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Silk Road - online marketplace that officials seem powerless to stop

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Silk Road: the online drug marketplace that officials seem powerless to stop

Authorities around the world know about the website, but closing it is another matter – partly because it uses Bitcoins

The Guardian

Friday 22 March 2013 16.04 GMT

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The Silk Road online marketplace, which lists more than 10,000 items, 7,000 of which are drugs

Mark Johnson* rifles through his mail as he gets home from work. Among the usual bills is a small padded envelope. Though it doesn't have his name on, it's the package he's most interested in: inside lie two grams of, he hopes, relatively pure MDMA.

Johnson has no idea who has sent him the envelope: he has never met his dealer, and never will. The delivery was facilitated through a website called Silk Road, an underground eBay-like site which has become the core marketplace for buying and selling drugs online – and despite law enforcement authorities across the world being fully aware of its operation they have, so far, been powerless to stop it.

The site has been shrouded in secrecy even since it was founded in February 2011, but research due to be formally published later this year tracked its growth during six months of last year. Over those months, sales on the site doubled, hitting $1.7m a month.

Johnson, a TV executive, is one of those contributing to those monthly takings. Describing himself as "not excited or impressed by drugs per se", but "interested" in them, he explains how he came to the Silk Road.

"I heard about it at a party, from the type of guy you only ever meet at parties," he said. "I missed the last train. I might as well go hard. His brown envelope proved to be a veritable party bag, reminiscent of Hunter S Thompson. Where had he found all this? The Silk Road."

Link to video: Bitcoin: the fastest growing currency in the world

Johnson said his view was that Silk Road was a site for connoisseurs: an easy way to track down better quality – not cheap – drugs. The site "isn't easy to use", but doesn't require particular expertise: "If you can set up a direct debit and follow a recipe for risotto then you'll work it out."

Once you're in, it works much like eBay: sellers' reputations are verified through feedback, building trust. Money is typically held in an escrow (a trusted middleman) until delivery, with missing packages qualifying for partial refunds.

In all, he concludes, the quality is more consistent, the sale is safer, and the experience better than trying to find a street dealer. Johnson even claims the site helps combat addiction.

"There are some highly addictive and dangerous substances available on Silk Road, so instant access wouldn't be advisable," he concludes. "You must undertake the purchase soberly, with plenty of occasions to confirm your intentions."

Silk Road today lists more than 10,000 items, 7,000 of which are drugs, with erotica, books and fake IDs among the rest. Notably missing are weapons of any sort (a sister site selling weapons shut due to lack of demand last year) and child pornography, both of which are banned.

Dr Nicolas Christin, who researched the site, believes Silk Road is far bigger today than it was in July 2012 when his fieldwork ended. "It's not a matter of the police locking a few guys up to end this," he said. "It is very distributed: we are looking at more than 600 sellers each month."

How has a marketplace with millions of pounds of revenue survived the long arm of the law? The answer, according to its users, lies in the way it is structured.

Silk Road is no secret to law enforcement, who know where to find it online – indeed, shortly after the site's existence was first reported in 2011, the senior US senator Chuck Schumer vowed to shut it down.

"It's a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen," he said.

The site continued uninterrupted, thanks to two technological innovations that make it all but impregnable.

The first is that Silk Road runs as a "hidden service" on a popular internet anonymising tool known as Tor. This makes identifying the physical location of the computers operating the marketplace – or anyone visiting it – all but impossible.

The legitimate uses of Tor make disrupting the service morally difficult: it is a staple of activists avoiding internet censorship or government crackdowns the world over, including in China, Iran and Syria. Indeed, a large proportion of Tor's funding comes – albeit indirectly – from the US state department's internet freedom budget.

In his paper, Christin raised the possibility that authorities might instead try to disrupt Silk Road's other protection: its use of the anonymous, stateless, encrypted online currency known as Bitcoin. But that's a task that's only getting harder.

Bitcoins are a currency controlled by no government, no company, and no group, but rather by maths: a series of complex cryptographic calculations rule how many Bitcoins are in existence and how many are traded.

