Bitcoin, the Pirate King of the Silk Road, and the Problematic Opportunities of the Dark Web

Andy Greenberg at Forbes beat me to this story (and by "beat me," I mean he actually carved out the time to report on it instead of just occasionally thinking about it) regarding the Silk Road, a "booming" drug website. If you're running Tor, know the right people who can show you how to get there, and buy some Bitcoins, you can get pretty much any drug you want on the Silk Road, from old-fashioned, high-quality heroin to the latest, most finely tuned ecstasy analogue, and have it discreetly delivered via the US Postal Service to your doorstep.

Naturally, this drives the US government absolutely nuts. From the story:

Sponsored Port Townsend Film Festival Stream 24/7 - Watch 75 curated films with filmmaker interviews & special events. Support local arts!

All my communications with Roberts are routed exclusively through the messaging system and forums of the website he owns and manages, the Silk Road. Accessing the site requires running the anonymity software Tor, which encrypts Web traffic and triple-bounces it among thousands of computers around the world. Like a long, blindfolded ride in the back of some guerrilla leader’s van, Tor is designed to prevent me–and anyone else–from tracking the location of Silk Road’s servers or the Dread Pirate Roberts himself. “The highest levels of government are hunting me,” says Roberts. “I can’t take any chances.” If Roberts is paranoid, it’s because very powerful people really are out to get him. In the last two and a half years Silk Road has grown into the Web’s busiest bazaar for heroin, methamphetamines, crack, cocaine, LSD, ecstasy and enough strains of marijuana to put an Amsterdam coffee shop to shame. The Drug Enforcement Administration won’t comment on whether it’s investigating Silk Road but wrote in a statement that it’s aware of the site and is “very proactive in keeping abreast” of the digital underground’s “ever-evolving technological advancements.” Senator Chuck Schumer has demanded Silk Road be shut down and called it “the most brazen attempt to peddle drugs online that we have ever seen … by light-years.”

But Roberts says the Silk Road isn't just a way to get people high—it's a gateway drug (if you will) to a different way of thinking about citizenship, commerce, and an individual's relationship to government:

Roberts also has a political agenda: He sees himself not just as an enabler of street-corner pushers but also as a radical libertarian revolutionary carving out an anarchic digital space beyond the reach of the taxation and regulatory powers of the state–Julian Assange with a hypodermic needle. “We can’t stay silent forever. We have an important message, and the time is ripe for the world to hear it,” says Roberts. “What we’re doing isn’t about scoring drugs or ‘sticking it to the man.’ It’s about standing up for our rights as human beings and refusing to submit when we’ve done no wrong.”

You could say that's just good snake-oil p.r., but he has a point—a point illustrated by the recent subpoenas issued to "every important person in Bitcoin."

Things are getting serious for Bitcoin this month: a federal judge declared it real money, Bloomberg gave it an experimental ticker (XBT), and New York’s financial regulator announced an interest in regulating it. Declaring Bitcoin “a virtual Wild West for narcotraffickers and other criminals,” the New York State Department of Financial Services is stepping into the sheriff’s boots. The recipients of the subpoenas are nationwide and include everyone on the “people making real money on Bitcoin” list, such as Bitcoin exchanges and processors, “ mining equipment” maker Butterfly Labs, and major investors, such as the Winklevosses, Marc Andreessen & Ben Horowitz, and Google’s venture fund.

All of this relates to larger—and fascinating—questions about the "dark web." (Not dark as in "sinister" but dark as in "obscure.") As usual, our technology has leapt way ahead of our ability to think about how to use it.

The dark web has immense power to do good—since governments can't control or monitor it (so far), it could be an extremely virtuous tool for, say, dissidents in Iran and Russia, workers'-rights organizers in China, and anyone else fighting for basic human dignity while living under oppressive regimes.

On the other hand, it's a natural marketplace for things you aren't allowed to trade openly, such as that high-quality smack (which doesn't bother me much) as well as slaves and exploitative child pornography (which does).

Anonymity, as we've seen in the past years of increasing revelations about state and business surveillance, both in the US and in other countries, is almost like a superpower these days. So how are people actually using it?

Who are the superheroes, who are the supervillians, and what are they up to? We don't know. (But if any of you out there are using that superpower I'd love to hear from you—whether or not I'd approve of your activities. I'm not interested in judging you, I just want to learn more about you. We can, of course, make arrangements for your anonymity. My email and the newsroom phone number are easy to find.)

I don't want to get into a debate about human nature (I don't think such a thing exists), but an anthropology of what people do when they're in the dark would be extraordinarily valuable.

There's a secondary question of whether—and how—the US government can interfere with dark-web activities or currencies such as Bitcoin. Police can arrest someone in possession of heroin on US soil, but what is the legal status of a person who's just made an international trade (pinging, through the Tor network, innumerable servers across the globe) using a new form of currency?

Once the heroin gets into the US postal system and into the mailbox, there's clearly a crime. But what about during the time-lag between the transaction and its arrival? Back to the Silk Road story:

Bitcoin, which came into widespread use around the same time as Silk Road’s creation, isn’t exactly the financial-privacy panacea some believe it to be–its transactions can be traced using the same mechanisms that prevent fraud and counterfeiting within the Bitcoin economy. But unlike with dollars, euros or yen, the integrity of the nearly $1 billion worth of Bitcoins floating around the Internet is maintained by the distributed computing power of thousands of users who run the crypto-currency’s software, not by any bank or government. That means careful users never have to tie their accounts to their real-world identity... Support The Stranger More than ever, we depend on your support to help fund our coverage. Support local, independent media with a one-time or recurring donation. Thank you! “We’re talking about the potential for a monumental shift in the power structure of the world,” Roberts writes. “The people now can control the flow and distribution of 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.”

Maybe so. Or maybe that's a delusion of grandeur. Either way, it's an open question that should be followed by anyone interested in prohibition markets, how people organize themselves in the absence of a central authority, and the ever-shifting relationship between individuals and state regulatory power.

In other words, how this develops—along with the cases of Assange, Snowden, undocumented workers, and others living in the grey zones of murky relationships with nation-states—could be big.