One British user told AP he first got interested in Silk Road while he was working in China, where he used the site to order banned books. After moving to Japan, he turned to the site for an occasional high.
Drug dealers aren't the only ones cashing in on Bitcoin. The hackers behind Lulz Security, whose campaign of online havoc drew worldwide attention back in 2011, received thousands of dollars' worth of bitcoins after promising followers that the money would go toward launching attacks against the FBI.
A report apparently drawn up by the bureau and leaked to the Internet last year said that "since Bitcoin does not have a centralized authority, detecting suspicious activity, identifying users and obtaining transaction records is problematic for law enforcement."
It went on to warn that bitcoins might become "an increasingly useful tool for various illegal activities beyond the cyber realm"— including child pornography, trafficking and terrorism.
That is, if the currency survives.
Bitcoin's dramatic collapse — from peak to trough, the currency shed more than 80 percent of its value — has left many enthusiasts anxious and many skeptics saying "I told you so."
"Trading tulips in real time," is how longtime UBS stockbroker Art Cashin described Bitcoin's vertiginous rise, comparing it to the now-unfathomable craze that saw 17th-century Dutch speculators trade spectacular sums of money for a single flower bulb.
"It is rare that we get to see a bubble-like phenomenon trade tick for tick in real time," he said in a recent note to clients.
One Bitcoin supporter with a unique perspective on the boom-turned-to-bust might be Mike Caldwell, a 35-year-old software engineer based in suburban Utah. Caldwell mints physical versions of bitcoins at his residence, cranking out thousands of homemade tokens with codes protected by tamper-proof holographic seals — a retro-futuristic kind of prepaid cash.
His coins are stamped with the words "Vires in Numeris" — Latin for "Strength in Numbers."
Some may wonder whether Caldwell's coins will one day be among the few physical reminders of an expensive fad that evaporated into the ether.
When asked, Caldwell acknowledged that bitcoin might be in for a bumpy ride.
"The way I look at it is that there will be bugs and there will be minor issues from time to time," he said. But barring a complete unraveling of the currency's electronic architecture, he predicted that it would continue to grow.
"Bitcoins will either be worth nothing or worth a whole lot more than its current value," he said.
For Colas, the market strategist, the most important thing to keep in mind was that bitcoins suffer from the same weakness as any other form of money. If people increasingly believe they're not worth anything, then they're not worth anything — no matter how clever the currency's design.
"The future of bitcoin is, like all currencies, going to come down to trust," he said.
Raphael Satter can be reached at: http://raphae.li/twitter