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Silk Road Shutdown Puts Users In Danger, But Not Necessarily From Feds

Posted on October 07, 2013 by News Admin

Last Wednesday, the FBI announced that they had identified and detained Ross William Ulbricht, aka "Dread Pirate Roberts", the alleged founder and owner of the not-so-Top-Secret illicit online drug marketplace known as Silk Road.

Until the seizure by the Feds last week, Silk Road, in operation since 2011, served as a sort of Amazon.com for anything from pills to hallucinogens to heroin, and everything in between.

The weed game was lush on the site as well, with growers and dealers pulling out all the stops to move their buds. Pot prices and quality varied on the site, and as a mail order transaction with a complete stranger can sometimes go awry, some risk was always involved. But as real tangible cash never changes hands in a Silk Road deal, users of the site always felt fairly protected by the implied anonymity.

But with the latest intervention by the FBI, many shut-out Silk Road users have found themselves in some real world trouble.

The site was only accessible by utilizing a not-very-noob-friendly TOR browser as one main layer of security and anonymity, combined with a Bitcoin-based economy that employed the virtual cryto-currency to take advantage of its hyper-encrypted untraceable nature.

Bitcoins are a decentralized peer-to-peer paperless form of currency that are quite literally harvested by high powered computers out of a mind-boggling web of mathematical equations and algorhythms that serves as a digital version of "thin air".

With no gold, or silver, or any tangible asset to back the currency, its value is determined and protected by the marketplace of Bitcoin owners. Through their network, a virtual ledger is maintained and updated in real time, to show every Bitcoin user exactly where every other Bitcoin user stands, financially. Each transaction is peer-approved, with a history of past transactions attached as proof of each party's trustworthiness.

That record keeping of past transactions, and the open-source nature of that information may sound scary, but the dynamic encryption key generation that takes place with every transaction allows for an incredibly large number of possible keys that can be generated.

As one useful YouTube video on the subject of Bitcoins explains; some estimate that the total number of grains of sand on the Earth to be somewhere around 7.5 billion trillion, or 7,500,000,000,000,000,000 (or 7.5x10^18). If you then imagine each one of those grains of sand to be its own planet Earth with its own grains of sand, and counted them all, you would still be well short of the number of possible encryption codes in the Bitcoin economy.

So while the FBI did make reference to at least 100 undercover sting operations conducted on Silk Road during their investigation, and are almost certainly not ready to completely close the case, it is not a fear of a breach of anonymity that has Silk Road users a little more paranoid than usual.

When the FBI arrested Ulbricht in San Francisco last week, they also reported to have seized all Bitcoins deposited into the site's user's digital wallets, reportedly some 26,000 coins. The value of each individual Bitcoin fluctuates, but currently sits around $120/1Bitcoin(BTC), and Silk Road users load up their wallets on the site prior to making a purchase, at which point they digitally transfer the coin(s) to the seller and everyone is happy and/or high.

Experienced Silk Road travelers try not to keep any funds in their wallet unless making a purchase, just in case. But the Internet/Reddit/Twitter-sphere erupted within minutes of the site shutting down last week, with users claiming they had just made a deposit minutes earlier, only to be locked out of their accounts before they could even pick a strain.

For many users, what this meant was kissing a few hundred bucks away and hoping that somehow, some way, the Dread Pirate would swab the FBI's poop decks and find a way to return their precious booty.

But for some, the situation was allegedly much more dire.

In reaction to the sudden shutdown and asset seizure, one Silk Road user named Jayman62 exclaimed: "I just loaded mine 10 minutes before it was seized. I'm fucking screwed. It wasn't all my money and it's very dangerous people that I now owe large sums to. I'm a dead man."


Another, krazydude1, confesses, "I'm dead if this happened 3 grand fronted."
So what appears to have "happened", and should come as no surprise, is that low- to mid-level street dealers around the globe were using the Silk Road website as their wholesale source, then distributing the drug du jour back in their hometown after the mailman came and left.

A risky game in the best of times, and a costly mistake when the game is up, many Silk Road users like Jayman62 apparently took money from less-than-savory individuals in exchange for a promise to deliver a certain amount of goods. Now, not only is the marketplace of goods inaccessible, but so too are a reported $3.6-million dollars' worth of Bitcoins - many of those dollars belonging to drug addicts, or even legitimate patients, who don't know, or care to know, what a Bitcoin is - and certainly don't want to hear the letters FBI.

Aside from the obvious dangers of owing people large amounts of cash for undelivered drugs, Jayman62 points out some of the other negative effects he sees coming as a result of the Silk Road shutdown: "This site kept people like me from having to go into dangerous sketchy places and risk possible robbery or death, which happened to my best friend/brother who was shot and killed in an alley like a dog. Silk Road was a safe haven. It took away all the "bad" and sketchy from deals. The feds shutting down the site did not help anything. They just made things very very bad for a lot of people."

It should be noted that the 26,000 Bitcoins that he FBI says they seized were not owned by Ulbricht, they were owned by countless Silk Road users who happened to get caught up in the crash. Ulbricht's untraceable and ridiculously encrypted wallet is said to contain as many as 600,000 Bitcoins, or well over $70-million in commissions in two years.
And you thought your dealer was pinching you.


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