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FTR #764 Bit[coin]burg, Part 2, The Snowden-Inspired, Bitcoin-operated Online Murder Incorporated

Posted by Dave Emory ⋅ December 9, 2013Post a comment Email This Post Email This Post Print This Post Print This Post
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Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. (The flash dri­ve includes the anti-fas­cist books avail­able on this site.)

Side 1   Side 2

NB: On Side 1, Mr. Emory mis­pells Pierre Omid­yar’s name. At the begin­ning of Side 2, the pro­gram is misiden­ti­fied as “FTR #760, its pre­de­ces­sor broad­cast.

This descrip­tion con­tains sup­ple­men­tal infor­ma­tion not includ­ed in the orig­i­nal broad­cast.

INTRODUCTION:  In FTR #760, we exam­ined the tech­no-lib­er­tar­i­an, Lud­wig von Mis­es milieu-affil­i­ated nature of the bit­coin phe­nom­e­non. Quite pos­si­bly devel­oped by ele­ments of Ger­man intel­li­gence and the Under­ground Reich, bit­coins are not only vul­ner­a­ble to “tape-paint­ing,” but can be stolen by hack­ers.

In a [per­haps] pre­dictable exten­sion of the Lud­wig von Mis­es, anar­cho-fas­cism under­ly­ing the bit­coin phe­nom­e­non, as well as the polit­i­cal forces behind Eddie the Friend­ly Spook” Snow­den, some­one oper­at­ing under the name “Kuwabakatake San­juro” has begun a bit­coin-fund­ed, online assas­si­na­tion con­sor­tium called “The Assas­si­na­tion Mar­ket.” His project was inspired by the “dis­clo­sures” of Snow­den.

After dis­cussing the bit­coin-fund­ed assas­si­na­tion con­sor­tium, we will under­score the extreme vul­ner­a­bil­i­ty of this vir­tu­al cur­ren­cy to theft.

Pro­gram High­lights Include these Points of Infor­ma­tion:

  • “San­juro” was inspired to real­ize the project by the “dis­clo­sures” of Edward Snow­den.
  • The largest “bit­coin boun­ty” is on the head of Ben Bernanke, chair­man of the Fed­er­al Reserve, to whom Snow­den referred as a “cock­bag” in the 2009 online post­ing in which he advo­cat­ed the elim­i­na­tion of social secu­rity and a return to the gold stan­dard.
  • “San­juro” also has bit­coin boun­ties on the heads of  Pres­i­dent Oba­ma and Gen­er­al Kei­th Alexan­der, the head of the NSA.
  • “San­juro” sees his online assas­si­na­tion con­sor­tium as a real­iza­tion of lais­sez-faire mar­ket the­o­ry to pol­i­tics.
  • We note that the the­o­ries of Hans Her­mann-Hoppe (dis­ci­ple of Lud­wig von Mis­es, stu­dent of Juer­gen Haber­mas, idol of bit­coin advo­cate R. Cody Wil­son) explic­it­ly reject democ­ra­cy. So does the Lud­wig von Mis­es Insti­tute, the epi­cen­ter for the eco­nom­ic the­o­ries of Ron Paul and Edward Snow­den. So does Peter Thiel, a bit­coin advo­cate and cap­i­tal­iz­er of Ron Paul’s 2012 polit­i­cal cam­paign. Thiel is also the largest stock­hold­er in Palan­tir, which appears to have devel­oped the PRISM soft­ware at the cen­ter of the Snow­den leaks. (Palan­tir CEO Alex Karp is also a stu­dent of Juer­gen Haber­mas.) “San­juro” takes this benight­ed phi­los­o­phy to its [per­haps inevitable] con­clu­sion.
  • The endgame of lib­er­tar­i­an phi­los­o­phy does indeed appear to be “anar­cho-fas­cism.”
  • The tech­no-lib­er­tar­i­ans war­rant seri­ous con­sid­er­a­tion as the “neue-wan­der­vo­gel.”
  • In an update, we learn that the alleged mas­ter­mind of the bit­coin-fund­ed Silk Road–the Lud­wig von Mises/Ron Paul devo­tee Ross Ulbricht–allegedly sought the con­tract mur­ders of six people–five more than orig­i­nal­ly stat­ed. It is inter­est­ing and rel­e­vant that both Ulbricht and “San­juro” pro­ceed from an anar­cho-lib­er­tar­i­an per­spec­tive, decry­ing slav­ery AND democ­ra­cy, ulti­mate­ly arriv­ing at a lethal advo­ca­cy posi­tion, alleged­ly so in Ulbricht’s case.
  • Inter­est­ing­ly, Ulbricht was appar­ent­ly think­ing of mov­ing to Domini­ca, the island nation tar­get­ed by a Nazi/white suprema­cist inva­sion known as “The Bay­ou of Pigs.” Ulbricht’s 2012 Pres­i­den­tial selectee Ron Paul was appar­ent­ly involved in that gam­bit, along with Paul’s long-time asso­ciates David Duke and Storm­front cre­ator Don Black.
  • As “Pter­rafractyl” informs us: “One thing is clear from this arti­cle: Ross Ulbricht had a HUGE per­cent of the total bit­coin sup­ply. At least for an indi­vid­ual. The FBI received 144,336 bit­coins off of just one of Ulbricht’s com­put­ers, and with ~12 mil­lion bit­coins already in sup­ply (a lit­tle over half of the total 21 mil­lion), that means Ulbricht had over 1% of the cur­rent bit­coin sup­ply on that sin­gle com­puter alone. Accord­ing to the researchers, 78% of Ulbrich’s bit­coins are still “buried” and beyond the FBI’s reach. So Ulbricht, alone, may have actu­ally con­trolled clos­er to 5% of the total bit­coin sup­ply. It’s a reminder that bit­coins have an addi­tional built-in defla­tion­ary force: Lost bit­coins that can’t be recov­ered are lost for good, per­ma­nently reduc­ing the sup­ply of trade­able bit­coins while main­tain­ing the over­all sup­ply offi­cially in exis­tence (because a lost bit­coin is indis­tin­guish­able from one that’s sim­ply being saved). The small casu­al users with tiny frac­tions of a bit­coin in their accounts are prob­a­bly the most like­ly source of bit­coin loss­es, but since we have no real idea who the large bit­coin own­ers are at this point, you have to won­der how many more hid­den bit­coin barons are going to end up either hand­ing siz­able per­cent­ages of the total bit­coin sup­ply over to law enforce­ment agen­cies or just los­ing them alto­geth­er.
  • In anoth­er update, we learn that the suc­ces­sor to Silk Road–Sheep Marketplace–has van­ished tak­ing vast amounts of its users’ bit­coins with it. The users of Sheep Mar­ket­place, it would seem, have been fleeced!
  • “Pter­rafractyl” informs us of anoth­er aspect of the vul­ner­a­bil­i­ty of Bit­coin: “One of the inter­est­ing aspects about the bit­coin phe­nom­ena is that the more peo­ple that start using bit­coin the greater the defla­tion­ary pres­sure on the val­ue of the bit­coins. That’s because there’s a fixed max­i­mum of 21 mil­lion bit­coins that can ever exist, so the greater the demand for bit­coins the more each bit­coin will cost in oth­er cur­ren­cies. With the Chi­nese mar­ket now warm­ing up to bit­coin, and all those new poten­tial users, we might see a fas­ci­nat­ing exam­ple of a hyper­de­fla­tion­ary vir­tual gold bub­ble.”
  • The per­ils of “Bit­coin­ery” were illus­trat­ed when a Hong Kong Bit­coin mar­ket van­ished, tak­ing $5 mil­lion dol­lars with it!
  • Fur­ther updat­ing the dis­cus­sion “Pter­rafractyl” informs us: It would be pret­ty hilar­i­ous if Bit­coin, a cur­rency cher­ished by haunt­ed by hyper­in­fla­tion­ary fears, becomes an object les­son in the dan­gers of defla­tion. But it’s hard to see how this les­son will be avoid­ed if Bit­coin ever real­ly catch­es on because one of the main fea­tures of the cur­rency is that it’s capped out at 21 mil­lion coins but you can divide each coin up into small­er and small­er pieces. There­fore, the rea­son­ing goes, Bit­coin has defeat­ed the infla­tion beast while still main­tain­ing the scal­a­bil­ity required to han­dle the vol­ume of trans­ac­tions in vir­tu­ally any sized econ­omy! Rev­o­lu­tion awaits! The vic­tory over infla­tion comes at the cost of built-in defla­tion cor­re­lated to the growth of the Bit­coin econ­omy (imag­ine if dol­lars grew more expen­sive with the growth of the US econ­omy). So the more Bit­coin grows in pop­u­lar­ity the greater the defla­tion, the greater the pay­out to the ear­li­est bit­coin investors, and the greater the temp­ta­tion to keep hold­ing onto those Bit­coins.
  • Cor­nell Uni­ver­si­ty researchers have dis­cov­ered a fun­da­men­tal flaw in bit­coin that can per­mit a very small num­ber of users to take over the mar­ket.
  • Not sur­pris­ing­ly, it turns out that Bit­coin is high­ly vul­ner­a­ble to self­ish “min­ing,” which could per­mit knowl­edge­able and enter­pris­ing male­fac­tors to cor­ner the mar­ket.
  • Bit­coin users have relied on the TOR net­work, to a con­sid­er­able extent. Because TOR is not as secure as advertsed, some have avoid­ed using it. Now the Max Planck Insti­tute is research­ing the devel­op­ment of a more secure oper­a­tion, that might per­mit dras­tic pro­lif­er­a­tion of the types of ills that appear inher­ent in the bit­coin con­cept.
  • A sup­ple­men­tal sto­ry, not includ­ed in the orig­i­nal pro­gram, con­cerns Ron Paul’s enthu­si­as­tic views on bit­coin.
  • In anoth­er sup­ple­men­tal sto­ry, not includ­ed in the orig­i­nal pro­gram, we learn that the Euro­pean Cen­tral Bank views bit­coin as root­ed fun­da­men­tal­ly in the Lud­wig von Mises/Friedrich von Hayek the­o­ret­i­cal con­struct.

1. In FTR #‘s 758, 759, we looked at the anti-demo­c­ra­t­ic, pro-monar­chist phils­o­phy of Hans-Her­mann Hoppe, a devo­tee of the Lud­wig von Mis­es school of eco­nom­ic and social the­o­ry and a stu­dent of Juer­gen Haber­mas. Haber­mas was exam­ned at length in FTR #757. One of the most vis­i­ble sup­port­ers of bit­coin is a “tech­no-lib­er­tar­i­an” named Cody R. Wil­son, whom we exam­ined in FTR #760. Wil­son, not sur­pris­ing­ly, is a devo­tee of Hans Her­mann-Hoppe and an active oppo­nent of democ­ra­cy.

“All Mar­kets Become Black” by Daniel Fel­len­stein and Cody R. Wil­son; Blink; 12/27/2012.

. . . . Accord­ing to your pro­file on defense dist. you’re “a stu­dent of Bas­ti­at, Hoppe, and Antho­ny de Jasay”. Could you go over your philo­soph­i­cal basics before we dive into the project? How much of a state would you accept in your life?. . .

. . . . I am but a con­duit for ide­ol­o­gy. Mod­ern neolib­er­al democ­ra­cy is a crum­bling idol. The God has failed, to invoke Hoppe. . . .

2. “San­juro” was inspired to real­ize the project by the “dis­clo­sures” of Edward Snow­den. The largest “bit­coin boun­ty” is on the head of Ben Bernanke, chair­man of the Fed­eral Reserve, to whom Snow­den referred as a “cock­bag” in the 2009 online post­ing in which he advo­cated the elim­i­na­tion of social secu­rity and a return to the gold stan­dard. “San­juro” also has bit­coin boun­ties on the heads of  Pres­i­dent Oba­ma and Gen­eral Kei­th Alexan­der, the head of the NSA. “San­juro” sees his online assas­si­na­tion con­sor­tium as a real­iza­tion of lais­sez-faire mar­ket the­ory to pol­i­tics.

We note that the the­o­ries of Hans Her­mann-Hoppe (dis­ci­ple of Lud­wig von Mis­es, stu­dent of Juer­gen Haber­mas, idol of bit­coin advo­cate R. Cody Wil­son) explic­it­ly reject democ­ra­cy. So does the Lud­wig von Mis­es Insti­tute, the epi­cen­ter for the eco­nom­ic the­o­ries of Ron Paul and Edward Snow­den. So does Peter Thiel, a bit­coin advo­cate and cap­i­tal­iz­er of Ron Paul’s 2012 polit­i­cal cam­paign. Thiel is also the largest stock­hold­er in Palan­tir, which appears to have devel­oped the PRISM soft­ware at the cen­ter of the Snow­den leaks. (Palan­tir CEO Alex Karp is also a stu­dent of Juer­gen Haber­mas.) “San­juro” takes this benight­ed phi­los­o­phy to its [per­haps inevitable] con­clu­sion. The endgame of lib­er­tar­i­an phi­los­o­phy does indeed appear to be “anar­cho-fas­cism.”

“Meet The ‘Assas­si­na­tion Mar­ket’ Cre­ator Who’s Crowd­fund­ing Mur­der With Bit­coins” by Andy Green­berg; Forbes; 11/28/2013.

As Bit­coin becomes an increas­ingly pop­u­lar form of dig­i­tal cash, the cryp­tocur­rency is being accept­ed in exchange for every­thing from socks to sushi to hero­in. If one anar­chist has his way, it’ll soon be used to buy mur­der, too.

Last month I received an encrypt­ed email from some­one call­ing him­self by the pseu­do­nym Kuwa­batake San­juro, who point­ed me towards his recent cre­ation: The web­site Assas­si­na­tion Mar­ket, a crowd­fund­ing ser­vice that lets any­one anony­mously con­tribute bit­coins towards a boun­ty on the head of any gov­ern­ment offi­cial–a kind of Kick­starter for polit­i­cal assas­si­na­tions. Accord­ing to Assas­si­na­tion Market’s rules, if some­one on its hit list is killed–and yes, San­juro hopes that many tar­gets will be–any hit­man who can prove he or she was respon­si­ble receives the col­lected funds.

For now, the site’s rewards are small but not insignif­i­cant. In the four months that Assas­si­na­tion Mar­ket has been online, six tar­gets have been sub­mit­ted by users, and boun­ties have been col­lected rang­ing from ten bit­coins for the mur­der of NSA direc­tor Kei­th Alexan­der and 40 bit­coins for the assas­si­na­tion of Pres­i­dent Barack Oba­ma to 124.14 bitcoins–the largest cur­rent boun­ty on the site–targeting Ben Bernanke, chair­man of the Fed­eral Reserve and pub­lic ene­my num­ber one for many of Bitcoin’s anti-bank­ing-sys­tem users. At Bitcoin’s cur­rent rapid­ly ris­ing exchanges rate, that’s near­ly $75,000 for Bernanke’s would-be killer.

Sanjuro’s gris­ly ambi­tions go beyond rais­ing the funds to bankroll a few polit­i­cal killings. He believes that if Assas­si­na­tion Mar­ket can per­sist and gain enough users, it will even­tu­ally enable the assas­si­na­tions of enough politi­cians that no one would dare to hold office. He says he intends Assas­si­na­tion Mar­ket to destroy “all gov­ern­ments, every­where.”

