🔮 Silk Road: a “digital bazaar” for drugs

& how did Bitcoin enable online drug marketplaces in the 2010s?

You’ve probably heard of the historical Silk Road.

It was a Eurasian trade route that brought Chinese silk to the Middle East and Europe.

Trade along the route occurred over 1,600 years, starting during the era of the Roman Republic (~200 BC) and continuing until the mid-1400s.

What Was The Silk Road And Why Was It So Hugely Important ...

Today’s newsletter is about a very different digital Silk Road.

This Silk Road, which operated between 2011 and 2013, was the first major dark web marketplace that allowed people to buy and sell drugs and other illegal goods anonymously from around the world.

The FBI even called the website “a digital bazaar for illegal goods and services.” (see the screenshot below)

Silk Road was the fastest growing online marketplace ever | by Tristan Pollock | Startup Grind | Medium

You can think of the dark web as the shadowy underside of the Internet, where tech-savvy individuals can come together anonymously to buy & sell whatever they want.

What the Silk Road was doing was obviously illegal.

But in the beginning, users were “safe” from law enforcement because people could only access the Silk Road by using the anonymity granted by the Tor browser — a key tool that enabled the emergence of illegal “dark web” marketplaces like the Silk Road.

Who Are Today's Dark Web Users? | ID Agent

The Tor browser, which was launched in 2002, allows users to anonymously surf the internet by re-routing their internet traffic randomly through one of 7,000+ relays around the world.

The idea behind the Tor network was actually developed by mathematicians & computer scientists working for the United States Naval Research Laboratory in the mid-1990s as a way of protecting U.S. intelligence agencies' communications online.

The Tor browser is based on the idea of “onion routing,” where actions on the internet are hidden within layers of encryption — just like an onion. (see the graphic illustrating the dynamics of onion routing below)

Where did the Silk Road come from?

The Silk Road was created by a 29-year-old American named Ross Ulbricht in 2011.

Ulbricht, who went by the pseudonym “Dread Pirate Roberts” online, was a well-educated & ambitious young man who received full scholarships to complete his B.A. in Physics and his Master’s degree in Engineering. (see Ulbricht in the picture below)

The Problem with Ross Ulbricht's Request for Clemency

He was also a strident libertarian who opposed government intervention in free markets.

In his personal journal, Ulbricht wrote that he had the brilliant idea:

The Silk Road would use Bitcoin, the digital cryptocurrency created in 2009, as its mode of payment. The use of anonymous Bitcoin wallets helped Silk Road users to hide their identities.

The Silk Road website even included a “Seller's Guide” that instructed users on how to best vacuum-seal the drugs they were shipping.

And if the police asked you about the shipment of narcotics that arrived on your doorstep, you could just say,

“Ordering drugs online? What're you talking about?”

Follow the deep web, to the Silk Road | Brittany Smith

One of the most interesting things about the Silk Road was that it was similar to Amazon, eBay, and other e-commerce sites.

Sellers were given ratings by customers about the potency and purity of the drugs they'd purchased, forcing dealers to keep standards high — lest they get a bad rating. (see some customer reviews on the Silk Road below)

Here's why Silk Road was the fastest growing online marketplace ever — Tristan Today

Key Facts about the Silk Road:

  • It had nearly a million customers and 10,000+ listed “products”

  • Over a billion dollars of transactions were done on the Silk Road between 2011-2013

  • Ulbricht and his team collected $13M+ in Bitcoin from commissions on Silk Road sales

After two years of astronomical growth for the Silk Road, things came to an unpleasant end for Ulbricht. He was arrested by the FBI on October 1, 2013, in a San Francisco public library.

The Silk Road website was shut down that same month.

FBI agents seized Ulbricht’s laptop, which he used to run the Silk Road empire from the U.S. and elsewhere around the world. (see below from an FBI website)

In 2015, Ulbricht was found guilty on multiple counts and was sentenced to two life sentences in federal prison.

Silk Road: History + accessing the black market - LifeLock

Dark Web Marketplaces after the Silk Road

After the Silk Road was shut down, dozens of new dark web marketplaces emerged around the world to replace it.

One of them, set up by former Silk Road administrators, was even called Silk Road 2.0.

Many new websites also scammed users by stealing Bitcoins held in escrow, leading customers to lose faith in the dark web marketplaces. (see a post-Silk Road darkweb market called Agora below)

Dark Markets Grow Bigger and Bolder in Year Since Silk Road Bust

By 2018, a cyber-security group called Digital Shadows said government crackdowns and scams had led dark web drug traffickers to move away from open online marketplaces.

Rick Holland of Digital Shadows explained:

Now, online drug trafficking networks were using encrypted messaging services like Telegram to buy & sell drugs online.

The age of the dark web marketplace, however shortlived, was over.

Ulbricht’s Life after the Silk Road

As cryptocurrency and Bitcoin have become mainstream, Ulbricht’s case has become a cause cĂ©lèbre in the crypto community.

Thanks to help from friends on the outside, Ulbricht has been able to publish articles on a personal blog from prison.

Some have argued that Ulbricht’s life sentence is excessive, given the non-violent nature of his crimes.

Earlier this year at the Libertarian National Convention, former President Donald Trump said that he would commute Ulbricht’s sentence and free him from federal prison if he is re-elected in November.

What do you think? Reply to this email to let me know your thoughts on Ulbricht’s sentence or the idea of online drug marketplaces like the Silk Road.

ART OF THE DAY

Life in a Box by Ross Ulbricht