Silk Road: A Cautionary Tale about Online Anonymity

Are bitcoin and the Darkweb as anonymous as people think?

One of the biggest allures, and criticisms, of cryptocurrencies is their anonymity. Bitcoin transfers are publicly available, but only linked to an account number and not a person.

But bitcoin isn’t actually that anonymous after all. Experts call it “pseudonymous,” comparable to writing a book under a pen name. Users are anonymous so long as there’s no connection between their identity and an account number. Obscuring that connection is not so easy. If you buy bitcoins in an online exchange office, you leave a bank or credit card receipt. If you pay in an online shop with bitcoins, you enter a delivery address. There’s a trail to almost every transaction.

Ross Ulbricht can spend the next decades thinking about the distinction between anonymous and pseudonymous while he’s serving a life sentence in prison. In 2011, he created a digital marketplace where customers could order anything from heroin to fake IDs. But relying on the anonymity of bitcoin and the dark side of the internet eventually led to Ulbricht’s downfall. Ship of Fools: How a S... Carlson, Tucker Check Amazon for Pricing.

Parallels could easily be drawn between Ulbricht’s story and that of Star Wars’ Anakin Skywalker. Just as a hopeful Skywalker eventually is seduced by power and the dark side of the Force, becoming Darth Vader, an ambitious Ulbricht eventually became “Dread Pirate Roberts,” attempting to build his illegal empire in the dark corners of the internet.

After completing a graduate degree in materials science and engineering at Penn State, Ulbricht, returned to Austin, Texas. He wanted to be an entrepreneur. He tried various endeavors before landing in the world of e-commerce with a successful online used-book store. The site grew, stocking 50,000 secondhand books, employing five part-time workers, and bringing in $10,000 in sales per month. Everything could have gone on beautifully and petit bourgeois, but the dark side of the Force was calling Ulbricht.

Silk Road was an illegal trading venture that had a cash flow of at least $213 million.

BITCOIN: Mastering Bit... Nakamoto, Pat Buy New $2.99 (as of 05:15 UTC - Details) In addition to his entrepreneurial spirit, Ross Ulbricht saw himself as a Libertarian, and the political philosophy of libertarianism views any intervention by the state — such as taxes — as coercion. Ulbricht and his spiritual brothers stood for property, self-administration, and self-realization. He believed the state should have no other task than to ensure its citizens these rights.

Cryptocurrency automatically holds great appeal for libertarians because of the lack of regulation. No state can print bitcoins, take it away from its owners, or levy taxes on it. Bitcoin is as free as libertarians themselves want to be. One of Ulbricht’s diary entries reads: “I had the idea of creating a website where people could buy everything anonymously without leaving any trace that could be traced back to them.” That idea eventually became Silk Road, a major Darknet marketplace for drugs and guns that went live in 2011.

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