Silk Road is probably the biggest use of the currency, followed by an unregulated online gambling site known as Satoshidice.

But more mainstream services are adopting the currency: the blogging platform Wordpress accepts Bitcoins, as does the social news site Reddit. WikiLeaks opened up to Bitcoin when the mainstream banking system blockaded the site.

At the currency's birth, Bitcoins were almost worthless – five cents each. Today, a single Bitcoin trades at $70 (£46) – and the total value of all the world's Bitcoins has topped $800m (£500m). On the face of it, this makes Bitcoin the fastest-growing currency in the world.

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Mihai Alisie, editor of Bitcoin Magazine, and Amir Taaki, a Bitcoin developer and activist, in a squat in London. Photograph: Linda Nylind for the Guardian

Despite the present value of what they have created, several of the key players in the currency's community can be found occupying a "political squat" in central London, mere minutes away from the financiers they intend to disrupt.

Walking through a corridor of conference rooms rearranged into makeshift lounges, Amir Taaki – a Bitcoin developer and activist, and convenor of Bitcoin conferences – rejects concerns that Bitcoins' biggest use is unethical.

"People want drugs. The drugs war is probably a failed war," he says. "I want to get rid of cartels. The way to do that is for people to buy their drugs straight from the producer. That's what's cool about things like Silk Road – you can bypass gangs."

Taaki claims freedom to purchase is freedom of speech – and illustrates his argument by raising a service which allows Bitcoins to exist purely as a passphrase in a user's head, 'spent' by typing (or saying) the key phrase.

"Can you imagine if we had restrictions of speech, or the surveillance state, 400 years ago? We wouldn't have had the Reformation, or the Enlightenment, or the scientific revolution. Those would have been stopped – and we're having other kinds of revolutions now."

For many of those involved, Bitcoins are far more than a handy way to buy drugs. Instead, they are a challenge to the orthodoxies of mainstream finance: "extortionate" fees to transfer money, real-time customer tracking of every credit card foundation, even government oversight of banks.

Bitcoins' value might be a bubble caused by people trying to cash in on soaring value, or a result of panicked savers in Cyprus and Spain looking for somewhere to move their money, or the result of people looking to buy drugs. To Mihai Alisie, editor of Bitcoin magazine, it hardly matters.

"At this point there's no penalty for politicians saying 'yeah, let's ban Bitcoin, you can buy drugs online, so let's ban it'. But if politicians would ban Bitcoin for that, it is like burning an entire village to roast a pig. It's like shutting down the internet because someone's posting pornography," he says.

"Bitcoin is definitely more than a get-rich scheme. I think it's the next big technology that will revolutionise our society. It's as big as the internet – or maybe bigger."

Interviews concluded, Taaki and Alisie climb to the roof of the office block that is their current home. Taaki walks to the edge, looks over to the clustered skyscrapers that make up the City of London, and raises his middle finger.

Miles across London, Mark Johnson slips his MDMA into his back pocket, getting ready to sample his latest delivery over the weekend.

*Names have been changed.

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I am more worried that minors can purchase drugs . im all for legislation of drugs but i do beleive

there is a appropriate age to start using them and silk road is a great concept but honestly

it makes available anything to any age . A similar site offered glocks , ar15's , and other automatic weapons

I think as the government tries to take it down the more advertising it gets. But if you are going to use

drugs I do believe you have the right to have a unadulterated product, one thing silk road offers

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http://www.afp.gov.au/media-centre/news/afp/2013/march/joint-operation-targets-drugs-sent-via-the-mail.aspx

This is a joint media release with the Australian Federal Police, Victoria Police and Australian Customs and Border Protection Service.

Australian law enforcement agencies have completed a strategic blitz on drug importations via the international mail system, arresting 20 people and seizing 18.1 kg of illicit drugs worth $8.2 million.

The joint Australian Federal Police, Australian Customs and Border Protection Service and state law enforcement operation saw 38 search warrants conducted in five states and the Northern Territory during recent weeks.

Among the 21 drug types seized were LSD, heroin, steroids, ecstasy, cannabis, methamphetamine, GHB and cocaine.

