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The online drug marketplace Silk Road is collapsing – did hackers, government or Bitcoin kill it?


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The website posted on Saturday that it had received an email from someone, who goes by the handle "Lance G", threatening to crash the site unless it fronted the surprisingly small amount of $5000. An administrator of Silk Road confirmed on its forums that the attacks were the work of an individual who had been trying to blackmail the organisation.

Other theories have circulated, including a common one that "LEOs" (law enforcement officials) are behind the attacks. The other common theory is that the attacks are the work of someone looking to set up a similar website to Silk Road, and taking out the competition.

Silk Road is now offering $5000 to anyone with any "information that leads to the arrest and conviction of whoever is behind this extortion attempt". Although phoning up the cops and saying "some guy is blackmailing my giant drug-dealing operation!" probably won't elicit much sympathy.

Of course, it might also be the natural consequence of Silk Road users paying for goods using the encrypted digital currency Bitcoin.

As an economy where Bitcoin was the main currency, Silk Road recently went through a hyper-deflation almost unprecedented in economics. Following the recent surges in the value of Bitcoin, people have been selling less and less, initially because the value of the Bitcoins was going up so fast people were unwilling to part with them; then, once the Bitcoin price started crashing, dealers were unwilling to part with valuable drugs for Bitcoins worth who-knows-what.

I think Bitcoin could not have gotten nearly as crazy unless there was a marketplace where Bitcoins were valuable. Silk Road was that marketplace.

Why was Silk Road allowed to last as long as it did? Perhaps the Feds had a bigger target in mind?

There's a lot of reverse-engineered syllogistic speculation out there .... who knows?

What we do know:

1. The Feds let Silk Road exist without shutting it down.

2. No government in the world has outlawed Bitcoin yet.

3. Without Silk Road, Bitcoin would never have been able to bootstrap its value.

Taking Bitcoin down with a back-door approach, like nailing Al Capone for tax evasion?

Or using Bitcoin to catch kingpins later, perhaps?

Yes, now I see it.

"Dread Pirate Roberts" (owner of Silk Road) is one of the elite-elite among hackers. Β The Feds genuinely don't know who he is. Β It's important to remember that Silk Road exists entirely within Tor's .onion AltDNS space and mapping the Tor network is _VERY_ expensive and essentially futile.

Okay, that's a really good point. Even if they WANTED to stop it, they couldn't.

But someone in government could explicitly outlaw it, and they have not done that.

it already is... it's Facilitation and Conspiracy. ... and frankly if DPR is ever exposed, they _will_ find _something_ to charge him with... Β like the Julian Assange thing but with serious determination

Geez. You're right, it's worse than it seems.

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