The Silk Road and Bitcoins: the dark side of innovation.

dark web

There is a road called life. It is known to teach us, to throw surprises at us and make us grow.  It can take us to education and provide access to crime too.

And then there is a road called the World wide web. This road too is full of learning and surprises. It has surprised us with so many technologies that have brought us together and unleashed our creativity.

And just like life, it has its dark side too. However, this dark web is not without its share or creativity, innovation and chutzpah.

The Need

There are desires that the society rightfully proscribes as they are considered to lead to a waste of human life. But these desires do exist. And wherever there is a desire, there are people who have means to fulfil that desire and an ambition to make money out of it. But while there are lots of legitimate means to fulfil the legitimate desires, dark desires have to venture into the underworld of crime.

The dark Internet

The dark internet refers to those sites that are not visible through normal browsers and cannot be searched through even Google. A number of dark sites, which pander to the victims of destructive and usually anti social desires, thrive in this rather obscure part of internet.

silk road

Enter Silk Road

Silk Road entered this world in 2011 and evolved into the Amazon of this world. The site basically functioned as an organised market place for a wide variety of hallucinogens. It was inhabited by a number of dealers who claimed to provide excellent “product” and “prompt, effective and confidential” delivery of the drugs ordered. It also sold usual product like books and apparel claimed to categorically exclude “harmful” products and services like weapons of mass destruction, child pornography etc.

Silk Road : The market place and the transactions.

Can you imagine dealing with the anonymous and often pseudonymous people in this shady market place and making payment through your credit card’s white money? It  would be full of hazards and there would be few takers. For an innovative market place there must be an innovative monetary system and an innovative currency.

Enter Bitcoin

Bitcoin is a Cryptocurrency.  Cryptocurrency means digital currency for online transactions that relies on cryptography for both creation and transaction. Its origin is attributed to a paper published by one Satoshi Nakamoto in 2009. It was implemented for the first time in 2010.

Bitcoins can be generated or purchased and managed online with the help of an App called Bitcoin wallet. The biggest perceived advantage of Bitcoin is the anonymity and the un- traceability of the person using it…i.e. both the sender and the receiver. This feature of Bitcoin made it a highly desirable currency for such dark market places as the Silk Road.

The Silk Road:  Business volumes

In around two years of operation, Silk Road and Ross Ulbricht carried out roughly 1,229,465 transactions and in this period made around $ 1.2 Billion and $79.8 Million USD through sales and commissions respectively. In terms of bitcoins this is a whopping 9.5 million bitcoins out 11.75 million bitcoins in circulation so far!

Ross

The Boss

He was known as Dead Pirate Roberts. Silk Road was his brain child and he was the boss. Of course this was his pseudonym. FBI has arrested a man named Ross William Ulbricht, who they claim is Dead Pirate Roberts.

According to wiki On October 2, 2013, Ross William Ulbricht, alleged by the FBI to be the owner of Silk Road and the person behind the pseudonym “Dread Pirate Roberts”, was arrested in San Francisco on suspicion of drug trafficking, soliciting murder, facilitating computer hacking, and money laundering. On 4 October, Ulbricht appeared in federal court in San Francisco and denied all charges, whereupon the hearing was rescheduled for the 9th of October.

The Downfall

The unscrupulous ways offer steep rise but often the downfall is steeper. In Silk Road’s case it was almost an anti climax. For a person who built his business on the pillars of cryptography and anonymity, it was rather surprising to go down in such manner. What exactly happened?

Different stories are doing rounds. Some say it started when Dead Pirate Roberts gave an interview to The Forbes magazine early this year on a secure TOR network which also hosted the Silk Road. Then some parcel was seized by the customs in July 2013 and it had a photograph of Ross Ulbricht, which matched with his photograph on his LinkedIn profile. Another story is that Ross paid $ 80,000 to hire a man to eliminate a former employee who was allegedly blackmailing him. This man turned out to be an undercover FBI agent.

My opinion

What remains to be seen is that whether this the beginning of the end for the dark internet or Silk Road is a scapegoat to save the iceberg. It all depends on how serious is FBI towards demolishing the dark internet and also on the covert equation between the two.

Thanks for your time. Hope this would serve as a primer. If you want to explore more, you may refer the following.

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3 thoughts on “The Silk Road and Bitcoins: the dark side of innovation.

  1. Hi Rupesh, thank you for the informative post. I had heard a little, but very little, regarding this information. I have learned more now thanks to the information you supplied. Every angle of everything you posted made complete logical sense. With every invention that is ever made there are going to be individual people, companies, and governments that are going to take a look at your invention to see if it is something that they can use in their fields of expertise. As you said, the internet can be used for good, or for evil. The person who thought up the concept and working intricacies of the silk road was brilliant, but now even if he has been arrested, others will see if they can do a new and improved product. Thanks again for the information.

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