bitcoin as a currency by attacking the blockchain. If these suppositions are correct, then bitcoin may well have reached its peak value and our decision to sell will have proven prescient. Or not …. We may be missing the boat here, but for now our experiment is over.