A single bidder obtained all of the nearly 30,000 bitcoins that once belonged to the online drugs bazaar Silk Road, according to the U.S. Marshal Service, which held an unusual auction for the virtual currency on Friday.
Under the terms of the auction, the Marshal Service divided the Silk Road booty into ten blocks and invited would-be bitcoin owners to make secret bids on one or more of them. On Tuesday, it announced that a single bidder had scooped up all ten blocks but, under the terms of the auction, did not say who the winner was.
On Wednesday morning, Reuters reported that Venture capitalist Tim Draper identified himself as the winner. Draper is a backer of Varaum, “a Palo Alto-based company that facilitates over-the-counter bitcoin trading for financial institutions and high-net-worth traders.”
Draper’s news came after several established players in the bitcoin world — including Pantera Capital, Second Market and Bitcoin Shop — earlier claimed that their bids did not succeed. Virtual currency watchers are taking this a positive sign for bitcoin, suggesting it means there is increased demand for bitcoin and that a new big player has entered the market.
Following news of the auction result, bitcoin has maintained its recent price gains and, as of Wednesday morning, is selling for around $647 on the Coinbase exchange. The currency has been on a recent rally, jumping from the $570 range it had been trading at before the auction. Here’s a screenshot of prices in the last month:
As with so many things related to bitcoin, it’s hard to say for sure what the auction really means. In theory, the Silk Road bitcoins should have sold for very close to market value since bitcoin, as its champions point out, is money and money is fungible — it’s like asking how much people would pay at auction for a $100 bill.
But as, blogger TwoBit Idiot points out, it probably is a good sign for the currency’s value that the established players do not appear to have won the auction: those players already have their own procurement channels, and their only incentive in bidding would have been to acquire bitcoins at below-market rates. (A list of those interested in the auction was released in June thanks to an email foul-up by the Marshals Service).
The currency will get an even bigger test down the road if the Marshal Service auctions off the approximately 144,000 bitcoins it seized from Silk Road owner Dread Pirate Roberts.
This story was updated at 9:13am ET to note that Draper was the winner.