Bitcoin Values Plunge, But Recover, Following Silk Road Shutdown

Bitcoins the common currency for the online black market site

Bitcoin, world's most popular digital currency, had a roller coaster ride today after the federal government shut down the Silk Road, an online marketplace where millions of bitcoins were swapped for drugs and black market products over the past two years.

As news of the Silk Road shutdown spread, bitcoin values took a tumble, initially dropping by about 20 percent, or close to $500 million by mid-morning, Pacific time. But values soon crawled back. On the Bitstamp exchange, for example, bitcoins dropped from about $125 to $90, before climbing back to $115 at midday. On the slightly inflated Mt. Gox exchange, values went from $140 to 109, before jumping back to $128.

In addition to taking down the Silk Road, The Federal Bureau of Investigation arrested Ross William Ulbricht, 29, the San Francisco man who allegedly ran the site under the alias "Dread Pirate Roberts." He's facing drug trafficking, money laundering, and hacking charges. In in an affidavit filed in the case, the FBI specifically addressed Bitcoin, saying that although the digital currency isn't just for the black market, it can be used for nefarious purposes.