“I believe it will change the world for the bet­ter,” writes San­juro, who shares his han­dle with the name­less samu­rai pro­tag­o­nist in the Aki­ra Kuro­sawa film “Yojim­bo.” (He tells me he chose it in homage to cre­ator of the online black mar­ket Silk Road, who called him­self the Dread Pirate Roberts, as well Bit­coin inven­tor Satoshi Nakamo­to.) ”Thanks to this sys­tem, a world with­out wars, drag­net panop­ti­con-style sur­veil­lance, nuclear weapons, armies, repres­sion, mon­ey manip­u­la­tion, and lim­its to trade is firm­ly with­in our grasp for but a few bit­coins per per­son. I also believe that as soon as a few politi­cians gets offed and they real­ize they’ve lost the war on pri­vacy, the killings can stop and we can tran­si­tion to a phase of peace, pri­vacy and lais­sez-faire.”

...

Just read­ing about that cold­ly cal­cu­la­tive sys­tem of lethal vio­lence like­ly inspires queasy feel­ings or out­rage. But San­juro says that the public’s abhor­rence won’t pre­vent the sys­tem from work­ing. And as a mat­ter of ethics, he notes that he’ll accept only user-sug­gest­ed tar­gets “who have ini­ti­ated force against oth­er humans. More specif­i­cally, only peo­ple who are out­side the reach of the law because it has been sub­verted and cor­rupted, and whose vic­tims have no oth­er way to take revenge than to do so anony­mous­ly.”

Even set­ting aside the immoral­ity of killing, doesn’t the notion of enabling small minori­ties of angry Bit­coin donors to assas­si­nate elect­ed offi­cials sound like an attempt to crip­ple democ­racy? “Of course, lim­it­ing democ­racy is why we even have a con­sti­tu­tion,” San­juro responds. “Major­ity sup­port does not make a leader legit­i­mate any more than it made slav­ery legit­i­mate. With this mar­ket the great equal­is­ing forces of cap­i­tal­ism have the oppor­tu­nity to work in pol­i­tics too. One bit­coin paid is one vote clos­er to a veto of what­ever leg­is­la­tion you dis­like.”

San­juro didn’t actu­ally invent the con­cept of an anony­mous crowd­funded assas­si­na­tion mar­ket. The idea dates back to the cypher­punk move­ment of the mid-1990s, whose adher­ents dreamt of using encryp­tion tools to weak­en the gov­ern­ment and empow­er indi­vid­u­als. For­mer Intel engi­neer and Cypher­punk Mail­ing List founder Tim May argued that uncrack­able secret mes­sages and untrace­able dig­i­tal cur­rency would lead to assas­si­na­tion mar­kets in his “Cryptoanarchist’s Man­i­festo” writ­ten in 1992.

A few years lat­er, anoth­er for­mer Intel engi­neer named Jim Bell pro­posed a sys­tem of fund­ing assas­si­na­tions through encrypt­ed, anony­mous dona­tions in an essay he called “ Assas­si­na­tion Pol­i­tics.” The sys­tem he described close­ly match­es Sanjuro’s scheme, though anonymi­ty tools like Tor and Bit­coin were most­ly the­o­ret­i­cal at the time. As Bell wrote then:

If only 0.1% of the pop­u­la­tion, or one per­son in a thou­sand, was will­ing to pay $1 to see some gov­ern­ment slime­ball dead, that would be, in effect, a $250,000 boun­ty on his head. Fur­ther, imag­ine that any­one con­sid­er­ing col­lect­ing that boun­ty could do so with the math­e­mat­i­cal cer­tainty that he could not be iden­ti­fied, and could col­lect the reward with­out meet­ing, or even talk­ing to, any­body who could lat­er iden­tify him. Per­fect anonymi­ty, per­fect secre­cy, and per­fect secu­rity. And that, com­bined with the ease and secu­rity with which these con­tri­bu­tions could be col­lected, would make being an abu­sive gov­ern­ment employ­ee an extreme­ly risky propo­si­tion. Chances are good that nobody above the lev­el of coun­ty com­mis­sioner would even risk stay­ing in office.

Bell would lat­er serve years in prison for tax eva­sion and stalk­ing a fed­eral agent, and was only released in March of 2012. When I con­tacted him by email, he denied any involve­ment in Sanjuro’s Assas­si­na­tion Mar­ket and declined to com­ment on it.

San­juro tells me he’s long been aware of Bell’s idea. But he only decid­ed to enact it after the past summer’s rev­e­la­tions of mass sur­veil­lance by the NSA exposed in a series of leaks by agency con­trac­tor Edward Snow­den. “Being forced to alter my every hap­py mem­ory dur­ing inter­net activ­ity, every inti­mate moment over the phone with my loved ones, to also include some of the peo­ple I hate the most lis­ten­ing in, analysing the con­ver­sa­tion, was the inspi­ra­tion I need­ed to embark on this task,” he writes. “After about a week of mut­ter­ing ‘they must all die’ under my breath every time I opened a news­pa­per or turned on the tele­vi­sion, I decid­ed some­thing had to be done. This is my con­tri­bu­tion to the cause.”

Assas­si­na­tion Mar­ket isn’t the first web­site to sug­gest fund­ing mur­der with bit­coins. Oth­ers Tor-hid­den web­sites with names like Quick Kill, Con­tract Killer and C’thulhu have all claimed to offer mur­ders in exchange for bit­coin pay­ments. But none of them respond­ed to my attempts to con­tact their admin­is­tra­tors, and all required advanced pay­ments for their ser­vices, so they may be scams.

...

If the sys­tem does prove to work, the launch of Assas­si­na­tion Mar­ket may be ill-timed for San­juro, giv­en law enforcement’s recent crack­down on the dark web. In August, the FBI used an exploit in Tor to take down the web host­ing firm Free­dom Host­ing and arrest its founder Eric Eoin Mar­ques, who is accused of offer­ing his ser­vices to child pornog­ra­phy sites. And just last month, the FBI also seized the pop­u­lar Bit­coin– and Tor-based black mar­ket for drugs known as Silk Road and arrest­ed its alleged cre­ator, Ross Ulbricht.

San­juro coun­ters that in addi­tion to Tor, Bit­coin, and the usu­al encryp­tion tools, he has “mea­sures in place to pre­vent the effec­tive­ness of such an arrest. Nat­u­rally these will have to be kept secret.”

He adds that, like an ear­lier gen­er­a­tion of cypher­punks, he puts his faith in the math­e­mat­i­cal promise of cryp­tog­ra­phy to trump the government’s pow­er to stop him. “With cryp­tog­ra­phy, the state, or any pro­tec­tion firm, is large­ly obsolete…all activ­ity that can be reduced to infor­ma­tion trans­fer will be com­pletely out of the government’s, or anyone’s, hands, oth­er than the par­ties involved,” he says.

“I am a cryp­to-anar­chist,” San­juro con­cludes. “We have a bright future ahead of us.”

3. In an update, we learn that the alleged mas­ter­mind of the bit­coin-fund­ed Silk Road–the Lud­wig von Mises/Ron Paul devo­tee Ross Ulbricht–allegedly sought the con­tract mur­ders of six people–five more than orig­i­nal­ly stat­ed. It is inter­est­ing and rel­e­vant that both Ulbricht and “San­juro” pro­ceed from an anar­cho-lib­er­tar­i­an per­spec­tive, decry­ing slav­ery AND democ­ra­cy, ulti­mate­ly arriv­ing at a lethal advo­ca­cy posi­tion, alleged­ly so in Ulbricht’s case. Again, these peo­ple are indeed the “neue-wan­der­vo­gel.”

“One thing is clear from this arti­cle: Ross Ulbricht had a HUGE per­cent of the total bit­coin sup­ply. At least for an indi­vid­ual. The FBI received 144,336 bit­coins off of just one of Ulbricht’s com­put­ers, and with ~12 mil­lion bit­coins already in sup­ply (a lit­tle over half of the total 21 mil­lion), that means Ulbricht had over 1% of the cur­rent bit­coin sup­ply on that sin­gle com­puter alone. Accord­ing to the researchers, 78% of Ulbrich’s bit­coins are still “buried” and beyond the FBI’s reach. So Ulbricht, alone, may have actu­ally con­trolled clos­er to 5% of the total bit­coin sup­ply. It’s a reminder that bit­coins have an addi­tional built-in defla­tion­ary force: Lost bit­coins that can’t be recov­ered are lost for good, per­ma­nently reduc­ing the sup­ply of trade­able bit­coins while main­tain­ing the over­all sup­ply offi­cially in exis­tence (because a lost bit­coin is indis­tin­guish­able from one that’s sim­ply being saved). The small casu­al users with tiny frac­tions of a bit­coin in their accounts are prob­a­bly the most like­ly source of bit­coin loss­es, but since we have no real idea who the large bit­coin own­ers are at this point you have to won­der how many more hid­den bit­coin barons are going to end up either hand­ing siz­able per­cent­ages of the total bit­coin sup­ply over to law enforce­ment agen­cies or just los­ing them alto­geth­er.”

“Alleged Silk Road Boss Ross Ulbricht Now Accused of Six Mur­ders-for-Hire, Denied Bail” by Andy Green­berg; Forbes; 11/21/2013.

A New York judge denied bail to alleged Silk Road cre­ator Ross Ulbricht Thurs­day, based in part on fresh accu­sa­tions of vio­lence: That the 29-year-old alleged­ly com­mis­sioned the mur­ders of a total of six peo­ple through would-be hit­men he con­tacted online, four more than the two attempt­ed killings described in pros­e­cu­tors’ orig­i­nal crim­i­nal com­plaint.

Judge Nathaniel Fox said that the risk that Ulbricht might flee or present a dan­ger to the com­mu­nity over­whelmed argu­ments that he be released on bail, cit­ing “pow­er­ful evi­dence pre­sented to us that the defen­dant has attempt­ed to secure the mur­ders of a num­ber of peo­ple.”

Pros­e­cu­tor Ser­rin Turn­er laid out that evi­dence in a state­ment to the court, say­ing that much of it was gath­ered from a Silk Road serv­er locat­ed by the FBI as well as Ulbricht’s seized com­puter after he was arrest­ed in Octo­ber and accused of run­ning the Silk Road’s mas­sive anony­mous online drug sales oper­a­tion under the pseu­do­nym the Dread Pirate Roberts. Ser­rin said that Ulbricht had not only sent mes­sages to two would-be hitmen–an under­cover agent on one of those two occa­sions–ask­ing to have a wit­ness and a black­mailer killed, but had fol­lowed up by order­ing the killing of the blackmailer’s asso­ciate and three peo­ple who lived with him.

Mys­te­ri­ously, Turn­er said that in none of the cas­es were actu­al vic­tims found; In the first, FBI agents say they faked the death of alleged for­mer Silk Road employ­ee Cur­tis Greento con­vince Ulbricht the mur­der had tak­en place. But the out­come of the oth­er five mur­ders remains unex­plained. Nonethe­less, Turn­er argued, “the evi­dence is crys­tal clear that the defen­dant intend­ed these mur­ders to hap­pen.”

Crim­i­nal com­plaints against Ulbricht pre­vi­ously accused him of order­ing the killing of for­mer Silk Road employ­ee Cur­tis Green in Jan­u­ary of 2013 for $80,000 and then pay­ing a user known as “redand­white” $150,000 in the cryp­tocur­rency Bit­coin to kill a Silk Road user iden­ti­fied as “Friend­ly­Chemist,” who claimed to have hacked anoth­er Silk Road ven­dor and threat­ened to release Silk Road cus­tomers’ iden­ti­fy­ing infor­ma­tion if he wasn’t paid $500,000.

In court Thurs­day, Turn­er added four more attempt­ed mur­ders, say­ing that Friend­ly­Chemist had impli­cated anoth­er Silk Road user known as “tony76.” And when redand­white had told Ulbricht that tony76 lived with three oth­er peo­ple who would have to be killed if they were to obtain the mon­ey and pos­ses­sions in his home, Ulbricht alleged­ly agreed to have all four killed for $500,000 in bit­coins. “Based on the say-so of [an online assas­sin,] he was will­ing to kill three oth­ers just liv­ing with him,” said Turn­er.

Turn­er also described evi­dence on Ulbricht’s com­puter that includ­ed a log he kept of his activ­i­ties that he said includ­ed the line “com­mis­sioned hit on black­mail­ers with angels,” imply­ing that redand­white may have been a mem­ber of the Hell’s Angel motor­cy­cle gang, giv­en its asso­ci­a­tion with the col­ors red and white. Anoth­er line alleged­ly read “sent pay­ment to angels for hit on tony76 and his 3 asso­ciates.”

In fact, Turn­er enu­mer­ated evi­dence found on Ulbricht’s seized machine that went far fur­ther in tying him to his alleged Dread Pirate Roberts iden­tity. When Ulbricht was arrest­ed in the Glen Park library in San Fran­cisco, Turn­er said he was logged into the Silk Road under his Dread Pirate Roberts account and was look­ing at an admin­is­tra­tor con­trol page for the site as well as anoth­er page called “Mas­ter­mind” that showed Silk Road sales num­bers. Turn­er added that he was also logged into a chat pro­gram under the han­dle “dread,” and his Mac­book had the user­name “Frosty,” which he said was linked to Ulbricht’s email address in a post he’d made to a cod­ing forum.

Remark­ably, Turn­er also described a jour­nal tak­en from Ulbricht’s hard dri­ve that recounts the sto­ry of Silk Road’s cre­ation. He list­ed details like the fact that Ulbricht had ini­tially called the Silk Road “Under­ground Bro­kers,” but had lat­er decid­ed to change the name. The pros­e­cu­tors’ let­ter to the court includes this pas­sage:

I began work­ing on a project that had been in my mind for over a year. I was call­ing it Under­ground Bro­kers, but even­tu­ally set­tled on Silk Road. The idea was to cre­ate a web­site where peo­ple could buy any­thing anony­mously, with no trail what­so­ever that could lead back to them.

At anoth­er point, he wrote that in 2011, he would be “cre­at­ing a year of pros­per­ity and pow­er beyond what I have ever expe­ri­enced before,” and added that “Silk Road is going to become a phe­nom­e­non and at least one per­son will tell me about it, unknow­ing that I was its cre­ator.”

The jour­nal, accord­ing to Turner’s account, also details how Ulbricht grew sev­eral kilos of psy­che­delic mush­rooms in a lab in an “off-the-grid” cab­in to have an ini­tial prod­uct to sell on the Silk Road. In a spread­sheet found on Ulbricht’s com­puter, Turn­er said Ulbricht’s expens­es and income were list­ed, includ­ing a line for “sr inc.” that he said list­ed its val­ue at $104 mil­lion.

To sup­port the prosecution’s argu­ment Ulbricht rep­re­sented a flight risk, he not­ed that Ulbricht had tak­en steps towards apply­ing for cit­i­zen­ship in the island nation of Domini­ca, and had dis­cussed mov­ing there with friends on Face­book.

...

4. In anoth­er update, we learn that the suc­ces­sor to Silk Road–Sheep Marketplace–has van­ished tak­ing vast amounts of its users’ bit­coins with it. The users of Sheep Mar­ket­place, it would seem, have been fleeced!

“Anony­mous Online Mar­ket­place that Replaced Silk Road Van­ish­es . . . Tak­ing $100 Mil­lion of Users’ Mon­ey With It” by Joshua Gard­ner; Dai­ly Mail [UK]; 12/2/2013.

A shady online mar­ket­place that anony­mous­ly sold drugs and guns has vir­tu­al­ly dis­ap­peared, leav­ing ille­gal ven­dors believ­ing they’ve been scammed out of as much as $100 mil­lion.

