![]() The real influx of users however, took place after Gawker, an online gossip column, ran an in-depth story on Silk Road. Silk Road’s servers were unable to handle the influx, and a combination of hackers and increased website traffic forced Ross to temporarily take Silk Road offline, to retool and upgrade the site. In two months, over a thousand people had registered. By the end of February, twenty-eight transactions for narcotics ranging from LSD to mescaline were conducted on the site. However, Ross promoted his site on the famous bitcoin forum, an act which attracted a few buyers for his mushrooms, but ultimately led to his downfall. Silk Road opened to modest beginnings, with psychedelic mushrooms grown by Ross himself listed as the first items for sale. Ulbricht would act as an escrow service between buyer and seller, and would profit from commissions taken from every transaction. By using bitcoin, the only identifying information for a narcotics transaction would be the address of the receiver, a problem solved by using an anonymous P.O. Bitcoin’s decentralized ledger – the blockchain – provided a way to verify that payments had been received or sent. ![]() Bitcoin addresses do not require a bank account, ID, social security number or name, and are free to open and maintain. Ulbricht got around this conundrum by using bitcoin as a payment method. While the users of a Darknet site can use Tor and Virtual Private Networks to obscure and hide their identities, they had no way of exchanging anonymous payments among themselves, short of sending envelopes full of cash via the postal service, an obviously impractical solution. In February of 2011, Ross William Ulbricht, who went by the nom de guerre of “Dread Pirate Roberts,” founded the site “Silk Road.” Ulbricht, a former Penn State graduate student and amateur programmer with a strong libertarian and anarchist bent, dreamt of an online marketplace where people would be able to buy and sell narcotics and other illicit items, without governmental interference. More recently, a multibillion-dollar money laundering scheme was uncovered at another exchange, allegedly linked to the infamous Mt. Gox bitcoin exchange, which sparked a vicious bear market in the price of bitcoin. Among them was the creation of the world’s first online drug bazaar, and a massive hack at the Mt. Since bitcoin’s inception, several high-profile instances of criminal misconduct have shone a light on the potential dangers of cryptocurrency. Purported anonymity, ease of cross border transport, lack of clear regulations, and settlement finality are all features of cryptocurrencies that may appeal to those who wish to skirt the law. Critics of bitcoin and other cryptocurrencies have long contended that their widespread use would empower hackers and other criminals.
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