The Unintended Consequences Of The Shutdown Of Silk Road

Predictions

from the yes,-it's-gone,-but-now-what dept

The closing down of Silk Road by the feds was almost certainly inevitable. In fact, especially in light of the details suggesting how sloppy Ross Ulbricht was at times, it’s somewhat amazing it lasted as long as it did. That said, in the past few days I’ve seen a couple of articles that are highlighting the unintended consequences of the closure. First up is Conor Friedersdorf over at The Atlantic, discussing how the closure of Silk Road almost certainly makes the world less safe. In some ways, this reminds me of similar discussions about targeting marketplaces vs. targeting users (such as Craigslist). While many people have a gut reaction that it makes sense to go after the marketplace/platform, the reality is that it’s the users that drive it, and those users will continue to do the same illegal acts as before, but most likely in a less safe manner.

Friedersdorf highlights how, assuming everything in the NY complaint is accurate, Silk Road functioned as a fairly safe and efficient market for buying what generally appeared to be high quality illegal drugs for personal use in a much safer and more trusted manner than going out on the street to do the same. And, on top of that, it appears that many of the sellers were from overseas where the drug trade might be even more dangerous:

On many thousands of occasions, drug dealers in foreign countries decided that, rather than using armed truck drivers, bribed customs agents, desperate drug mules, thuggish regional distributors, and street level drug dealers who used guns to defend their territory, they’d just mail drugs directly to their far away customers. Of course, folks at the beginning of the supply chain were still often violent drug cartels who one hates to see profit. But from the perspective of the many innocents who suffer from the black market supply chains involved in traditional drug sales, narcotics via mail order would seem to be a vast improvement.

The FBI summed up its case against The Silk Road by writing that “the site has sought to make conducting illegal transactions on the Internet as easy and frictionless as shopping online at mainstream e-commerce websites.” Insofar as it trafficked in violence-for-hire and hacked bank accounts, that was a bad thing — society has an interest in as much friction as possible in the market for hit men! But compared to the epidemic violence that has characterized the drug trade for the entirety of the War on Drugs, and that shows no signs of abating in the foreseeable future, a frictionless drug trade starts to seem like a relative utopia.

The “friction” is often dead teenagers on urban streets.

Of course you could make an argument that Friedersdorf’s argument is almost as much a condemnation of the overall War on Drugs as it is on Silk Road itself. In fact, you could argue that the “success” of Silk Road highlights how a legal and regulated market for such drugs would likely be quite efficient and safe. That’s not a “defense” of Silk Road or a suggestion that what Ulbricht did was morally correct. However, it’s just a statement of reality. The War on Drugs has a very large number of victims, and many of them are totally unrelated to drug addicts, but rather come with the infrastructure necessary to run a massive illegal business.

That brings us to the second article. Someone who worked for a competing online black market called Atlantis, which had closed just a few weeks earlier, has written up a fascinating post mortem of Silk Road, in which he (or she) notes that we’re about to see a lot of similar black markets now that the market leader has been cleared out by the feds.

As if there wasn’t enough suitors ready to rise to the challenge of being the next DPR, to make it easier there is already a functioning open-source project know as BitWasp which can simply be downloaded and installed on an onion web server and the next SilkRoad is (almost) ready to go. Below is a short description of the project from its facebook page where they make no secret of the fact the project aims to aid the development of future anonymous marketplaces flowing in the case of busts like just happened Silk Road.

“BitWasp Marketplace is a light weight, completely open source, anonymous bitcoin marketplace specifically built for use in conjunction with Tor or I2P via the hidden services such as .onion websites and eepsites (for I2P).

The goal of this project is to do the following:

1. Lower the barrier of entry and needed skill-set to operate a website like silkroad. This will increase the number of silkroad styled sites on the internet, and this increase will lead to a stronger pressure on governments to change their draconian drug law policies into something more practical and respecting of individual liberty.

Just like open source forum software revolutionized the ability for individuals to freely share ideas within niche communities, Bitwasp will revolutionize the ability for individuals to sell and buy materials and digital files within online communities.

2. Plans by the many, not by the few. This is essential because, as with nature, competition will select for the best, most secure, and most revolutionary marketplaces. Silkroad is great; but I suspect many minds working on many sites with various add-ons and extensions will lead to many better marketplaces in the long run.”

In other words, just like the court shutting down Napster over a decade ago resulted in a whole series of alternative file sharing networks, some that were much more underground and harder to stop, it seems likely that something similar is about to happen with black markets. In fact, the former Atlantis employee notes that the combination of Ulbricht’s carelessness and the fact that it took nearly two and a half years to track him down likely means that others will rush into the space, believing they can do it “right” to protect themselves.

The closing of Silk Road and the arrest of Ulbricht is an interesting story, no doubt, but it seems like just the very first chapter in the world of black markets.

Filed Under: copycats, drug dealing, safety, security, shutdown
Companies: silk road