Sheep Mar­ket­place emerged as the go-to replace­ment to Silk Road, a sim­i­lar bazaar shut­tered by the FBI in Octo­ber.

Now users of the site, which oper­at­ed out­side the law to begin with and dealt only in anony­mous Bit­coins, fear it was a scam all along.

Shield­ed from author­i­ties and using spe­cial soft­ware to access the so-called ‘Deep Web’ site, buy­ers could find drugs, guns, and even hit men.
Buy­ers would put their Bit­coins into the mar­ket­place, where sell­ers would with­draw them, with all the trans­ac­tions mod­er­at­ed by the web­site.
Which is where the issue first arose.

In the days before the site shut down, ven­dors sud­den­ly found them­selves unable to access the Bit­coins tied up in the site’s wal­let.
As they com­plained, reports RT, they found their com­ments sud­den­ly yanked from the site’s forums.

Buy­ers also began to see sus­pi­cious things in the time lead­ing up to this pos­si­ble scam. Some ven­dors, though not all, began to list their drugs and oth­er goods at prices far low­er than ever before.

Now, many believe they were being bilked out of as many of their Bitcoins—a dif­fi­cult to trace form of online cur­ren­cy cur­rent­ly worth over $1,000 a piece—as pos­si­ble before tak­ing the mon­ey and run­ning.

On Sun­day, vis­i­tors to the site found a note in place of the home­page that claimed a ven­dor called EBOOK101 had stolen from the site’s cache of Bit­coins.

‘This ven­dor found bug in sys­tem and stole 5400 BTC,’ reads the brief note. ‘Your mon­ey, our pro­vi­sions, all was stolen.’
How­ev­er, accord­ing to a post on Hack­er News, a wal­let of far more Bit­coins has been traced back to the site.

Val­ued at $45 mil­lion, 39,918 in Bit­coins could now be in the hands of a those behind the site after scam­ming untold num­bers of hope­ful drug users and gun tot­ers out of their hard earned vir­tu­al cash.

Or per­haps even more.

Accord­ing to the Dai­ly Dot, one Red­di­tor claims to have engaged in a vir­tu­al chase with Czech com­put­er pro­gram­mer Tomáš Jiřikovsky, who user sheeproadreloaded2 claims is behind the site and has abscond­ed with 96,000 bit­coins, or about $95 mil­lion dol­lars. . . . .

5. “Pter­rafractyl” informs us of anoth­er aspect of the vul­ner­a­bil­ity of Bit­coin: “One of the inter­est­ing aspects about the bit­coin phe­nom­ena is that the more peo­ple that start using bit­coin the greater the defla­tion­ary pres­sure on the val­ue of the bit­coins. That’s because there’s a fixed max­i­mum of 21 mil­lion bit­coins that can ever exist, so the greater the demand for bit­coins the more each bit­coin will cost in oth­er cur­ren­cies. With the Chi­nese mar­ket now warm­ing up to bit­coin, and all those new poten­tial users, we might see a fas­ci­nat­ing exam­ple of a hyper­de­fla­tion­ary vir­tual gold bub­ble.”

“Bit­coins Climb to Record, on Wider Accep­tance, Chi­na Trade” by Olga Kharif; Bloomberg News; 11/6/2013.

Bitcoin’s price hit a record at $265 on the Bit­Stamp online exchange, dri­ven by wider accep­tance of the vir­tual cur­ren­cy.

The dig­i­tal mon­ey, which can be used to pay for goods and ser­vices on the Inter­net, has risen 20-fold so far this year, as trad­ing activ­ity has increased. Bit­coins were trad­ing at $251.36 apiece at 6:30 p.m. in New York on Bit­Stamp, one of the more active Web-based exchanges where Bit­coins are trad­ed for dol­lars, euros and oth­er cur­ren­cies.

The ral­ly comes a month after the clos­ing of the “Silk Road Hid­den Web­site,” where peo­ple could obtain drugs, guns and oth­er illic­it goods using Bit­coins. The vir­tual cur­rency lost a third of its val­ue in the days after the web­site was shut down. Bit­coins are becom­ing increas­ingly pop­u­lar, par­tic­u­larly in Chi­na, said Ugo Egbunike, direc­tor of busi­ness devel­op­ment at Index­U­ni­verse, an index-fund researcher.

“I thought Silk Road is going to do some dam­age to the price,” Egbunike said. “But with BTC Chi­na buy­ing this up — they seem to have picked up the slack.”

BTC Chi­na is now the world’s largest Bit­coin exchange, Nicholas Colas, a Con­vergEx Group ana­lyst, wrote in a Nov. 5 report.

The vir­tual cur­rency exists as soft­ware that’s designed to be untrace­able, mak­ing it an attrac­tive ten­der for those seek­ing to trade anony­mously via the Web. There are about 30 trans­ac­tions per minute, at an aver­age amount of 16 Bit­coins, accord­ing to a report today by the Fed­eral Reserve Bank of Chica­go. . . .

6. Fur­ther updat­ing the dis­cus­sion “Pter­rafractyl” informs us: It would be pret­ty hilar­i­ous if Bit­coin, a cur­rency cher­ished by haunt­ed by hyper­in­fla­tion­ary fears, because an object les­son in the dan­gers of defla­tion. But it’s hard to see how this les­son will be avoid­ed if Bit­coin ever real­ly caught on. One of the main fea­tures of the the cur­rency is that it’s capped out at 21 mil­lion coins but you can divide each coin up into small­er and small­er pieces. There­fore, the rea­son­ing goes, Bit­coin has defeat­ed the infla­tion beast while still main­tain­ing the scal­a­bil­ity required to han­dle the vol­ume of trans­ac­tions in vir­tu­ally any sized econ­omy! Rev­o­lu­tion awaits! And this is sort of true of Bit­coins but the vic­tory over infla­tion also comes at the cost of built-in defla­tion cor­re­lated to the growth of the Bit­coin econ­omy (imag­ine if dol­lars grew more expen­sive with the growth of the US econ­omy). So the more Bit­coin grows in pop­u­lar­ity the greater the defla­tion, the greater the pay­out to the ear­li­est bit­coin investors, and the greater the temp­ta­tion to keep hold­ing onto those Bit­coins.

“If You Believe in Bit­coin, You Should Nev­er Buy Any­thing in Bit­coin” by Jon Weisen­thal; Business Insid­er; 11/10/2013.

Many Bit­coin believ­ers think that the dig­i­tal cur­rency will one day become the pre-emi­nent cur­rency of the inter­net. They basi­cally see it becom­ing the internet’s ver­sion of gold in that it’s nat­u­rally scarce, inde­pen­dent, vir­tu­ally impos­si­ble to manip­u­late, and cru­cially suit­ed for a dig­i­tal world when mon­ey ought to be able to be moved seam­lessly and at no cost.

Well here’s a tip: If you think that this is true, then nev­er use Bit­coin in a trans­ac­tion.

As more peo­ple have got­ten into Bit­coin, the price has gone way up.

Vir­tu­ally every­one who has ever bought any­thing in Bit­coin has been a huge los­er, who would have been bet­ter suit­ed just hold­ing onto the Bit­coins instead.

Remem­ber the piz­za that was pur­chased for $25 in Bit­coins years back? Had the per­son not bought that piz­za, it would be worth near­ly $3 mil­lion. That pur­chase was a cat­a­strophic deci­sion, as that was prob­a­bly the most expen­sive piz­za of all time.

Of course this presents a Catch-22. How can Bit­coin become a real cur­rency if it’s not used in trans­ac­tions? And why would any­one use it in trans­ac­tions if becom­ing a real cur­rency offers so much more price appre­ci­a­tion? This con­tra­dic­tion is a core prob­lem, and it’s a rea­son why it’s prob­a­bly doomed to fail (real cur­ren­cies don’t have this issue, since cen­tral banks pre­vent rapid price appre­ci­a­tion, and they man­date that the cur­rency be used). . . .

7. The per­ils of “Bit­coin­ery” were illus­trat­ed when a Hong Kong Bit­coin mar­ket van­ished, tak­ing $5 mil­lion dol­lars with it!

“Hong Kong Bit­coin Trad­ing Plat­form Van­ishes with Mil­lions” by Liu Jiayi; ZDNet; 11/12/2013.

When ardent Chi­nese Bit­coin investors found that they could no longer access the web­site of Glob­al Bond Lim­ited (GBL) in the ear­ly morn­ing of Octo­ber 26, it was already too late.

One investor under the pseu­do­nym of South Amer­i­can Vicu­na orga­nized an online group for the los­ing traders and told IT Times on Mon­day that more than 30 mil­lion yuan from 500 investors, many of whom sold homes to get in the vir­tual cur­rency trade, could nev­er be retrieved.

Accord­ing to the Vicu­na, after the GBL’s web­site shut­down, it left only one mes­sage, say­ing that the site was com­pro­mised and investors who want to get back their invest­ment data shall trans­fer mon­ey to a des­ig­nated account. Now all con­tacts are not respond­ing, and the com­pany office in Hong Kong is as emp­ty as the traders’ pock­ets.

GBL self-pro­claimed that the local gov­ern­ment had approved vir­tual cur­rency exchange back on June 8, and lured buy­ers in with high lever­age rate and high yield. How­ever, the too-obvi­ous-to-ignore trad­ing loop­hole in its trad­ing sys­tem raised con­cerns, but the “always-win­ning” traders were too obsessed to get out, accord­ing to Vicu­na. . . .

8. Cor­nell Uni­ver­si­ty researchers have dis­cov­ered a fun­da­men­tal flaw in bit­coin that can per­mit a very small num­ber of users to take over the mar­ket.

“Bit­coin Vul­ner­a­bil­ity Could Allow Mali­cious Min­ers to Seize Con­trol”; MIT Tech­nol­o­gy Review; 11/8/2013.

One of Bitcoin’s big advan­tages is that it is decen­tralised with nobody in over­all con­trol. But now a sim­ple strat­egy has emerged that could allow almost any group to take over, say com­puter secu­rity ana­lysts.

The dig­i­tal cur­rency Bit­coin is one of the zeit­geist phe­nom­ena of our time. Since 2009, it has grown from a dig­i­tal curios­ity to an online phe­nom­e­non. There are now some 11.5 mil­lion Bit­coins in cir­cu­la­tion and each one is worth over $300.

The Bit­coin sys­tem is specif­i­cally designed to over­come one of the seri­ous flaws of pre­vi­ous dig­i­tal currencies—the pos­si­bil­ity of dou­ble spend­ing; that two peo­ple could spend two copies of the same cur­rency at the same time. It is also decen­tralised so that no sin­gle organ­i­sa­tion or organ­ised group of indi­vid­u­als can con­trol the cur­rency and pre­vent cer­tain types of trans­ac­tions.

But Bit­coin may not be quite as secure as every­body thought. Today, Ittay Eyal and Emin Gun Sir­er at Cor­nell Uni­ver­sity in Itha­ca say they’ve dis­cov­ered a flaw that allows any organ­ised group of Bit­coin min­ers to take over the cur­rency. And they say that some groups today are already big enough to do the job.

First some back­ground. Per­haps Bitcoin’s biggest advan­tage is its unique approach to pre­vent­ing dou­ble spend­ing. It does this by record­ing every trans­ac­tion in a sin­gle log known as a blockchain. An indi­vid­ual account can only spend a Bit­coin if the blockchain records that it owns the Bit­coin in the first place.

This log is pro­tected by cryp­top­uz­zles that can only be solved by large scale num­ber crunch­ing. When any­body solves such a puz­zle, they can record new trans­ac­tions and are reward­ed with a fee in the form of new Bit­coins.

Hence the emer­gence of Bit­coin min­ers. These are peo­ple who devote com­put­ing pow­er to solve cryp­top­uz­zles and are paid for their work in Bit­coins.

If you’re think­ing of a career as a Bit­coin min­er, you’ll imme­di­ately run into a prob­lem. The cryp­top­uz­zles are so dif­fi­cult that the chances of solv­ing one by your­self is tiny. So Bit­coin min­ers work togeth­er in groups so that they can solve the prob­lems more quick­ly. If any one of them solves a puz­zle, they all share the pro­ceeds.

There are lots of groups to join and there’s no advan­tage in join­ing one over anoth­er. The received wis­dom is that this keeps the min­ing decen­tralised.

But now Eyal and Sir­er say that’s not true and have worked out how a self­ish group of min­ers could take over the cur­rency. “We show that the con­ven­tional wis­dom is wrong,” they say.

The trick is to mine for Bit­coins but to keep the results secret. This cre­ates a fork in the blockchain so that one half of the fork is pub­lic and the oth­er half is secret.

The Bit­coin sys­tem has a way of resolv­ing these kinds of forks, which occur by acci­dent from time to time. It requires min­ers to join the longest fork. The trans­ac­tions in the oth­er fork are then resub­mit­ted for res­o­lu­tion.

If the self­ish min­ers make their fork longer than the pub­lic one, it becomes the cho­sen chain.

The prob­lem is that the num­ber crunch­ing done on the fork that is aban­doned is wast­ed. So the self­ish min­ers end up get­ting more than their fair share of Bit­coins. This “enables pools of col­lud­ing min­ers that adopt it to earn rev­enues in excess of their min­ing pow­er,” say Eyal and Sir­er.

Hav­ing skewed the sys­tem in favour of self­ish min­ers, oth­er min­ers see that they can make more Bit­coins by join­ing this group. The result is a tip­ping point in which the Bit­coin min­ing sys­tem sud­denly becomes dom­i­nated by a sin­gle group. And this group can exer­cise what­ever con­trol it likes over how trans­ac­tions are record­ed.

Of course, self­ish min­ing only reach­es a tip­ping point if the self­ish group con­sists of a cer­tain frac­tion of Bit­coin min­ers. Groups that are small­er than this can­not force the sys­tem to tip.

The key result that Eyal and Sir­er have cal­cu­lated is that the tip­ping thresh­old is close to zero zero. So almost any group could adopt the self­ish min­ing strat­egy and end up con­trol­ling the sys­tem.

Eyal and Sir­er have a solu­tion of sorts. This involves a chang­ing the sys­tem so that it choos­es one fork over anoth­er at ran­dom (rather than choos­ing the lon­er one). When this choice is ran­dom, then it is hard­er for the self­ish min­ers to take con­trol.

But not that much hard­er. Eyal and Sir­er cal­cu­late that this rais­es the tip­ping thresh­old to groups that con­trol around 25 per cent of all Bit­coin min­ing. “Even with our pro­posed fix that rais­es the thresh­old to 25 per cent, the out­look is bleak: there already exist pools whose min­ing pow­er exceeds the 25%,” they point out. . . . .

9. Not sur­pris­ingly, it turns out that Bit­coin is high­ly vul­ner­a­ble to self­ish “min­ing,” which could per­mit knowl­edge­able and enter­pris­ing male­fac­tors to cor­ner the mar­ket.

“In the Murky World of Bit­coin, Fraud is Quick­er than the  Law” by Nathaniel Pop­per; The New York Times; 12/05/2013.

It was an invi­ta­tion to a pen­ny stock-style pump-and-dump scheme — only this one involved Bit­coin, the soar­ing, slight­ly scary vir­tu­al cur­ren­cy that has beck­oned and bewil­dered peo­ple around the world.

While such bid ’em up, sell ’em off scams are shut down in the finan­cial mar­kets all the time, this one and oth­er frauds involv­ing dig­i­tal mon­ey have gone unchecked. The rea­son, in no small part: Gov­ern­ment author­i­ties do not agree on which laws apply to Bit­coin — or even on what Bit­coin is.

