Walt Lamar: Indian Country can't ignore the rise of the bitcoin

The virtual currency, bitcoin, recently gained attention as its trading value topped $140 US per coin on April 2. Most of the hoopla surrounding the news about bitcoin skirted the critical fact that the $1.5 billion trading system is mostly funding illegal transactions, particularly drugs and pornography. Increasingly, bitcoins are also used to participate in the legally gray area of Internet gaming. Bitcoin-only casinos handled about $2 million in bets in 2012, which is a small slice of the online gaming pie, but are also seeing month-to-month growth rates of nearly 900 percent.

The bitcoin, which relies on “mined” numerical strings to support its currency and to track unique transactions, is designed to be anonymous. Many retailers who accept bitcoins add additional layers of privacy protection. One of the most transparent is Mt. Gox, the Tokyo-based currency exchange site that handles 80 percent of bitcoin-to-dollar transactions. Mt. Gox claims to collect enough data that a determined computer forensics specialist could identify individuals who make transactions.

On the other end of the spectrum is Silk Road, which provides nearly impenetrable layers of security to protect the identities of the shoppers and the sellers on this “black market Amazon.” Like Amazon, shoppers can browse categories of products offered by various sellers, who post chatty descriptions and product photos, then receive feedback from customers. Unlike Amazon, the categories include not only books, CDs and electronics, but also drugs, pornography and weapons, all sold for bitcoins.