Yesterday afternoon, I met with a key insider in the Bitcoin world. He's a major player who is going to take Bitcoin to the next level, by making the purchase of bitcoins a much easier transaction.
Early on, our conversation turned to Ross Ulbricht, the alleged operator of Silk Road, who was arrested earlier this week by the FBI. While not having specific application to the clues the FBI followed to nab Ulbricht, this insider told me that it is only dumb criminals that use bitcoins.
As I have pointed out here many times, bitcoins are not anonymous and in fact are very traceable. My insider reminded me that unless very extraordinary measures are taken, an individual's entire Bitcoin use can be traced back to the start.
He put it to me this way, "If you buy drugs on the street and you are caught, that is one single transaction law enforcement has you for. If they catch you buying drugs via Bitcoin, it is very likely law enforcement will be able to trace back every transaction you ever made with Bitcoin." Not a very bright move.