The per­son behind the recent scheme, a trad­er known on Twit­ter as Fontas, said in a secure Inter­net chat that he oper­at­ed with lit­tle fear of a crack­down.

“For now, the lack of reg­u­la­tions allows every­thing to hap­pen,” Fontas said in the chat, where he ver­i­fied his con­trol of the Twit­ter account, which has thou­sands of fol­low­ers, but did not give his iden­ti­ty. He added that Bit­coin and its users would ben­e­fit when some­one steps in to police this finan­cial wild west, and would stop his schemes when they do.

Chi­nese author­i­ties drew atten­tion to the issue on Thurs­day when they announced that they were bar­ring Chi­nese banks from mak­ing Bit­coin trans­ac­tions. The same day, the Bank of France issued its own warn­ing about the poten­tial risks. The news sent the price of Bit­coin tum­bling, but it quick­ly bounced back to near its all-time high of around $1,200. . . .

10. Bit­coin users have relied on the TOR net­work, to a con­sid­er­able extent. Because TOR is not as secure as advertsed, some have avoid­ed using it. Now the Max Planck Insti­tute is research­ing the devel­op­ment of a more secure oper­a­tion, that might per­mit dras­tic pro­lif­er­a­tion of the types of ills that appear inher­ent in the bit­coin con­cept.

“Anonymi­ty Net­work Tor Needs a Tune-Up to Pro­tect Users from Sur­veil­lance” by Toni Simonite; MIT Tech­nol­o­gy Review; 10/25/2013.

. . . . This month’s reports, based on doc­u­ments leaked by Edward Snow­den, didn’t say whether the NSA was doing so. But a 2012 pre­sen­ta­tion marked as based on mate­r­i­al from 2007, released by the Guardian, and a 2006 NSA research report on Tor, released by the Wash­ing­ton Post did men­tion such tech­niques.

Stevens Le Blond, a researcher at the Max Planck Insti­tute for Soft­ware Sys­tems in Kaiser­slautern, Ger­many, guess­es that by now the NSA and equiv­a­lent agen­cies like­ly could use traf­fic cor­re­la­tion should they want to. “Since 2006, the aca­d­e­m­ic com­mu­ni­ty has done much work on traf­fic analy­sis and has devel­oped attacks that are much more sophis­ti­cat­ed than the ones described in this report.” Le Blond calls the poten­tial for attacks like those detailed by John­son “a big issue.”

Le Blond is work­ing on the design of an alter­na­tive anonymi­ty net­work called Aqua, designed to pro­tect against traf­fic cor­re­la­tion. Traf­fic enter­ing and exit­ing an Aqua net­work is made to be indis­tin­guish­able through a mix­ture of care­ful tim­ing, and blend­ing in some fake traf­fic. How­ev­er, Aqua’s design is yet to be imple­ment­ed in usable soft­ware and can so far only pro­tect file shar­ing rather than all types of Inter­net usage. . . . .

11. A sup­ple­men­tal sto­ry, not includ­ed in the orig­i­nal pro­gram, con­cerns Ron Paul’s enthu­si­as­tic views on bit­coin.

“Ron Paul:Bitcoin Could Destroy the Dol­lar” by Jose Pagliery; CNN­Money; 12/4/2013.

Imag­ine a world in which you can buy any­thing in secret. No banks. No fees. No wor­ries infla­tion will make today’s mon­ey worth less tomor­row.

The dig­i­tal cur­ren­cy Bit­coin promis­es all these things. And while it’s far from achiev­ing any of them — its val­ue is unsta­ble and it’s rarely used — some have high hopes.

“There will be alter­na­tives to the dol­lar, and this might be one of them,” said for­mer U.S. con­gress­man Ron Paul. If peo­ple start using bit­coins en masse, “it’ll go down in his­to­ry as the destroy­er of the dol­lar,” Paul added.

It’s unlike­ly that Bit­coin would replace the dol­lar or oth­er gov­ern­ment-con­trolled cur­ren­cies. But it could serve as a kind of uni­ver­sal alter­na­tive cur­ren­cy that is accept­ed every­where around the globe. Con­cerned about the dol­lar’s infla­tion? Just move your cash to bit­coins and use them to pay your bills instead. Tired of hefty cred­it card fees? Bit­coin allows trans­ac­tions that bypass banks. . . .

12. In anoth­er sup­ple­men­tal sto­ry, not includ­ed in the orig­i­nal pro­gram, we learn that the Euro­pean Cen­tral Bank views bit­coin as root­ed fun­da­men­tal­ly in the Lud­wig von Mises/Friedrich von Hayek the­o­ret­i­cal con­struct.

“ECB: ‘Roots Of Bit­coin Can Be Found In The Aus­tri­an School Of Eco­nom­ics’ ” by Jon Mato­nis; Forbes; 11/3/2012.

The ECB (Euro­pean Cen­tral Bank) has pro­duced the first offi­cial cen­tral bank study of the decen­tral­ized cryp­to­graphic mon­ey known as bit­coin, Vir­tual Cur­rency Schemes. Ignor­ing for a moment the ECB’s con­de­scend­ing and deroga­tory use of the vir­tual cur­rency phrase and scheme phrase, the study pro­duced at least one land­mark achieve­ment.

In claim­ing that “The the­o­ret­i­cal roots of Bit­coin can be found in the Aus­trian school of eco­nom­ics,” the ECB for­ever linked Bit­coin to the proud eco­nomic her­itage of Menger, Mis­es, and Hayek as well as to Aus­trian busi­ness cycle the­ory. This recog­ni­tion is also a direct tes­ta­ment to the mon­e­tary the­ory work of Friedrich von Hayek who inspired many with his 1976 land­mark pub­li­ca­tion of Dena­tion­al­i­sa­tion of Mon­ey.

Bit­coin ful­ly embod­ies the spir­it of dena­tion­al­ized mon­ey as it seeks no author­ity for its con­tin­ued exis­tence and it rec­og­nizes no polit­i­cal bor­ders for its cir­cu­la­tion. Indeed accord­ing to the report, pro­po­nents see Bit­coin as “a good start­ing point to end the monop­oly cen­tral banks have in the issuance of mon­ey” and “inspired by the for­mer gold stan­dard.”

Econ­o­mists from the 19th and mid-20th cen­turies can be for­given for not antic­i­pat­ing an inter­con­nected dig­i­tal realm like the Inter­net with its p2p dis­trib­uted archi­tec­ture, but mod­ern econ­o­mists can­not be. From their own con­clu­sions (on page 48) which inac­cu­rately lump Bit­coin togeth­er with Lin­den Dol­lars, here is what the mod­ern-day econ­o­mists at the ECB are still not get­ting:

1. ECB con­cludes that if mon­ey cre­ation remains at a low lev­el, bit­coin does not pose a risk to price sta­bil­ity. This is incor­rect on two lev­els. One, the cre­ation of new bit­coin is capped at 21 mil­lion with eight cur­rent dec­i­mal places so it grows through adop­tion and usage rather than mon­e­tary expan­sion. And two, as with gold, sil­ver, and oth­er com­modi­ties hav­ing a mon­e­tary com­po­nent, price sta­bil­ity is a func­tion of the mar­ket not cen­tral plan­ners;

2. ECB con­cludes that bit­coin can­not jeop­ar­dize finan­cial sta­bil­ity due to its low vol­ume and lim­ited con­nec­tion with the real econ­omy. Con­versely, bit­coin will tend to increase finan­cial sta­bil­ity and over­all sound­ness. Bitcoin’s con­nec­tion with the real econ­omy is only a con­cern for the reg­u­lated and taxed econ­omy, where­as bit­coin inde­pen­dently may thrive in the $10 tril­lion shad­ow or “orig­i­nal” econ­omy. Besides, with its repeat­ed mar­ket inter­ven­tions, no one has done more to jeop­ar­dize finan­cial sta­bil­ity than the ECB itself;

3. ECB con­cludes that bit­coin is cur­rently not reg­u­lated and super­vised by any pub­lic author­ity. It would be more accu­rate to say that State-spon­sored reg­u­la­tion is large­ly irrel­e­vant because of the inher­ent design prop­er­ties of a peer-to-peer dis­trib­uted com­put­ing sys­tem. But hap­pily, this is still a con­clu­sion that I can agree with and rec­om­mend that it remains the case;

4. ECB con­cludes that bit­coin could rep­re­sent a chal­lenge for pub­lic author­i­ties, giv­en the legal uncer­tainty and poten­tial for per­form­ing ille­gal activ­i­ties. While pub­lic author­i­ties will cer­tainly be chal­lenged by the intro­duc­tion of a mon­e­tary unit that can­not be manip­u­lated for polit­i­cal pur­poses, bit­coin in some cas­es does have the abil­ity to pro­vide track­ing capa­bil­ity that far exceeds that of nation­al cash or mon­ey sub­sti­tutes. What author­i­ties will find most trou­bling though, with bit­coin, is that mon­ey flows between indi­vid­u­als and busi­nesses will no longer be exploitable for pur­poses of unlim­ited iden­tity track­ing and uncon­sti­tu­tional ‘fish­ing expe­di­tions’

13. We link a char­ac­ter­is­ti­cal­ly impor­tant and detailed post by “Pter­rafractyl” on this sub­ject.

14. In a com­ment, “Pter­rafractyl” updates, not­ing that the prob­a­bly myth­i­cal “Satoshi Nakamo­to” is appar­ent­ly the biggest bit­coin hold­er. This would make Ger­man Intel/Underground Reich the biggest hold­er, if our work­ing hypoth­e­sis pre­sent­ed in FTR #760 is valid.

15. Anoth­er “Pter­rafractyl” com­ment sup­ports the work­ing hypoth­e­sis that “Satoshi Nakamo­to” is a fic­ti­tious name for prob­a­ble Euro­pean ele­ments.

16. Yet anoth­er “Pter­rafractyl” con­tri­bu­tion notes that con­cen­tra­tion of own­er­ship appears to be a fun­da­men­tal char­ac­ter­is­tic of bit­coin min­ers.

 

 

 

 

Discussion

15 comments for “FTR #764 Bit[coin]burg, Part 2, The Snowden-Inspired, Bitcoin-operated Online Murder Incorporated”

  1. Here’s an inter­est­ing fun-fact about the con­cen­tra­tion of pow­er in the bit­coin min­ing mar­ket and the risk of “self­ish min­ing”:

    If you go here you can find a charge of the “hashrate dis­tri­b­u­tion” that shows the rel­a­tive amounts of the total hash­es (hash­es are cal­cu­lat­ed as part of the min­ing process). Notice how two guilds, BTC Guild and GHash.IO, con­trol well over 50% of of the total min­ing pro­cess­ing pow­er. Sit­u­a­tions like this are a huge poten­tial prob­lem for how bit­coin is sup­posed to work. But, in a way, this is a sym­bol of bit­coin’s poten­tial pop­ulism in that a guild con­sists of THOUSANDS of users all work­ing togeth­er. So at least when the BTC Guild and GHash.IO take over the min­ing mar­ket the pro­ceeds would be going to a large num­ber of peo­ple and not just some hand­ful of super-min­ers. Except it may not be quite that clean because, as of April of this year, the top 10 users in the BTC Guild account­ed for half of the entire guild’s pro­cess­ing pow­er and would there­fore get about half of BTC Guild’s the pro­ceeds and it’s unclear why a sit­u­a­tion like that that would­n’t still be the case today.

    Posted by Pterrafractyl | December 18, 2013, 12:16 pm

  2. We won’t know until Christ­mas day, but odds are San­ta won’t be deliv­er­ing all of the items on Ross Ulbricht’s wish list this year:

    The Reg­is­ter
    Ross Ulbricht: ‘Oi! Give me back my $34m in Silk Road Bit­coin booty’
    Claims asset seizure was ille­gal
    By Neil McAl­lis­ter, 24th Decem­ber 2013

    After his arrest in Octo­ber, 29-year-old Ross Ulbricht main­tains that he is not the Dread Pirate Roberts, mas­ter­mind of the online drugs mar­ket­place Silk Road. But he also says the Bit­coins the author­i­ties seized from Silk Road belong to him, and the gov­ern­ment should give them back.

    Since shut­ting down the secre­tive online shop, the FBI claims to have con­fis­cat­ed elec­tron­ic wal­lets con­tain­ing more than 173,000 Bit­coins from Silk Road – an amount worth about $33.6m in real-world cur­ren­cy.

    The author­i­ties claim these funds are the pro­ceeds of a crim­i­nal con­spir­a­cy involv­ing drugs traf­fick­ing and mon­ey laun­der­ing. Ulbricht, on the oth­er hand, says that’s got noth­ing to do with him – yet the New York Post reports that he has also filed papers with a fed­er­al court in New York City demand­ing that the seized Bit­coins be returned to him.

    In a nota­rized state­ment dat­ed Decem­ber 11, Ulbricht report­ed­ly says he “has an inter­est as own­er” in the seized funds and argues that as a vir­tu­al cur­ren­cy, Bit­coins are “not sub­ject to seizure” under fed­er­al for­fei­ture laws.

    It’s a neat argu­ment. Since the Silk Road raid was the largest Bit­coin for­fei­ture in US his­to­ry, the courts lit­er­al­ly have nev­er heard a case quite like it. It’s pos­si­ble that a judge could rule that Bit­coins don’t count as the kind of prop­er­ty that can be seized in a crim­i­nal pros­e­cu­tion.

    It’s unlike­ly, though. In past cas­es, courts have seen fit for author­i­ties to seize every­thing from cash to cars, boats, hous­es, art­work, and even intel­lec­tu­al prop­er­ty such as inter­net domain names. Just the fact that Ulbricht wants the Bit­coins back would seem to estab­lish that they have val­ue and are there­fore fair game for for­fei­ture.

    Still, Ulbricht could cer­tain­ly use the mon­ey. Although he was rep­re­sent­ed by a pub­lic defend­er in his first few court appear­ances, he has since retained the ser­vices of New York attor­ney Joshua Dra­tel, and his case looks like it could be a long one. Among oth­er offens­es, he is charged with com­mis­sion­ing the con­tract killings of as many as six peo­ple (although there is no evi­dence that any­one was actu­al­ly killed).

    ...

    Posted by Pterrafractyl | December 24, 2013, 7:01 pm

  3. One of the yet to be answered ques­tions regard­ing the future of bit­coin is what hap­pens when one of the large stake­hold­ers decides to pub­licly cash out? It turns out the FBI is giv­ing us a mini-pre­view of such an event: The FBI just got clear­ance to auc­tion off near­ly 30k bit­coins of the 144k they seized from Ross Ulbricht which means the bit­coin mar­ket has a bit of a stress-test com­ing up:

    ArsTech­ni­ca
    Feds ready to auc­tion off $25 mil­lion in Silk Road Bit­coin
    Funds seized from alleged Silk Road founder Ross Ulbricht are still in con­tention.

    by Megan Geuss — Jan 16 2014, 8:15pm CST

    In a press release on Thurs­day, the US Attor­ney’s office for the South­ern Dis­trict of New York announced the for­fei­ture of 29,655 bit­coins that were seized from a Silk Road serv­er dur­ing a raid in Octo­ber. At cur­rent exchange rates, that purse is worth about $25 mil­lion, up from $3.5 to 4 mil­lion when it was seized. The US Attor­ney’s office also announced that the Silk Road web­site will be for­feit­ed along with the bit­coins.