Illicit substances were concealed in cushions, a handbag, prints, a jade dragon, cosmetic brushes, birthday cards and other letters and parcels.

The interception of LSD during the blitz was particularly interesting, with 1100 tabs seized in Brisbane and 1000 tabs seized in Melbourne.

Of particular note, one man was charged with six offences in Victoria for importing 1.36 kilogram of Ice from China, while another Victorian man was charged with four offences for importing MDMA, ecstasy and amphetamine in both tablet and powder form.

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I wonder why the person writing the media release found the LSD interceptions, "particularly interesting"?. Is the quantity unusual or the fact they picked it up at all, or that it may actually be LSD and not all the other things masquerading as it, or some other reason?

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1000 tabs should hardly even rate a mention in terms of street value, the fact that they only mention that, and a kilo of ice, makes you wonder what is in those 18 kilos to justify a figure of 8 million

Edited by ThunderIdeal
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I wonder why the person writing the media release found the LSD interceptions, "particularly interesting"?. Is the quantity unusual or the fact they picked it up at all, or that it may actually be LSD and not all the other things masquerading as it, or some other reason?

1000 tabs should hardly even rate a mention in terms of street value

probably they were the most notable/valuable busts

...meaning the other busts were probably negligible quantities and they're trying to talk themselves up/discourage people from using silk road haha

[EDIT] except $8.2 million. i don't know

Edited by Scarecrow

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i was just wondering, with the surge in bitcoin value, how rich is anyone here who uses them?

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i wouldnt be rich for long if i had bitcoins.

Lots of pretty pictures there.

Edited by spacemonk
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I have a wallet.dat file with 600 coins in it but it is corrupted and will let me use the dat file

(when i started buying them they where 3 dollars and i had a small rig) but with this boom

i am desperately trying to get it to work. The one thing i hate about bit coin there is no

customer support, any pointers

edit every time i log onto mt gox a see red ahhhhhhhhh but if someone can help me

recover the file i will share the booty (but a lot of expert nerds say just let it go

Edited by bigred82

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i see red isee red i see red

good luck.

600 coins arrgggggghh i would be trying aswell!

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I have a wallet.dat file with 600 coins in it but it is corrupted and will let me use the dat file

(when i started buying them they where 3 dollars and i had a small rig) but with this boom

i am desperately trying to get it to work. The one thing i hate about bit coin there is no

customer support, any pointers

edit every time i log onto mt gox a see red ahhhhhhhhh but if someone can help me

recover the file i will share the booty (but a lot of expert nerds say just let it go

Could you explain the 'corruption' a bit better? How did it happen? Was the wallet encrypted? PM me if you want and I'll see what I can do to help

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Well i backed up my wallet on usb and then (my girl friend had a spat on how much of my savings i was

putting in to bitcoin ) made me delete it of our computer. So once they where at 20 bucks i thought i would

reload the backup file. I put the usb into the drive and it took about ten min to transfer the dat file.

so when i go to use the dat file my bitcoin software at first it got to about 30% updated then my system crashed

and i had to reload it now it just says the file can not be read or may be corrupted . im lost on it and i have tried a lot

of times to reload it even on new computers etc. Maybe i could send it to the creator himself but doubt it

What pisses me more is how everyone told me no dont buy them you will be sorry its dangerous

man i should have gone with my gut !!!!!!! fuck i hate being poor. occupation FOOL

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+1 cheers dude awesome read

qoute

My dad did some work for 2 guys in the 80's. They wanted to pay for his work in stock, he said no, he didn't like their product, and he'd prefer cash. Well, turns out those 2 guys owned Starbucks. My dad said he cried when he put 2 and 2 together 10 years later. When I told my mom this story (my parents divorced) she cried too.

I felt like crying too, because this was after I was born.

Or maybe it like karma saying hang on to your coins. We will work it out all later you will either be rich

or poor or in jail or dead there are a lot of cards in the deck . But a friend who built my rig is very confident

he will get it in sinc again. so its looking it up for a change

Edited by bigred82

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