Eadon on Tech: The Waitrose For Narcotics Silk Road Bust Bruhaha

To understand the spectacular annihilation of the Silk Road online trading site, I’ll explain briefly outline two wonders of our age: virtual money called Bitcoin and a secret network called Tor. You can skip those bits to the juicy stuff.

Bitcoin
Let’s make some “virtual” money (money that is not physical)! Take a photograph of a bank note and then declare that the image is worth the same as the bank note. Yay! Then send the photo to someone else to pay them. Then they now own the photo / “money”. As you have guessed, the fatal flaw with this cunning plan is that it’s easy to “print money” by copying of the photo. (The Bank Of England calls this “Quantitative Easing”).

However, what if you were to sign the photo? If you could sign it in a way no one could copy, then suddenly you can exchange the photo-money in a more trusted way.

Bitcoin uses an analogous signing technique. Each transaction is digitally “signed” using cryptographic techniques. Loosely speaking, the signed money cannot be “copied” (or at least not without using expensive, electricity-consuming computer power, which makes bit coin “copying” sufficiently uneconomical).

If people shared photos of bank notes by sending them directly to one another then this would be a so called peer-to-peer trading system. Bitcoin operates in a peer-to-peer way too, it is a decentralised currency that is subject to no financial authority. Even though Bitcoin relies on encryption, how it operates is entirely in the pubic domain, it is an Open Source system.

Bitcoins are bought and sold on “exchanges” and are traded for goods on various websites.

Tor
Tor is a secret network that anyone can use. It encrypts all data passing through it and also makes it fiendishly difficult to trace traffic to its source – your computer. Tor uses a routing system whereby your traffic hops between at least two links, each of which adds a further layer of encrypton. Because the links do not share information, the origin location of the traffic is unable to be traced. Due to the constant spying going on by the US Government (NSA) and others, Tor is becoming ever more popular. But, like everything, from your computer hardware, your operating system, your ISP etc. it is best to assume that Tor is compromised. It’s great to use Tor for fun, but if you have secrets, do not entrust them to the Internet unless you are a security expert and know what you are doing.

Tor + Bitcoin = feral underground economy.

The Fall Of Silk Road: Dark Web Den Of Ne’er Do Wells
There are trading sites that allow people to buy and sell goods with bitcoins. People routinely access such websites using the Tor network. That allows for privacy which is great for the user. But this exasperates control-freak governments. Firstly they cannot tax, spy-upon or regulate the trades. Secondly illegal goods may be traded on such sites. which is where Silk Road comes in.

Silk Road was an anonymous marketplace where merchants flogged pretty much anything ranging from legitimate goods to black market stuff: hookie gear, narcotics, hitman contacts, you name it. Needless to say, Silk Road was infamous for being the go-to site for the deeply illegal stuff. The FBI, who went all medieval on the site, alleges revenues of over one beeeeelion dollars. The FBI also claims that Sowner, Ross Ulbricht put a hundred grand bounty on the head of man for an extortion play.

So we have a supremely dodgy crypto website trading a crypto currency – so how did the FBI take down the leader of this high tech den? The old fashioned way. Canadian border authorities have a penchant for poking their nose into people’s packages. The story goes that they intercepted a package destined for Ulbricht’s California abode and lo and behold: fake ID cards. Bang to rights. Ulbricht was broght down by a low-tech violation of his privacy. He required the IDs, apparently, to obtain new servers to allow the site to scale up.

It could be, however, that the Feds were already onto Ulbricht, perhaps by tracing his bitcoin transactions (which, in his case, were money laundering transactions). People think Bitcoin is anonymous, but in fact it keeps public records of every transaction, cyber-trails that digital bloodhounds can latch on to. Ulbricht should have cut and run, because the site was so popular – so hot – that the Feds had to be crawling all over it.

Ulbricht knew the tremendous danger, he confessed that he was being hunted, yet he continued to play the cat and mouse games. Perhaps it was an intoxication, he may have revelled in playing the criminal overlord, Breaking Bad style. Or he was gluttonous for ever more wealth. Either way, he was mental to keep it going.

In any case, Ulbricht had left big plodding footprints all over social networking sites and forums, so the daft sod had doomed himself no matter what happened. He had taken no securty precautions on his servers either, which will bedevil the erstwhile users of his site.

Silk Road was a site on the Dark Web – an underbelly of the Internet that normal search engines do not show you. The dark web comprises sites that are the equivalent of private houses or organisations, where the public is either exclused or has to make an effort to find out about such dark sites and perhaps apply or pay to enter.

One thing is for sure. With the vast sums to be made, replacement dark sites for Silk Road will spring up as sure as eggs is eggs. But beware using such sites, law enforcement agents are there too: buying, selling, tracking and trapping.

Come back next week for more Criminal Geek Madness.

One comment on “Eadon on Tech: The Waitrose For Narcotics Silk Road Bust Bruhaha

  1. Brian Williams
    October 16, 2013 at 10:13 pm #

    Good. I hate, loathe and detest those spawners of misery, the drug dealers. I hope they go down for a very, very long time.

    The sooner Bitcoin is smashed the better too.

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