    A spokesper­son for the US Attor­ney’s office told Forbes that the bit­coins will be auc­tioned off, although he could not say when the auc­tion will take place. It will be the fed­er­al gov­ern­men­t’s first-ever auc­tion of bit­coins, and as Forbes points out, there is no legal­ly cer­ti­fied US Bit­coin exchange, so con­vert­ing the stash into cash first will like­ly not be an option.

    Ross Ulbricht, who alleged­ly went by the name of Dread Pirate Roberts and who is sus­pect­ed of being the mas­ter­mind behind the Silk Road, has been in cus­tody since fed­er­al agents arrest­ed him at the Glen Park branch of the San Fran­cis­co Pub­lic Library three months ago. That day, feds also seized a cache of 144,000 bit­coins that belonged to Ulbricht per­son­al­ly. While the gov­ern­ment is seek­ing to auc­tion off those bit­coins as well, Ulbricht is con­test­ing the for­fei­ture in civ­il court.

    Just two days after the Silk Road and its assets were seized, Bit­coin enthu­si­asts dis­cov­ered the wal­let. At the time, it con­tained almost 27,000 bit­coins seized from the Silk Road that were being held by the fed­er­al gov­ern­ment. As Bit­coin trans­ac­tions are pub­lic, sev­er­al peo­ple began trans­fer­ring very small amounts of bit­coin into the fed­er­al­ly held wal­let so as to send a mes­sage to the author­i­ties in the “pub­lic field” of the trans­ac­tion. Some mes­sages includ­ed “Pub­lic Note: I THOUGHT OF SNIFFING FARTS WHILST SENDING THESE BITCOINS TO YOU” as well as “Pub­lic Note: hey com­put­er geek, who con­trol this address. ‘Ross Ulbricht’ is not the bad guy, you are a bad guy. Please open your eyes, dont be brain­washed, and think your self!!!” Those micro-trans­ac­tions will also be includ­ed in the auc­tion, it seems.

    ...

    So peo­ple vol­un­tar­i­ly send bit­coins to the FBI just to send the agency angry mes­sages in the trans­ac­tion’s “pub­lic field” and make that mes­sage part of the bit­coin pub­lic record? It looks like we just dis­cov­ered how gov­ern­ments are going to fund them­selves after cryp­to-cur­ren­cies have replaced cash and trans­ac­tions are no longer tax­able. Just think of how many angry rev­enue-enhanc­ing bit­coin-mes­sages gov­ern­ment agen­cies will receive once cryp­to-cur­ren­cy-agorism adds its force to the dom­i­nant Norquist-agorism that’s already has been Starv­ing the Beast for a gen­er­a­tion. Thanks to bit­coin, anti-gov­ern­ment hate-mail can finance the gov­ern­ment. Hel­lo sur­plus­es!

    Posted by Pterrafractyl | January 18, 2014, 10:12 pm

  4. Cody Wil­son, the guy brought us the 3D-print­able gun, has a new plan to lib­er­ate human­i­ty from the New World Order: The Dark Wal­let:

    Forbes
    Dark Wal­let Aims To Be The Anar­chist’s Bit­coin App Of Choice

    Andy Green­berg, Forbes Staff

    Bit­coin may be the world’s first decen­tral­ized, state­less dig­i­tal cur­ren­cy. But in the eyes of at least one group of anar­chists, the Bit­coin com­mu­ni­ty has been get­ting a lit­tle too cozy with the estab­lish­ment. And they want to bring the cryp­tocur­ren­cy back to its anti-reg­u­la­to­ry roots.

    On Thurs­day a group of lib­er­tar­i­an Bit­coin devel­op­ers call­ing them­selves Unsys­tem launched a crowd­fund­ing cam­paign to raise mon­ey to code a new Bit­coin “wal­let” they’re call­ing Dark Wal­let. Like any Bit­coin wal­let, Dark Wal­let will store a user’s Bit­coins and inter­act with the Bit­coin net­work, allow­ing the own­er to spend and receive the cur­ren­cy. But unlike oth­er wal­lets, Dark Wal­let is designed specif­i­cal­ly to pre­serve and even enhance the prop­er­ties of Bit­coin that make it a poten­tial­ly anony­mous, tough-to-trace coin of the Inter­net under­ground.

    “If Bit­coin rep­re­sents any­thing to us, it’s the abil­i­ty to for­bid the gov­ern­ment,” says Cody Wil­son, Dark Wallet’s project man­ag­er. (If Wilson’s name sounds famil­iar, he’s also the cre­ator of the world’s first ful­ly 3D-print­able gun, anoth­er project designed to show how tech­nol­o­gy can under­mine gov­ern­ment reg­u­la­tion.) “Dark­Wal­let is your way of lock­ing out the State, flip­ping the chan­nel to one beyond obser­va­tion.”

    ...

    Bit­coin has already served as a pow­er­ful tool for the so-called “dark web”– the law­less, anonymi­ty-enabled cor­ners of the Inter­net allud­ed to in some parts of Wilson’s video. Bitcoin’s most recent moment in the spot­light came with the shut­down of the Silk Road, the Bit­coin-based anony­mous online mar­ket­place for ille­gal drugs that gen­er­at­ed hun­dreds of mil­lions of dol­lars worth of sales in its 2.5 years online; The FBI seized anoth­er $28.5 mil­lion in stored bit­coins believed to belong to the site’s now-arrest­ed alleged own­er 29-year-old Ross Ulbricht just last week.

    Bit­coin enabled the Silk Road by act­ing as a trust­wor­thy form of pay­ment that didn’t require any real names. Though all Bit­coin trans­ac­tions are pub­licly vis­i­ble with­in the Bit­coin net­work, they’re only linked to pseu­do­nyms, and users can anonymize the coins fur­ther by send­ing them through a Bit­coin laun­dry that mix­es up users’ bit­coins with those of oth­er users to make them hard­er to trace; Silk Road auto­mat­i­cal­ly mixed the coins of all its users.

    But Dark Wal­let would go fur­ther towards mak­ing Bit­coin a tru­ly untrace­able form of dig­i­tal cash. The wal­let cre­ators plan to include a fea­ture called “trust­less mix­ing” accord­ing to Amir Taa­ki, one of Unsystem’s founders and a long­time Bit­coin devel­op­er. Rather than hand a user’s bit­coins off to a typ­i­cal Bit­coin laun­dry ser­vice that must be trust­ed to send back anoth­er more anony­mous bit­coin, trust­less mix­ing bun­dles togeth­er a col­lec­tion of Bit­coin trans­ac­tions and simul­ta­ne­ous­ly sends them to new Bit­coin address­es that are also con­trolled by the same users; Since no one watch­ing the trans­ac­tions can see whose coins went where, the tech­nique eras­es any own­er­ship-iden­ti­fy­ing traces on the coins, while also avoid­ing the prob­lem of trust­ing a third-par­ty ser­vice to suf­fi­cient­ly mix the coins and not to sim­ply steal them.

    The soft­ware, which is intend­ed to be a brows­er plug-in for Chrome and Fire­fox, would auto­mat­i­cal­ly coor­di­nate the process with oth­er users over the anonymi­ty ser­vice Tor or sim­i­lar ser­vices to fur­ther hide users’ iden­ti­ties. The process could even be reduced to an anonymiz­ing “tog­gle switch” that would enable users to laun­der their coins on com­mand, says Taa­ki. “You buy the bit­coins in a nor­mal exchange, switch this on, and it slow­ly anonymizes them for you in the back­ground,” he says.

    Dark Wal­let would also aim to solve anoth­er poten­tial pri­va­cy prob­lem with Bit­coin that aris­es from wal­let soft­ware “announc­ing” trans­ac­tions to the Bit­coin net­work from a tell-tale IP address. By broad­cast­ing the mes­sages from a proxy address or over the Tor net­work, Taa­ki says that Dark Wal­let could pre­vent any­one from track­ing a user based on those trans­ac­tion announce­ments.

    Wil­son and Taa­ki see Dark Wal­let in part as an answer to Bitcoin’s increas­ing adop­tion by users and devel­op­ers with more main­stream, gov­ern­ment-friend­ly views. In the video above and in their write­up of Dark Wal­let on Unsystem’s web­site, they direct­ly attack the Bit­coin Foun­da­tion, a non-prof­it group that has sought to engage with gov­ern­ments and use lob­by­ing tac­tics to com­pro­mise on poten­tial reg­u­la­tion of Bit­coin. “Many promi­nent Bit­coin devel­op­ers are active­ly in col­lu­sion with mem­bers of law enforce­ment and seek­ing approval from gov­ern­ment leg­is­la­tors,” reads one por­tion of the Dark Wal­let text. “We believe this is not in Bit­coin user’s self inter­est, and instead serves wealthy busi­ness inter­ests that make up the self-titled Bit­coin Foun­da­tion.”

    ...

    Posted by Pterrafractyl | January 21, 2014, 8:16 pm

  5. Cal­i­for­nia and New York appear to be rac­ing to lay down bit­coin reg­u­la­tions and become bit­coin busi­ness hubs, thus suck­ing away bit­coin enthu­si­asts from the rest of the coun­try. Brain-drains aren’t all bad:

    Bloomberg
    New York Vying With Cal­i­for­nia to Write Bit­coin Rules
    By Carter Dougher­ty Jan 27, 2014 7:18 PM CT

    Cal­i­for­nia and New York, home to Sil­i­con Val­ley and Wall Street, are prepar­ing to write rules of the road for entre­pre­neurs dri­ving a surge of inter­est in Bit­coin and oth­er vir­tu­al cur­ren­cies.

    The out­come could deter­mine how big a threat Bit­coin pos­es to estab­lished pay­ment com­pa­nies includ­ing JPMor­gan Chase & Co. and Visa Inc. as well as where ven­ture cap­i­tal and tal­ent con­verge to form a geo­graph­ic hub for U.S. star­tups.

    “If a state becomes Bit­coin-friend­ly, it will see a huge increase in com­pa­nies,” said Adam Ettinger, an attor­ney with San Fran­cis­co-based Strate­gic Coun­sel Corp., which advis­es tech­nol­o­gy investors. “That will mean the bright­est minds work­ing on some of the most inno­v­a­tive pay­ment tech­nol­o­gy we’ve seen in awhile.”

    Bit­coin, a five-year-old pro­to­col for issu­ing and mov­ing mon­ey across the Inter­net, has gained trac­tion with mer­chants sell­ing every­thing from Sacra­men­to Kings bas­ket­ball tick­ets to kitchen mix­ers on Overstock.com. Ven­ture cap­i­tal­ists see promise in it as an alter­na­tive to the glob­al pay­ment sys­tem cur­rent­ly dom­i­nat­ed by com­pa­nies includ­ing Visa, West­ern Union Co. (WU) and large banks.

    Legal Sta­tus

    Bitcoin’s legal sta­tus has been uncer­tain. In March, the U.S. Trea­sury Department’s Finan­cial Crimes Enforce­ment Net­work, which polices mon­ey laun­der­ing, said vir­tu­al-cur­ren­cy firms may be reg­u­lat­ed as mon­ey trans­mit­ters. The move set off the race among states, which license such firms, to deter­mine if and how their laws apply.

    Reg­u­la­tors and law enforcers have expressed con­cern that Bit­coin could facil­i­tate mon­ey laun­der­ing and sales of drugs and oth­er ille­gal goods.

    Fed­er­al pros­e­cu­tors in New York today indict­ed the head of a dig­i­tal cur­ren­cy exchange com­pa­ny on charges of con­spir­ing to laun­der more than $1 mil­lion in Bit­coin tied to Silk Road, an online drug bazaar. Char­lie Shrem, the chief exec­u­tive offi­cer of BitIn­stant, is also the vice chair­man of the Bit­coin Foun­da­tion, the group that over­sees the currency’s soft­ware pro­to­cols and lob­bies reg­u­la­tors. In Octo­ber, U.S. author­i­ties shut down Silk Road and arrest­ed its oper­a­tor for host­ing ille­gal trans­ac­tions.

    Mon­ey Trans­mit­ters

    Stephanie New­berg, pres­i­dent of the Mon­ey Trans­mit­ter Reg­u­la­tors Asso­ci­a­tion, a group of state offi­cials, said Bit­coin will dom­i­nate her association’s agen­da pre­cise­ly because its legal sta­tus is unclear.

    “Some states have statutes that are broad enough to do it imme­di­ate­ly,” said New­berg, who is also deputy com­mis­sion­er of bank­ing in Texas. “Oth­er states don’t. It’s a state-by-state ques­tion.”

    JPMor­gan Chief Exec­u­tive Offi­cer Jamie Dimon has said he expects that Bit­coin will be less of a threat once reg­u­la­tors inter­vene.

    Bit­coin “will even­tu­al­ly be made as a pay­ment sys­tem, I think, to fol­low the same stan­dards as the oth­er pay­ment sys­tems, and that will prob­a­bly be the end of them,” Dimon said Jan. 23 in an inter­view on CNBC.

    ...

    Dif­fer­ent Approach­es

    Cal­i­for­nia and New York have so far adopt­ed dif­fer­ent approach­es. New York’s super­in­ten­dent of finan­cial ser­vices, Ben­jamin Lawsky, moved pub­licly against Bit­coin star­tups last year, issu­ing sub­poe­nas for infor­ma­tion on their busi­ness, a move the com­pa­nies com­plain has forced them to spend seed cap­i­tal on lawyers. Tomor­row Lawsky is sched­uled to con­vene two days of pub­lic hear­ings to con­sid­er whether New York should estab­lish what he has called a “BitLi­cense.”

    By con­trast, offi­cials in Cal­i­for­nia have been qui­et­ly meet­ing with lawyers and com­pli­ance experts for advice before mak­ing pub­lic moves, accord­ing to a per­son advis­ing Bit­coin com­pa­nies who asked not to be iden­ti­fied because the meet­ings were pri­vate.

    Patrick Mur­ck, gen­er­al coun­sel of the Seat­tle-based Bit­coin Foun­da­tion, a group that pro­motes the use of dig­i­tal cur­ren­cy, point­ed­ly com­pli­ment­ed Cal­i­for­nia on its approach dur­ing a U.S. con­gres­sion­al hear­ing.

    ...

    Legal ‘Gap’

    Mar­co San­tori, a lawyer with Nesenoff & Mil­tenberg LLP in New York who advis­es vir­tu­al-cur­ren­cy star­tups, said com­pa­nies that receive mon­ey from a cus­tomer to con­vert into Bit­coin may not fall under that law, since the funds aren’t being trans­mit­ted. Since “mon­ey” isn’t defined in the law, New York may not have juris­dic­tion, he said.

    “These laws are nowhere near what they’d need to be to reg­u­late Bit­coin busi­ness­es,” San­tori said.

    As a result, Lawsky’s depart­ment is con­sid­er­ing use of its “gap author­i­ty” to reg­u­late vir­tu­al cur­ren­cies, accord­ing to a per­son briefed on the dis­cus­sions. This author­i­ty, includ­ed in the law that cre­at­ed the depart­ment in 2011, allows it to reg­u­late finan­cial ser­vices not oth­er­wise cov­ered by state law.

    Com­pa­nies includ­ing New York-based Union Square Ven­tures have met with staff for Sen­a­tor Charles Schumer, a New York Demo­c­rat, to press their case for cre­at­ing a Bit­coin-friend­ly reg­u­la­to­ry envi­ron­ment, accord­ing to a per­son famil­iar with the dis­cus­sions. Union Square, head­ed by Fred Wil­son, con­tributed $51,500 to Demo­c­ra­t­ic can­di­dates and orga­ni­za­tions in the 2012 elec­tion cycle, accord­ing to the Cen­ter for Respon­sive Pol­i­tics.

