Until last week, Silk Road was the largest black market for illicit drugs and services on the internet. The Feds were following it for years, but now they are arresting Silk Road users all over the world for dealing in drugs, weapons, prostitution and even contract murder.
What was Silk road?
Silk Road was a hidden web site that people bought and sold illicit goods on. Here is a shot of their home page, taken from Gwern’s excellent expose on Silk Road:
Silk Road existed on the deep web. The deep web is a part of the internet that can not be browsed with normal web browsers. To get there you usually have to use special software and know a thing or two about computers. The average internet user who doesn’t know what hypertext is can’t get to it.
You had to use TOR to connect to Silk Road. Tor is a peer to peer anonymizer service developed by the US Navy and open sourced for the public to use. It can be used to protect political dissidents in China and Iran, but it can also be used to protect criminals, like Silk Road users.
Dealers on Silk Road didn’t take US Dollars or Euros or Yen in exchange for their goods and services. They only took Bitcoin, which is a purely digital currency that is (supposedly) anonymous and secure.
This was all built on the philosophy of the cypherpunks. The cypherpunks are people like Julian Assange, who believe that cryptography can free us from government oppression. The person running Silk Road was Ross William Ulbricht, but online he used the name Dread Pirate Roberts.
If you really want to dig into this you can find a longer, more detailed explanation of Silk Road here.
The Honey Pot
Not many people I know were surprised when Silk Road got shut down. I’ve long suspected it was a honey pot set up by the government to entrap users. I turned out to be half right. The Dread Pirate Roberts was not actually a fed himself, but he was being watched by the feds for 2 years before the bust, and he was extremely careless. He might as well have been a fed. The feds spent 2 years gathering information on Ulbricht and his customers so that they can move in and take out as many drug dealers and users as possible.
That’s crazy, you might say. Why spend 2 years watching somebody engage in criminal activity on a massive, global scale, and not bust them? What makes me think they didn’t just find out about it a couple weeks ago and then bust him immediately?
First of all, according to some Silk Road users, Ulbricht was busted almost immediately after he set the web site up 2 years ago. They busted him and then let him go to get more customers for them to bust.
Ulbricht was careless to the point where he was acting like he almost wanted to get caught. He was using his real name and email address to talk about silk road on drug forums, linked in, twitter and Facebook. He was careless with how he obfuscated his IP address through his VPN and he used his real name to ask for help with some code on Stack Overflow. He was even giving interviews to Forbes Magazine. Finally, he hired a hit man, which is just not something you can easily do without getting busted.
Despite all of these mistakes from Ulbricht, the government didn’t simply send in the DEA to bust him. They used the FBI, the DEA, the IRS and Homeland Security’s investigative unit. This shows they were not just after a single web site operator. They were after everybody in the world who operates in the Silk Road marketplace.
People are getting arrested all over the world over this and Silk Road users are scared as hell. Customers are begging dealers to delete their information from their computers, but I highly doubt that is going to happen. Dealers know that if they get busted they can leverage their customer data into shorter sentences, or even no sentence at all, if they get a good lawyer who gets them a deal with the prosecution. The drug war profiteers are going to make a killing off of this bust.
The Future of Online Black Markets
Does this shut down black markets on the internet? Not by a long shot. Black Market Reloaded and Atlantis were Silk Road’s major competitors, and they are still around. There seems to be a lot of buzz around a new market named Sheep Marketplace. Silk Road forums are full of posts predicting that even better, more securely run alternatives will start appearing soon.
These black market web sites should really not be trusted. The entire deep web should be treated as a giant honey pot operation to catch criminals. TOR is fine for protecting you from most things, but a serious government investigation is not one of them. The way most people use bitcoins, the currency is not anonymous at all, and it isn’t really decentralized, either, since most bitcoins are exchanged and stored in central repositories like Mt GOX.
The Moral Of The Story Is…
If you have to break the law don’t be an idiot about it. Keep it offline and, you know, be sneaky. Don’t trust technology you don’t really understand to keep you out of prison.