It was a libertarian’s dream gone wild: a marketplace in which just about anything can be bought, by anyone, at any time without the worries of being overseen by the authorities. It was a secret corner in the deepest recesses of the Internet, inaccessible by conventional means, considered an unsubstantiated rumor prior to Gawker breaking the story and as ridiculous and outrageous to the imagination of the common layperson as the notion of the service’s founder calling himself “the Dread Pirate Roberts” — the pseudonym of Westley the stable boy in the 1987 comedy “The Princess Bride.”

Yet, the Silk Road Anonymous Marketplace was a very real thing. The Bitcoin-enabled private Darknet store — which was only accessible through a Tor browser, which can access .onion -level sites — was a principal site for drugs, illicit paraphernalia and pornography purchases. Users from around the world could conveniently buy and sell under the assumption of anonymity, making Silk Road the underworld’s equivalent of eBay — with an estimated $1.2 billion in sales over three years.

On Oct. 2, the FBI seized Silk Road and arrested “the Dread Pirate Roberts,” San Francisco-based engineer and self-described “investment adviser and entrepreneur” Ross William Ulbricht, 28. Ulbricht was arrested Tuesday afternoon at the San Francisco Public Library’s Glen Park branch on charges of engaging in money laundering, narcotics trafficking conspiracy and computer hacking. The U.S. Department of Justice seized Bitcoins with an equivalent value of $3.5 million to $4 million.

“This is supposed to be some invisible black market bazaar. We made it visible,” said an FBI spokesperson to Forbes who asked not to be named. “When you interviewed [Ulbricht], he said he would never be arrested. But no one is beyond the reach of the FBI. We will find you.”

On being lucky

Despite the bravado, there is evidence to suggest that the federal government was lucky. A seized package that was intercepted from the U.S. Postal Service by Customs and Border Patrol showed nine different counterfeit IDs — all with different identification information but with Ulbricht’s photograph, per Ulbricht’s criminal indictment. The package’s address was 15th Street in San Francisco, where the FBI found Ulbricht. The arrest was made based on facial identification from the forged IDs.

Ulbricht also fumbled by mentioning his time zone on Silk Road posts, filing posts on the Bitcoin Talk forum using a handle tied to his personal email account and not striking the IP address of his virtual private network server from Silk Road code.

There is no indication to suggest that Ulbricht engaged in Silk Road — which he purchased from the previous “Dread Pirate Roberts” in 2011 — just for profit. A political activist at Penn State, Ulbricht embraced libertarianism and the political philosophy of former Rep. Ron Paul (R-Texas), and it is generally felt that Ulbricht ran Silk Road in direct defiance in what he saw as a market too heavily interfered with by the government.

“It already is transforming society,” Ulbricht — as “the Dread Pirate Roberts” — told Forbes in an exclusive interview in June in regard to Bitcoins and Silk Road’s effect on commerce. He continued:

“We’ve won the State’s War on Drugs because of Bitcoin, and this is just the beginning. It’s really part of a larger transformation, driven by peer-to-peer technology and the internet as a whole. The people now can control the flow and distribution on information, and the flow of money. Sector by sector the state is being cut out of the equation and power is being returned to the individual. I don’t think anyone can comprehend the magnitude of the revolution we are in. I think it will be looked back on as an epoch in the evolution of mankind. “I am proud of what I do. I can’t think of one drug that doesn’t have at least some harmful effects. That’s really not the point though. People own themselves, they own their bodies, and it is their right to put into their bodies whatever they choose. It’s not my place, or the government’s, or anyone else’s to say what a person does with their own body. Giving people that freedom of choice and the dignity of self-ownership is a good thing. “If someone uses drugs, then goes on to hurt other people, then of course they should be held accountable for their actions, whether they were using drugs or not, but to paint all drug users as ‘harmful to society’ and try to throw them all in cages is despicable and does much more harm to communities and families than drugs ever could … There are many dangers facing children, the least of which include obtaining Bitcoins, configuring their computer to access Tor and Silk Road, navigating the site to make a purchase, and getting the package delivered past their parents. It is the responsibility of parents and those they trust to educate their children about drugs and everything else they will have to make decisions about in their life. Again, not my place, or the government’s, or anyone else’s.”

The government is currently seeking additional charges on Ulbricht, including the allegation that Ulbricht paid hitmen to kill two individuals — one which attempted to blackmail Ulbricht after hacking a Silk Road service provider and discovering the identities of thousands of Silk Road buyers, and the other which was a Silk Road employee that Ulbricht feared would turn state informant.

“DPR’s communications reveal that he has taken it upon himself to police threats to the site from scammers and extortionists,” read an affidavit from FBI agent Christopher Tarbell, “and has demonstrated a willingness to use violence in doing so.” In a sting, Ulbricht allegedly agreed to wire $40,000 to an undercover agent posing as a hitman before the hit and $40,000 after the hit.