    Lawsky, who was pre­vi­ous­ly chief coun­sel to Schumer, has said he is mind­ful of the effects of reg­u­la­tion on what could be an emerg­ing indus­try.

    “We want New York to be a place where these com­pa­nies are com­ing and thriv­ing, and at the same time, put in the rules of the road and pro­tec­tions to ensure we don’t have mon­ey laun­der­ing,” Lawsky told CNBC on Jan. 10.

    It’s for­tu­nate that the bit­coin brain drain is swirling into states with large pop­u­la­tions. Small­er states that become bit­coin hubs might not be states for much longer.

    Posted by Pterrafractyl | January 30, 2014, 10:30 am

  6. Here’s the lat­est man­i­fes­ta­tion of Cody Wilson’s vio­lence-ori­ent­ed brand of anar­chic ide­al­ism: cheap machines for mak­ing your own untrace­able guns:

    Wired
    The $1,200 Machine That Lets Any­one Make a Met­al Gun at Home

    By Andy Green­berg
    10.01.14 |
    6:30 am |

    When Cody Wil­son revealed the world’s first ful­ly 3‑D print­ed gun last year, he showed that the “mak­er” move­ment has enabled any­one to cre­ate a work­ing, lethal firearm with a click in the pri­va­cy of his or her garage. Now he’s moved on to a new form of dig­i­tal DIY gun­smithing. And this time the results aren’t made of plas­tic.

    Wilson’s lat­est rad­i­cal­ly lib­er­tar­i­an project is a PC-con­nect­ed milling machine he calls the Ghost Gun­ner. Like any com­put­er-numer­i­cal­ly-con­trolled (or CNC) mill, the one-foot-cubed black box uses a drill bit mount­ed on a head that moves in three dimen­sions to auto­mat­i­cal­ly carve dig­i­tal­ly-mod­eled shapes into poly­mer, wood or alu­minum. But this CNC mill, sold by Wilson’s orga­ni­za­tion known as Defense Dis­trib­uted for $1,200, is designed to cre­ate one object in par­tic­u­lar: the com­po­nent of an AR-15 rifle known as its low­er receiv­er.

    That sim­ple chunk of met­al has become the epi­cen­ter of a gun con­trol firestorm. A low­er receiv­er is the body of the gun that con­nects its stock, bar­rel, mag­a­zine and oth­er parts. As such, it’s also the rifle’s most reg­u­lat­ed ele­ment. Mill your own low­er receiv­er at home, how­ev­er, and you can order the rest of the parts from online gun shops, cre­at­ing a semi-auto­mat­ic weapon with no ser­i­al num­ber, obtained with no back­ground check, no wait­ing peri­od or oth­er reg­u­la­to­ry hur­dles. Some gun con­trol advo­cates call it a “ghost gun.” Sell­ing that untrace­able gun body is ille­gal, but no law pre­vents you from mak­ing one.

    Exploit­ing the legal loop­hole around low­er receivers isn’t a new idea for gun enthusiasts—some hob­by­ist gun­smiths have been mak­ing their own AR-15 bod­ies for years. But Wil­son, for whom the Ghost Gun­ner is only the lat­est in a series of anti-reg­u­la­to­ry provo­ca­tions, is deter­mined to make the process eas­i­er and more acces­si­ble than ever before. “Typ­i­cal­ly this has been the realm of gun­smiths, not the casu­al user. This is where dig­i­tal man­u­fac­tur­ing, the mak­er move­ment, changes things,” he says. “We devel­oped some­thing that’s very cheap, that makes tra­di­tion­al gun­smithing afford­able. You can do it at home.”

    Wilson’s goal of enabling any­one to pri­vate­ly fab­ri­cate an untrace­able gun is part of a larg­er anar­chist mis­sion: To show how tech­nol­o­gy can ren­der the entire notion of gov­ern­ment obso­lete. He’s spent the last two years devel­op­ing firearms designed to be print­ed as eas­i­ly as ink on a page, neu­ter­ing attempts at gun con­trol. “This is a way to jab at the bleed­ing hearts of these total sta­tists,” Wil­son says. “It’s about humil­i­at­ing the pow­er that wants to humil­i­ate you.”

    Defense Distributed’s con­tro­ver­sial cre­ations have includ­ed 3‑D print­able plas­tic mag­a­zines and low­er receivers for AR-15s as well as an entire 3D-print­ed pis­tol he called the Lib­er­a­tor. But he says his switch from 3‑D print­ing to CNC milling met­al makes the ubiq­ui­tous cre­ation of usable, lethal weapons one step more prac­ti­cal. “3‑D print­ing [guns] was about sig­nal­ing the future. This is about the present,” he says. “You can use this machine today to cre­ate some­thing to the stan­dards you’re used to…The gold stan­dard of the gun com­mu­ni­ty is met­al.”

    That sim­ple chunk of met­al has become the epi­cen­ter of a gun con­trol firestorm.

    ...

    As with 3D-print­ers, how­ev­er, CNC mills are quick­ly mov­ing from the realm of indus­tri­al man­u­fac­tur­ing to afford­able, per­son­al devices. Desk­top CNC mills like the Shapeoko and the Nomad cost just thou­sands or even hun­dreds of dol­lars. The Ghost Gun­ner was built with $20 open-source Arduino micro­con­trollers, a cus­tom-designed spin­dle (the head that holds the drill) and a steel car­bide bit. Defense Distributed’s machine can’t carve pieces as large as its com­peti­tors, but its small size makes it more rigid and pre­cise, allow­ing it to cut an alu­minum low­er receiv­er from an 80 per­cent low­er in around an hour. That’s a task Wil­son says would still be impos­si­ble with today’s cheap­est hob­by­ist mills but doesn’t require five-fig­ure pro­fes­sion­al tools. “We’re mak­ing this eas­i­er by an order of mag­ni­tude,” he says.

    Sub­ver­sive ambi­tions aside, Wil­son doesn’t hide the fact that the Ghost Gun­ner is also a mon­ey-mak­ing project. Unlike Defense Distributed’s 3D-print­ing projects in the past, Wil­son says sell­ing its own CNC mill offers his group a way to fund its activ­i­ties. He con­sid­ered offer­ing pre-orders of the device through an Indiegogo or Kick­starter cam­paign, but both sites’ terms of ser­vice don’t allow the sale of weapons or tools for mak­ing them.

    Since he first launched Defense Dis­trib­uted in 2012, Wil­son has demon­strat­ed a knack for throw­ing tech­no­log­i­cal gaso­line onto polit­i­cal fires, from uncon­trol­lable 3D-print­ed guns to Bit­coin mon­ey-laun­der­ing soft­ware. His lat­est cre­ation promis­es to be equal­ly con­tro­ver­sial: He’s releas­ing the Ghost Gunner’s on the heels of a debate in Cal­i­for­nia over a state law that would ban the man­u­fac­ture of all guns with­out ser­i­al num­bers. The bill, wide­ly known as the “Ghost Gun ban” and intro­duced by Los Ange­les state sen­a­tor Kevin de Leon ear­li­er this year was designed to crim­i­nal­ize either 3‑D print­ing or fin­ish­ing an 80 per­cent low­er with­out a gov­ern­ment-assigned ser­i­al num­ber in Cal­i­for­nia. The leg­is­la­tion passed California’s sen­ate and assem­bly, but was vetoed Tues­day by the state’s gov­er­nor Jer­ry Brown, who wrote that he “can’t see how adding a ser­i­al num­ber to a home­made gun would sig­nif­i­cant­ly advance pub­lic safe­ty.”

    “Our strat­e­gy is to lit­er­al­ize and reify their night­mare, to give them the world they’re talk­ing about.”

    ...

    In the wake of the governor’s veto of the Ghost Gun ban, Wilson’s CNC mill could make untrace­able guns all the more acces­si­ble. And as the video above shows, Wil­son isn’t shy­ing away from that face-off so much as direct­ly con­fronting gun con­trol advo­cates. He’s gone as far as apply­ing for a trade­mark for the term “Ghost Gun,” a move that could lim­it how gun con­trol advo­cates are legal­ly able to use it.

    “This wouldn’t be worth doing if Kevin de Leon didn’t know about it,” Wil­son says. “What excites me is giv­ing this world to the politi­cians. Our strat­e­gy is to lit­er­al­ize and reify their night­mare, to give them the world they’re talk­ing about.”

    And if, as in the case of John Zawahri, his milling machine is used to cre­ate uncon­trol­lable weapons that result in real vio­lence? Wil­son stands by the answer that he’s giv­en to that ques­tion when it was asked of his 3‑D print­ed guns: That the poten­tial for vio­lence is part of the price of free­dom. “I believe it’s in the sta­ble of pop­u­lar rights afford­ed to the peo­ple, a repub­li­can ide­al con­sis­tent with civ­il lib­er­ties,” he says.

    “You can have an unse­ri­al­ized tooth­brush, and you can have an unse­ri­al­ized rifle,” he adds. “This is impor­tant to me. The untrace­able firearm is my stand.”

    Posted by Pterrafractyl | December 21, 2014, 8:48 pm

  7. What a sur­prise: Yasha Levine is appar­ent­ly on one of the cryp­to-assas­si­na­tion mar­kets. Why? For “crimes against cryp­to”, pre­sum­ably a ref­er­ence to his report­ing on the poten­tial vul­ner­a­bil­i­ties of Tor. Real­ly.

    Enjoy your emerg­ing anar­cho-cap­i­tal­ist par­adise and Mer­ry Christ­mas!

    Posted by Pterrafractyl | December 24, 2014, 3:14 pm

  8. Was Ross Ulbricht the cre­ator of Silk Road but not the Dread Pirate Roberts? That’s his new sto­ry and he’s stick­ing to it:

    Wired
    Silk Road Defense Says Ulbricht Was Framed by the ‘Real’ Dread Pirate Roberts

    By Andy Green­berg
    01.13.15 5:27 pm

    For the past year, the FBI and fed­er­al pros­e­cu­tors have told and retold the sto­ry of how Ross Ulbricht cre­at­ed, owned and oper­at­ed the mas­sive, anony­mous online drug empire known as the Silk Road. But as his tri­al began Tues­day, Ulbricht’s defense lawyers for the first time told their own ver­sion of that sto­ry. And while theirs also begins with Ulbricht cre­at­ing the Silk Road, it ends with Ulbricht being framed by the “real” oper­a­tors of the site to whom he’d hand­ed over con­trol.

    In his open­ing state­ment in a Man­hat­tan court­room, defense attor­ney Joshua Dra­tel began with a sur­pris­ing admis­sion: that his client Ross Ulbricht was in fact the founder of the Silk Road.

    But Dra­tel went on to explain that the site was meant mere­ly to be a kind of “eco­nom­ic exper­i­ment” that Ulbricht only con­trolled for a brief time. The even­tu­al adop­tive own­ers of the Silk Road, Dra­tel claimed, would lat­er trick Ulbricht into serv­ing as the “fall guy” when they sensed an impend­ing law enforce­ment crack­down.

    “After a few months, he found it too stress­ful for him, and he hand­ed it over to oth­ers,” Dra­tel told the jury, describ­ing the Silk Road’s ear­ly days. “At the end, he was lured back by those oper­a­tors to…take the fall for the peo­ple run­ning the web­site.”

    “Ross was not a drug deal­er,” Dra­tel added. “He was not a king­pin.”

    Pow­er­ful New Evi­dence Against Ulbricht

    That new sto­ry, describ­ing Ulbricht as a pat­sy for the pow­er­ful online drug lords who oper­at­ed the Silk Road at its peak, won’t be an easy sell. In its own open­ing state­ment, the pros­e­cu­tion described pow­er­ful evi­dence against Ulbricht that includes proof the FBI caught him logged into a Silk Road admin­is­tra­tor pan­el in the San Fran­cis­co pub­lic library last year and a jour­nal and log­book found on his lap­top that detail his activ­i­ties run­ning the Silk Road.

    Assis­tant US attor­ney Tim­o­thy Howard also said in his state­ment that Ulbricht at one point con­fessed to run­ning the Silk Road to an old col­lege friend. That pur­port­ed per­son­al breach of Ulbricht’s secre­cy rep­re­sents a dam­ag­ing new claim from the pros­e­cu­tion, and Howard said that the col­lege friend would be serv­ing as a wit­ness in the tri­al.

    As the alleged admin­is­tra­tor of the Silk Road known as the Dread Pirate Roberts, Ulbricht faces charges includ­ing nar­cotics, mon­ey laun­der­ing and hack­ing con­spir­a­cies. But Tuesday’s open­ing state­ments show that the tri­al will cen­ter around prov­ing that Ulbricht is in fact the Dread Pirate Roberts. The Silk Road, after all, used the anonymi­ty soft­ware Tor and the cryp­tocur­ren­cy bit­coin express­ly to hide its users’ iden­ti­ties, and the tri­al could be a case study in how law enforce­ment cuts through those lay­ers of tech­no­log­i­cal obfuscation—or fails to.

    “The Inter­net is a strange place,” Dra­tel told the jury. “Peo­ple can cre­ate and fab­ri­cate pro­files for them­selves and oth­ers.”

    “The Per­fect Fall Guy”

    As Dra­tel told it, Ulbricht had long giv­en up con­trol of the Silk Road by the time he was arrest­ed and charged with run­ning the site last year. But as the site’s ini­tial cre­ator, he was the “per­fect fall guy,” Dra­tel said. He told the jury that he would present evi­dence that the “real” Dread Pirate Roberts paid for infor­ma­tion about the law enforce­ment inves­ti­ga­tion that focused on him, includ­ing infor­ma­tion that they had pos­si­bly learned his real name. “And that name is not Ross Ulbricht,” Dra­tel said.

    The new oper­a­tors of the Silk Road “had been alert­ed the walls were clos­ing in,” Dra­tel said. “That’s what com­pelled the Dread Pirate Roberts to put his escape plan into action,” fram­ing Ulbricht, accord­ing to Dratel’s telling.

    In Dratel’s ver­sion of events, Ulbricht’s store of bit­coins was sim­ply the earn­ings from his ear­ly invest­ments in the cryp­tocur­ren­cy, not the Silk Road prof­its the pros­e­cu­tors allege. He points out that the bit­coins seized from Ulbricht are only a “small frac­tion” of the full $18 mil­lion the gov­ern­ment has said the Dread Pirate Roberts earned in Silk Road com­mis­sions. And he implied that the evi­dence found on Ulbricht’s com­put­er at the time of his arrest was fal­si­fied to “leave him hold­ing the bag when the real oper­a­tors of Silk Road knew their time was up.” He didn’t elab­o­rate on how evi­dence could have been plant­ed on Ulbricht’s PC.

    “[The Dread Pirate Roberts] is some­one who stu­dious­ly avoid­ed reveal­ing his iden­ti­ty to any­one on the site…This same per­son goes to a pub­lic library and uses a pub­lic Wifi con­nec­tion?” Dra­tel asked the jury. “That Ross is DPR is a con­tra­dic­tion so fun­da­men­tal that it defies com­mon sense.”

    Dra­tel added, “The real DPR is out there.”

    ...

    Will Ulbricht remain a Lib­er­tar­i­an hero if he’s not the Dead Pirate Roberts? It might ruin his Ran­di­an mys­tique.

