It's about time someone figured out how to sell and buy illegal drugs online. It's sad that the Internet is so good at sex and so bad at drugs, no?

Enter Silk Road, an eBay-style site with seller rankings that sits at an obscure URL within an anonymizing network populated by geek and political dissidents that accepts only anonymous digital currency.

Sellers feel comfortable openly trading hardcore drugs because the real identities of those involved in Silk Road transactions are utterly obscured. If the authorities wanted to ID Silk Road's users with computer forensics, they'd have nowhere to look. TOR masks a user's tracks on the site. The site urges sellers to "creatively disguise" their shipments and vacuum seal any drugs that could be detected through smell. As for transactions, Silk Road doesn't accept credit cards, PayPal , or any other form of payment that can be traced or blocked. The only money good here is Bitcoins.

As luck might have it, reason.tv released a video about Bitcoin, the digital crypto-currency just this afternoon. How handy.

And who is behind this wonderful webtastic innovation? Libertarians, of course.

Silk Road's administrator cites the anarcho-libertarian philosophy of Agorism. "The state is the primary source of violence, oppression, theft and all forms of coercion," Silk Road wrote to us. "Stop funding the state with your tax dollars and direct your productive energies into the black market." Mark, the LSD buyer, had similar views. "I'm a libertarian anarchist and I believe that anything that's not violent should not be criminalized," he said.

The weak point in the otherwise anonymous system is that sellers have to mail the drugs to a physical place. Which means buyers have to disclose where they live (or some building they frequent), since USPS doesn't deliver to "the knot in the old oak tree on the corner."

Law enforcement officials tend to be fairly slow to dig into this sort of thing, and they'd have to go after individual buyers—which is annoying and fiddly—rather than big time sellers who have more robust anonymity. Plus, fake DEA-run sellers would probably not have very good user ratings if they answer requests for LSD with SWAT teams. But those reputational mechanisms alone aren't likely to keep the feds out forever.

Bonus reading: Will Bitcoin realize the shattered dreams of PayPal?

Via SugarFree.

UPDATE: Just got this note from Jeff Garzik of the Bitcoin "core dev team":

With bitcoin, every transaction is written to a globally public log,

and the lineage of each coin is fully traceable from transaction to

transaction…. Further, if Silk Road truly permits deposits on their site, that makes

it even easier for law enforcement to locate the "hub" of

transactions. Attempting major illicit transactions with bitcoin, given existing

statistical analysis techniques deployed in the field by law

enforcement, is pretty damned dumb. 🙂

Oh well.