“I’d like him beat up, then forced to send the bitcoins he stole back. like sit him down at his computer and make him do it,” read a message from Ulbricht’s account in regards to an employee he alleged scammed Bitcoins from the site users. Prosecutors allege that Ulbricht contacted the agent later, changing the torture order to a kill order — fearing that if the employee survives, he can turn informant. Ulbricht told the agent “he had never killed a man or had one killed before, but it is the right move in this case.”

A month after paying the agent, the agent sent staged photos of the victim, showing him beaten. The agent later lied, saying the target was dead. Ulbricht was, at first, disturbed and conflicted by what happened, but later said, “I don’t think I’ve done the wrong thing” and that he “would call on [the agent] again at some point, though I hope I don’t have to.”

“I’m pissed that I had to kill him, but what’s done is done,” the complaint alleged Ulbricht wrote, a week before sending the second $40,000 installment via a service called Technocash. “I just can’t believe he was so stupid … I just wish people had some integrity.”

A continuing industry

While the tale of “the Dread Pirate Roberts” most likely means the end for Silk Road and for Ulbricht, it should be noted that Silk Road was not the only player in this particular industry. Take, for instance, Black Market Reloaded. One can buy anything one can buy from the Silk Road from Bitcoins-enabled BMR; but unlike Silk Road, BMR sells personal weaponry — which Silk Road refused to do after a series of high profile shootings. Atlantis, a “start-up” online black market, tends to take a more consumer-friendly approach — including an animated announcement of the store’s opening. Users of Silk Road who “jumped ship” ended up at the Sheep Marketplace, the newest of the online black markets.

A first impression shows that these sites, despite facilitating the sale of illicit materials, are not necessarily hiding. In fact, that are advertising openly and publicly. The Sheep Marketplace, for example, despite being hidden on the .onion layer like the other marketplaces, has a .com layer site that openly shows what is currently being sold on the Darknet site — including one gram of cocaine for $145.20, two grams of “Yoda OG Kush” marijuana for $27.50 and 100 milliliters of ether for $160.75.

“Silk Road will almost certainly be replaced by a copycat-like site, as has been the case in carder markets where people trade fraudulent credit card information. Those kinds of places have been shut down in the past and very, very quickly replaced by others,” said Rik Ferguson, vice-president of security research at Trend Micro, talking to the Guardian.

“The are a multitude of online marketplaces for the trade of illegal goods, not all hidden within what we would call the dark web, but on the regular open internet. Forum-based shop fronts exist, where it’s not just one individual in charge of buying and selling, but it’s a co-operative that’s based on trust. They predated Silk Road by a very long way, and continue to thrive to this day,” said Ferguson. It’s a very established underground economy – where there is a void, there’s a niche.”

The Silk Road raid does not represent a threat to security of either the Darknet or the Tor network. In an experiment conducted by Forbes, a user’s movements using Bitcoins can be detected and traced back to the user, but only because it is difficult for the casual user to move undetected on the Internet in the first place. On top of that, an experienced hacker can effectively determine a Bitcoin’s “domain of use” by looking at the Bitcoin’s “blockchain” — an internal anti-fraud device that records the Bitcoin’s existence through a payment network.

The Bitcoin question

It is reasonable to speculate that despite congressional outrage at the existence of Silk Road, the government’s chief complaint about the site is not so much the site itself, but the site’s use of Bitcoins. Bitcoins — a mathematically-intricate unique computer hashcode that represents a stored monetary value at a Bitcoin exchange — are a virtual currency, separate from any central authority. As the currency has no physical footprint, it cannot be taxed, controlled, cancelled or regulated. There is no way to connect — without actually analyzing the Bitcoin itself — a Bitcoin to an actual person or organization, permitting Bitcoins to be a currency carrier outside of government control.

High-profile Bitcoin-related arrests — such as the May 2013 seizure of Liberty Reserve, which allegedly laundered more than $6 billion for some of the largest criminal organizations in the world — have raised the specter of virtual currency being a platform for money laundering. This coupled with growing privacy concerns, including the revelation of the possibility of reading the “blockchain,” unanswered questions such as how exactly the Justice Department was able to seize non-physical currency without the user’s keys and the increasing instability in Bitcoins’ values have raised questions of the future of the Bitcoin.

On news of the seizure of Silk Road, the value of the Bitcoin bottomed out — from a high in February of over $200 per Bitcoin to less than $110 today. Bitcoin exchange Mt. Gox had to cease all Bitcoin-to-U.S.-Dollar conversions Wednesday to prevent the Bitcoin from becoming undervalued.

As it stands now, the Bitcoin’s destiny may be determined in the interplay of those who see it as a protest tool against perceived violations in the market and those who see it as a dangerous fad that is past its time.

In subsequent articles, the future viability of the Bitcoin will be examined, including the federal stance against the currency and the future legitimacy of the Bitcoins as currency.