    Posted by Pterrafractyl | January 18, 2015, 6:09 pm

  9. Ross Ubricht, the alleged “Dread Pirate Roberts”, was just con­vict­ed:

    Accused Silk Road Oper­a­tor Ross Ulbricht Con­vict­ed On Drug Charges
    Reuters
    Post­ed: 02/04/2015 4:26 pm EST Updat­ed: 02/04/2015 4:59 pm EST

    NEW YORK, Feb 4 (Reuters) — The sus­pect­ed oper­a­tor of the under­ground web­site Silk Road was con­vict­ed on Wednes­day on nar­cotics and oth­er crim­i­nal charges for his role in orches­trat­ing a scheme that enabled around $200 mil­lion of anony­mous online drug sales using bit­coins.

    Ross Ulbricht, 30, was con­vict­ed by a fed­er­al jury in Man­hat­tan on all sev­en counts he faced fol­low­ing a close­ly watched four-week tri­al that spilled out of U.S. inves­ti­ga­tions of the use of the bit­coin dig­i­tal cur­ren­cy for drug traf­fick­ing and oth­er crimes.

    The jury of six men and six women need­ed a lit­tle over three hours to delib­er­ate before find­ing Ulbricht guilty of charges that includ­ed drug traf­fick­ing and con­spir­a­cies to com­mit mon­ey laun­der­ing and com­put­er hack­ing.

    Ulbricht faces up to life in prison. He has attract­ed many sup­port­ers to his cause, includ­ing some who say the gov­ern­men­t’s case is an attack on Inter­net free­dom.

    After the ver­dict was read, Ulbricht turned toward his sup­port­ers and raised his hand as he was led from the court. “Ross is a hero,” shout­ed one sup­port­er wear­ing dread­locks.

    Silk Road oper­at­ed from at least Jan­u­ary 2011 until Octo­ber 2013, when author­i­ties seized the web­site and arrest­ed Ulbricht at a pub­lic library in San Fran­cis­co.

    Pros­e­cu­tors said Ulbricht ran Silk Road as “Dread Pirate Roberts,” an alias bor­rowed from a char­ac­ter in the 1987 movie “The Princess Bride.”

    “FALL GUY”

    The web­site relied on the so-called Tor net­work, which lets users com­mu­ni­cate anony­mous­ly, and accept­ed pay­ment through bit­coins, which accord­ing to pros­e­cu­tors allowed users to con­ceal their iden­ti­ties and loca­tions.

    By the time it was shut down, Silk Road had gen­er­at­ed near­ly $213.9 mil­lion in sales and $13.2 mil­lion in com­mis­sions, pros­e­cu­tors said.

    ...

    Note that the fol­low­ing was­n’t quite accu­rate:

    The web­site relied on the so-called Tor net­work, which lets users com­mu­ni­cate anony­mous­ly, and accept­ed pay­ment through bit­coins, which accord­ing to pros­e­cu­tors allowed users to con­ceal their iden­ti­ties and loca­tions.

    Bit­coin and Tor aren’t actu­al­ly anony­mous for every­one. Keep that in mind while you’re plan­ning your verv own Silk Road 3.0 decen­tral­ized “Dread Pirate Roberts”-less Silk Road:

    Giz­mo­do
    Silk Road 3 Is Already Up, But It’s Not the Future of Dark­net Drugs

    Kate Knibbs

    11/07/14 12:46pm

    Silk Road 3 Is Already Up, But It’s Not the Future of Dark­net Drugs

    There are three things you can count on in life: Death, tax­es, and peo­ple buy­ing drugs on the inter­net. Yes­ter­day, the FBI seized black mar­ket web­site Silk Road 2.0 and charged the alleged admin Blake Ben­thall in fed­er­al court, trum­pet­ing its bust with a sassy take­down notice.

    This is a blow to the cocaine infor­ma­tion super­high­way crowd, sure, but don’t expect dig­i­tal deal­ers to go cold turkey any­time soon. With­in a few hours, “Silk Road 3 Reloaded” (http://qxvfcavhse45ckpw.onion/login.php)) went live, though as the Dai­ly Dot points out, it’s actu­al­ly an exist­ing drug bazaar rebrand­ed to cap­i­tal­ize on the post-raid hype. But even if 3.0 turns into 4.0 turns into 5.0, Silk Road and its ilk aren’t the future of deep web con­tra­band. More like­ly, the lat­est bust will only buoy a new wave of decen­tral­ized mar­kets.

    I talked to Car­los Lopez (a pseu­do­nym, nat­u­ral­ly), a promi­nent dark­net ven­dor, about what the future of dark­net drug deals looks like after the raid. “For any site nowa­days longevi­ty is vital, and for me as a ven­dor think­ing long-term, and for me to take it seri­ous­ly, it would need to be decen­tral­ized,” he told me over encrypt­ed email.

    Peer-to-peer mar­kets will not have a “Dread Pirate Roberts” at the helm. With­out a figurehead/operator to arrest and a main dat­a­cen­ter, it would be far more dif­fi­cult for law enforce­ment to seize a decen­tral­ized dark mar­ket. Using this mod­el, peo­ple could cre­ate any num­ber of dif­fer­ent mar­kets, and law enforce­ment would have to cast a far wider net to arrest ven­dors and buy­ers instead of going after admin. (And that will prob­a­bly hap­pen, but it will declaw any drug bust PR.)

    ...

    There is already one decen­tral­ized mar­ket gain­ing sup­port after this raid, called Open­Bazaar. It’s not meant to be a hub of drug sales; it’s meant to be an eBay rival. Open­Bazaar wants to work for all peer-to-peer com­merce, and while mar­kets like Silk Road and Evo­lu­tion focused on ille­gal prod­uct sales, Open­Bazaar does not. That does­n’t mean that peo­ple can’t use it to sell drugs, though. They very much could. And when they do, it’ll be hard­er for law enforce­ment to arrest a fig­ure­head, because there won’t be one.

    Open­Bazaar isn’t ready for secure trans­ac­tions yet, and it’s still in beta. But it has a savvy team of vol­un­teer devel­op­ers prep­ping it, includ­ing Google soft­ware engi­neer Dion­y­sis Zin­dros. It could rep­re­sent an inter­est­ing devel­op­ment for peer-to-peer trans­ac­tions of all types, but since the dark­net’s drug com­mu­ni­ty is cur­rent­ly with­out a secure home, it could also turn into a safer option for for­mer Silk Road ven­dors and buy­ers.

    ...

    Along with Silk Road 2, Europol says upwards of 50 mar­kets, includ­ing Cloud 9 and Hydra, were seized this week as part of a joint oper­a­tion between the FBI, Europol, and Inter­pol known as “Ony­mous.” This raid includ­ed the forum of a defunct mar­ket called Cannabis Road, empha­siz­ing that law enforce­ment are inter­est­ed in scour­ing through com­ments to find par­tic­i­pants, not just in the oper­a­tors. They mean busi­ness.

    There are still enough options func­tion­ing that ven­dors and buy­ers can just hop­scotch to the next one when these seizures hap­pen. Mar­kets like Evo­lu­tion and Ago­ra evad­ed seizure (unless, of course, they’re hon­ey­pots). But this con­stel­la­tion of raids is not the last we’ll see.

    As we can see, the future is bright for the online cryp­to mar­ket­places of the Dark­net. Sure, indi­vid­ual mar­ket­places might get shut down, but shut­ting down a big hub like Silk Road isn’t real­ly going to be an option in the future since there won’t be any big hubs to shut down. Just lots of lit­tle, con­stant­ly chang­ing mar­ket­places that ven­dors can select from. And that means:

    Peer-to-peer mar­kets will not have a “Dread Pirate Roberts” at the helm. With­out a figurehead/operator to arrest and a main dat­a­cen­ter, it would be far more dif­fi­cult for law enforce­ment to seize a decen­tral­ized dark mar­ket. Using this mod­el, peo­ple could cre­ate any num­ber of dif­fer­ent mar­kets, and law enforce­ment would have to cast a far wider net to arrest ven­dors and buy­ers instead of going after admin. (And that will prob­a­bly hap­pen, but it will declaw any drug bust PR.)

    And as human­i­ty has seen with some of its oth­er attempts to shut down decen­tral­ized ille­gal mar­ket­places one buy­er and ven­dor at a time, that’s not going to be cheap or easy strat­e­gy to imple­ment. And yet there’s undoubt­ed­ly going to be con­tent sold on these exchanges like ille­gal weapons (imag­ine the advanced weapon­ry of the future) that soci­ety def­i­nite­ly isn’t going to want to make wide­ly avail­able to any­one with an inter­net con­nec­tion. Alter­na­tive meth­ods of shrink­ing these online dark mar­kets so law enforce­ment can focus on the most dan­ger­ous buy­ers and sell­ers is prob­a­bly going to be required. And long over­due.

    Posted by Pterrafractyl | February 5, 2015, 8:35 pm

  10. While bit­coins are under­stand­ably very allur­ing to many for a vari­ety of rea­sons that can be dif­fi­cult to under­stand, it turns out bit­coin’s fan base includes a pair of fed­er­al agents involved with the Silk Road inves­ti­ga­tion that appear to be bit­coin enthu­si­asts for a very sim­ple rea­son. They want­ed mon­ey:

    The Los Ange­les Times
    For­mer fed­er­al agents at cen­ter of Silk Road case charged with steal­ing bit­coin
    By James Queal­ly con­tact the reporter

    March 30, 2015, 12:33 PM

    Two for­mer fed­er­al agents at the cen­ter of an inves­ti­ga­tion into the black mar­ket web­site Silk Road, where drugs were sold for bit­coin, have been accused of steal­ing dig­i­tal cur­ren­cy dur­ing the probe, accord­ing to court doc­u­ments made pub­lic Mon­day.

    Carl M. Force and Shaun W. Bridges, who were both inte­gral to the oper­a­tion that end­ed with the con­vic­tion of the alleged founder of Silk Road, have been charged with theft of gov­ern­ment prop­er­ty, wire fraud and mon­ey laun­der­ing, accord­ing to a 95-page crim­i­nal com­plaint unsealed on Mon­day.

    The com­plaint was filed on March 25 in U.S. Dis­trict Court in San Fran­cis­co.

    Ear­li­er this year, Ross William Ulbricht was con­vict­ed of cre­at­ing and oper­at­ing Silk Road. He was found guilty of allow­ing mil­lions of drug deals to take place through the web­site and earn­ing $18 mil­lion in bit­coins while the site was oper­a­tional.

    Force, a for­mer inves­ti­ga­tor with the Drug Enforce­ment Admin­is­tra­tion, was the lead under­cov­er agent tasked with com­mu­ni­cat­ing with “Dread Pirate Roberts,” the online alias alleged­ly used by Ulbricht, accord­ing to the com­plaint. He alleged­ly demand­ed Ulbricht pay him $250,000 in bit­coin to not offer cer­tain infor­ma­tion to the gov­ern­ment, and on anoth­er occa­sion, cre­at­ed an online alias under which he asked Ulbricht for $100,000 in bit­coin in exchange for infor­ma­tion on the fed­er­al probe into Silk Road, accord­ing to the com­plaint.

    Force also alleged­ly laun­dered funds giv­en to him as part of the inves­ti­ga­tion, siphon­ing them into per­son­al accounts rather than turn­ing them over to the gov­ern­ment, accord­ing to the com­plaint.

    Bridges, a for­mer Secret Ser­vice agent, is accused of steal­ing hun­dreds of thou­sands in bit­coin from Silk Road, accord­ing to the com­plaint. In Jan­u­ary 2013, the web­site “suf­fered a siz­able theft of bit­coins” which were moved into a dig­i­tal cur­ren­cy exchange in Japan.

    Around the same time, Bridges formed a lim­it­ed lia­bil­i­ty com­pa­ny and, accord­ing to the com­plaint, fund­ed that busi­ness’s account “exclu­sive­ly with wire deposits” from the same Japan­ese exchange, the com­plaint said.

    Ulbricht’s New York-based attor­ney, Joshua Dra­tel, has repeat­ed­ly said Ulbricht was not “Dread Pirate Roberts,” an alias that is a ref­er­ence to a charachter from the film “The Princess Bride.”

    Dra­tel was expect­ed to release a state­ment on Mon­day after­noon con­cern­ing the arrests of Bridges and Force.

    The gov­ern­ment spent at least two years infil­trat­ing Silk Road. Dur­ing Ulbricht’s tri­al, Home­land Secu­ri­ty Agent Jared Der-Yeghi­ayan tes­ti­fied that he began to take over staff accounts on the web­site as fed­er­al agents arrest­ed employ­ees of the site who agreed to coop­er­ate. The gov­ern­ment pre­sent­ed numer­ous instant mes­sages at tri­al between Der-Yeghi­ayan and Ulbricht, who went by the alias Dread Pirate Roberts online.

    ...

    Posted by Pterrafractyl | March 30, 2015, 3:07 pm

  11. same arti­cle post­ed on

    https://spitfirelist.com/news/cyber-terrorists-holding-detroit-database-hostage-demanding-ransom-of-2000-bitcoins/comment-page‑1/#comment-93248

    Posted by participo | March 31, 2015, 2:45 pm

  12. If you’re a for­mer sub­scriber of the “Ash­ley Madi­son” web­site for cheat­ing, just FYI, you might get­ting a friend­ly email soon:

    Giz­mo­do
    Extor­tion­ists Are After the Ash­ley Madi­son Users and They Want Bit­coin

    Adam Clark Estes
    8/21/15 2:55pm

    Peo­ple are the worst. An unknown num­ber of ass­holes are threat­en­ing to expose Ash­ley Madi­son users, pre­sum­ably ruin­ing their mar­riages. The hack­ing vic­tims must pay the extor­tion­ists “exact­ly 1.0000001 Bit­coins” or the spouse gets noti­fied. Ugh.

    This is an unnerv­ing but not unpre­dictable turn of events. The data that the Ash­ley Madi­son hack­ers released ear­ly this week includ­ed mil­lions of real email address­es, along with real home address­es, sex­u­al pro­cliv­i­ties and oth­er very pri­vate infor­ma­tion. Secu­ri­ty blog­ger Bri­an Krebs talked to secu­ri­ty firms who have evi­dence of extor­tion schemes linked to Ash­ley Madi­son data. Turns out spam fil­ters are catch­ing a num­ber of emails being sent to vic­tims from peo­ple who say they’ll make the infor­ma­tion pub­lic unless they get paid!

    Here’s one caught by an email provider in Mil­wau­kee:

    Hel­lo,

    Unfor­tu­nate­ly, your data was leaked in the recent hack­ing of Ash­ley Madi­son and I now have your infor­ma­tion.

    If you would like to pre­vent me from find­ing and shar­ing this infor­ma­tion with your sig­nif­i­cant oth­er send exact­ly 1.0000001 Bit­coins (approx. val­ue $225 USD) to the fol­low­ing address:

    1B8eH7HR87vbVbMzX4gk9nYyus3KnXs4Ez

    Send­ing the wrong amount means I won’t know it’s you who paid.

    You have 7 days from receipt of this email to send the BTC [bit­coins]. If you need help locat­ing a place to pur­chase BTC, you can start here…..

    ...

    One secu­ri­ty expert explained to Krebs that this type of extor­tion could be dan­ger­ous. “There is going to be a dra­mat­ic crime wave of these types of vir­tu­al shake­downs, and they’ll evolve into spear-phish­ing cam­paigns that lever­age cryp­to mal­ware,” said Tom Keller­man of Trend Micro.

    That sounds a lit­tle dra­mat­ic, but bear in mind just how many peo­ple were involved. Even if you assume some of the accounts were fake, there are poten­tial­ly mil­lions who’ve had their pri­vate infor­ma­tion post­ed on the dark web for any­body to see and abuse. Some of these peo­ple are in the mil­i­tary, too, where they’d face pos­si­ble penal­ties for adul­tery. If some goons think they can squeeze a bit­coin out of each of them, there are poten­tial­ly tens of mil­lions of dol­lars to be made.

    The word “poten­tial­ly” is impor­tant because some of these extor­tion emails are obvi­ous­ly get­ting stuck in spam fil­ters, and some of the extor­tion­ists could eas­i­ly just be bluff­ing. Either way, every­body los­es when com­pa­nies fail to secure their users’ data. Every­body except the crim­i­nals.

    While extort­ing some­one over data that’s already pub­licly avail­able might seem like an odd thing to do, keep in mind that the data so huge and dif­fi­cult to access that it’s not nec­es­sar­i­ly easy for a spouse to find out you were using the site. It’s not like there’s a search engine for Ash­ley Madi­son users, at least not yet. But there’s noth­ing stop­ping some­one from cre­at­ing one and sud­den­ly mak­ing it real­ly easy to find out if some­one you know used the site.

    So, until all that data become more acces­si­ble, the threats do car­ry some degree of weight which sug­gests we’re prob­a­bly going to see a wave of extor­tion­ists try­ing to do exact­ly this scheme. And ANYONE with an inter­net con­nec­tion can poten­tial­ly be an extortionist...they just have to put in the effort to obtain and parse the data. So even if you end up pay­ing the fee, there’s noth­ing stop­ping all the oth­er extor­tion­ists from doing exact­ly the same thing to you.

    As far as extor­tion-relat­ed game-the­o­ry goes, this one is a doozy. Ah, the joys of the dig­i­tal age.

    Posted by Pterrafractyl | August 21, 2015, 3:13 pm

  13. Link to fas­ci­nat­ing NYT arti­cle about the role an IRS inves­ti­ga­tor played in iden­ti­fy­ing Ross Ulbricht:

    http://www.nytimes.com/2015/12/27/business/dealbook/the-unsung-tax-agent-who-put-a-face-on-the-silk-road.html?smid=pl-share&_r=1

    Posted by Kathleen | December 26, 2015, 11:16 am

  14. Here’s an exam­ple of a ser­vices that’s going to become increas­ing­ly pop­u­lar as anony­mous com­mu­ni­ca­tion tech­nolo­gies and anony­mous pay­ment sys­tems like Bit­coin con­tin­ue to roll out. Espe­cial­ly dur­ing finals week: Bit­coin-based robo­call-bomb-threats-for-hire ser­vices:

    The Wash­ing­ton Post
    Tele­phone bomb threats prompt numer­ous school evac­u­a­tions and lock­downs in Va., N.J.

    By Mori­ah Balin­git and T. Rees Shapiro March 4 at 3:24 PM

    Police in North­ern Vir­ginia and New Jer­sey are inves­ti­gat­ing bomb threats that were called in to dozens of schools Fri­day morn­ing, threats that prompt­ed evac­u­a­tions and lock­downs.

    Many of the schools received the threats via auto­mat­ed phone calls — known as robo­calls — a method that has become increas­ing­ly com­mon for school bomb threats nation­wide and one that is dif­fi­cult to track. A rash of robo­calls led to evac­u­a­tions and lock­downs of 13 schools in three states in Jan­u­ary, none of which were found to be cred­i­ble..

    At least sev­en schools in North­ern Vir­ginia received bomb threats Fri­day morn­ing, prompt­ing some to evac­u­ate and oth­ers to lock down. Falls Church City’s lone high school, George Mason High, was evac­u­at­ed after it received what school offi­cials described as an “auto­mat­ed bomb threat” by phone short­ly before noon.

    Fair­fax Coun­ty Police are inves­ti­gat­ing bomb threats that were called in to three pub­lic schools and one pri­vate school between 11:22 a.m. and noon, but author­i­ties declined to say whether those threats were from robo­calls. Police deter­mined them not to be cred­i­ble and Fair­fax Coun­ty Pub­lic Schools offi­cials decid­ed to con­tin­ue class nor­mal­ly at the three high schools that received threats.

    “Police are inves­ti­gat­ing and have deter­mined the threats are not cred­i­ble, and are intend­ed only to dis­rupt school oper­a­tions,” said Mary Shaw, a school sys­tem spokes­woman. “We do not believe any FCPS stu­dents are at risk and we are con­tin­u­ing with nor­mal school oper­a­tions at all of our schools for the remain­der of the day.”

    ...

    Bomb threats also were called into schools in a dozen dis­tricts in New Jer­sey at around 11 a.m. Fri­day, dis­rupt­ing school for thou­sands of stu­dents, accord­ing to a report in The Record.. The prob­lem has become so severe that the Bergen Coun­ty Prosecutor’s Office has decid­ed to host a sym­po­sium to dis­cuss how to han­dle such threats. It was the sec­ond time in a week that robo­call bomb threats shut down mul­ti­ple schools in New Jer­sey.

    Robo­calls are becom­ing an increas­ing­ly com­mon method of deliv­ery for school bomb threats, said Amy Klinger, an assis­tant pro­fes­sor at Ash­land Uni­ver­si­ty in Ohio and a co-founder of the Educator’s School Safe­ty Net­work, a nation­al non-prof­it school safe­ty orga­ni­za­tion.

    Klinger said that Inter­net-based orga­ni­za­tions charged the equiv­a­lent of $50 in bit­coins to cre­ate a bomb scare using auto­mat­ed phone calls, which account for 13 per­cent of all threats, accord­ing to her school secu­ri­ty research.

    “Schools are real­ly caught in this dilem­ma of what do we do? Do we ignore it? But you can’t,” Klinger said, not­ing that some schools receive mul­ti­ple threats in a sin­gle day and evac­u­ate their build­ings for each occur­rence, cre­at­ing sig­nif­i­cant delays dur­ing the aca­d­e­m­ic day. “That’s a real­ly dan­ger­ous prece­dent to say we’re just going to stop respond­ing. So it’s real­ly kind of a Catch 22 that schools have found them­selves in. We need to respond but every time we do it just gen­er­ates more threats.”

    Klinger, in a recent school secu­ri­ty report, wrote that bomb threats against schools have increased sig­nif­i­cant­ly in recent years. So far dur­ing the 2015–2016 school year, Klinger found that a total of 745 bomb threats had been made against schools, a 143 per­cent increase com­pared to the same time peri­od dur­ing the 2012–2013 school year.

    In Jan­u­ary, schools nation­wide received 206 bomb threats, the high­est num­ber ever record­ed, Klinger found. Her research also deter­mined that threats were made indis­crim­i­nate­ly, with 48 of the 50 states in the coun­try record­ing school-based bomb threats.

    “It’s not going away,” Klinger said. “The only option is to empow­er schools to be able to han­dle these things.”

    “Klinger said that Inter­net-based orga­ni­za­tions charged the equiv­a­lent of $50 in bit­coins to cre­ate a bomb scare using auto­mat­ed phone calls, which account for 13 per­cent of all threats, accord­ing to her school secu­ri­ty research.”
    At $50 a bomb threat, it’s almost kind of amaz­ing that the trend isn’t grow­ing even faster than it already is:

    ...
    Klinger, in a recent school secu­ri­ty report, wrote that bomb threats against schools have increased sig­nif­i­cant­ly in recent years. So far dur­ing the 2015–2016 school year, Klinger found that a total of 745 bomb threats had been made against schools, a 143 per­cent increase com­pared to the same time peri­od dur­ing the 2012–2013 school year.

    In Jan­u­ary, schools nation­wide received 206 bomb threats, the high­est num­ber ever record­ed, Klinger found. Her research also deter­mined that threats were made indis­crim­i­nate­ly, with 48 of the 50 states in the coun­try record­ing school-based bomb threats.
    ...

    Of course, as anony­mous com­mu­ni­ca­tion tech­nolo­gies and next-gen­er­a­tion Bit­coin-like pay­ment sys­tems that don’t have Bit­coin’s pseudoanony­mous vul­ner­a­bil­i­ties are devel­oped and grow in pop­u­lar­i­ty, it only seems rea­son­able that the growth of the threats-for-hire mar­ket­place is only going to accel­er­ate too.
    And that accel­er­a­tion could cre­ate a rather inter­est­ing sup­ply and demand dynam­ic because the more threats of this nature because the New Nor­mal, the more soci­eties are going to suf­fer from “threat fatigue” and stop car­ing or even respond­ing to such threats and, there­fore, the low­er the “mar­ket” val­ue for such threats. Who knows, we might be wit­ness­ing the first phase of a tech-enabled “threat bub­ble”: In the first phase we have the growth in the pop­u­lar­i­ty of these threat “ser­vices” as peo­ple see the pow­er at their dis­pos­al for just $50 bit­coins, which is then fol­lowed by a col­lec­tive soci­etal “shrug” over future threats because they just become ubiq­ui­tous. Anony­mous bomb threats could become seen as a slight­ly more annoy­ing ver­sion of inter­net trolling. Just in real life.

    That, of course, assumes that we hit a point where such threats are just ignored. And, as Amy Klinger point­ed out, set­ting a prece­dent where schools just rou­tine­ly ignore such threats isn’t some­thing soci­eties just casu­al­ly do. At the same time, when you do respond to them, by clear­ing the school or what­ev­er, you just end up encour­age more threats:

    ...
    “Schools are real­ly caught in this dilem­ma of what do we do? Do we ignore it? But you can’t,” Klinger said, not­ing that some schools receive mul­ti­ple threats in a sin­gle day and evac­u­ate their build­ings for each occur­rence, cre­at­ing sig­nif­i­cant delays dur­ing the aca­d­e­m­ic day. “That’s a real­ly dan­ger­ous prece­dent to say we’re just going to stop respond­ing. So it’s real­ly kind of a Catch 22 that schools have found them­selves in. We need to respond but every time we do it just gen­er­ates more threats.”
    ...

    It’s all quite a conun­drum. One of the many conun­drums we can throw on the “tech­nol­o­gy is a dou­ble-edge sword” pile that’s only going to keep grow­ing. It’s a pret­ty big pile.

    Posted by Pterrafractyl | March 4, 2016, 4:21 pm

  15. More good times with the Bitcoin/TOR/Dark Web cypher­punk free­dom pack­age: Made-to-order remote con­trolled dyna­mite (although the sell­er might be the FBI):

    The Wash­ing­ton Post

    Texas man try­ing to buy explo­sives want­ed to ‘send mes­sage’ by bomb­ing a build­ing, feds say

    By Lind­sey Bev­er
    Sep­tem­ber 20, 2016

    A Texas boat repair­man has been arrest­ed and charged by fed­er­al author­i­ties for attempt­ing to pur­chase dyna­mite, grenades and wire­less trans­mit­ters with an intent to burn someone’s vehi­cle and apart­ment “to the ground.”

    Fed­er­al author­i­ties launched an under­cov­er oper­a­tion last month to mon­i­tor 50-year-old Cary Lee Ogborn, who they believed accessed an under­ground mar­ket­place for ille­gal goods and tried to “trans­port explo­sives for the pur­pose of injury or destruc­tion of prop­er­ty,” accord­ing to the U.S. Attorney’s Office for the South­ern Dis­trict of Texas.

    Ogborn, who had his ini­tial court appear­ance on Mon­day, is due back Wednes­day for his prob­a­ble cause and deten­tion hear­ing, accord­ing to news reports.

    “With ter­ror­ism, you don’t want to be reac­tive,” FBI spokes­woman Shau­na Dun­lap told the Hous­ton Chron­i­cle. “Our goal is to detect and deter events before they occur. An effec­tive way to do this is through an under­cov­er oper­a­tion.”

    The fed­er­al pub­lic defender’s office declined to com­ment on the case.

    Fed­er­al pros­e­cu­tors allege that start­ing in late August, online user “boat­manstv” went into an under­ground mar­ket­place called AlphaBay, which uses onion rout­ing, or TOR, to con­ceal users’ IP address­es, accord­ing to a crim­i­nal com­plaint filed in U.S. Dis­trict Court.

    The user, who author­i­ties believe was Ogborn, began com­mu­ni­cat­ing with an under­cov­er FBI agent he appar­ent­ly thought was an online explo­sives deal­er.

    The user wrote that he want­ed to buy a det­o­na­tor to blow up a five-gal­lon drum of gaso­line.

    “Dont need big explo­sion,” he wrote Aug. 27, accord­ing to court records, “just need to make sure build­ing 20 ft x 40 ft made of wood burns to the ground.”

    That same day, he explained that he was plan­ning to put explo­sives under a struc­ture being used as someone’s apart­ment and det­o­nate it from a dis­tance.

    “The build­ing like shed or stor­age, so yes like a house of wood,” he wrote, accord­ing to court records. “I guess I could use 1/4 stick TNT and gas to make sure it burns, or diesel fuel? I may use pres­sure sprayer to wet down the out­side of the build­ing right before I trig­ger it to help the burn. Dont know exact­ly whats inside but per­son using for apart­ment.

    “Per­son will not be there when set off. Dont want to kill, just send mes­sage.”

    Then at one point, “boat­manstv” inquired about a grenade, doc­u­ments show.

    “The idea we have for this per­son is, while he sleep­ing we put grenade in back of truck and run to our car 20 to 30 meters away, then the truck blow up, he heres [sic] truck blow up and come out­side while he out­side we blow up house,” he wrote Sept 14. “Tell me about the grenade please. How far do we need to be away? What postal car­ri­er for this pack­age?”

    Fed­er­al author­i­ties linked Ogborn to a marine repair shop in Hous­ton, where a sign reads, “Cary’s Mobile Marine Ser­vices! Home Of Your Mobile Home DR,” accord­ing to the court doc­u­ments. Neigh­bors said Ogborn lives and works at that loca­tion.

    ...

    It’s still unclear who Ogborn’s intend­ed vic­tim was and what kind of rela­tion­ship they had.

    Ear­li­er this month, the FBI agent sent a mes­sage to an email address pro­vid­ed by “boat­manstv,” telling him that the equip­ment would be sent con­cealed inside a toy.

    “We make it easy to ini­ti­ate like we say. All wire con­nect­ed you just add 2 bat­tery inside car alarm and put det­o­na­tor inside hole in dyna­mite,” it read, accord­ing to court doc­u­ments. “When ready to det­o­nate it just you push car alarm but­ton from key it ini­ti­ate.”

    Pros­e­cu­tors said Ogborn agreed to pay $600 for the explo­sives.

    The under­cov­er inves­ti­ga­tion revealed that “boat­manstv” had pre­vi­ous­ly placed 32 orders, total­ing more than $15,000 in Bit­coin, on that under­ground mar­ket­place.

    Pros­e­cu­tors said Ogborn picked up a pack­age Fri­day that he believed con­tained the explo­sives and took it back to the boat repair shop. He was arrest­ed for “attempt­ing to trans­port explo­sives with the intent that those explo­sives be used to kill, injure, or intim­i­date any indi­vid­ual or to dam­age or destroy a vehi­cle or build­ing,” accord­ing to the U.S. Attorney’s Office.

    He appeared Mon­day in fed­er­al court in a wheel­chair, com­plain­ing that he was injured, but then walked out of the cour­t­house, Alfre­do Perez, a spokesman for the U.S. Mar­shals Ser­vice, told the Hous­ton Chron­i­cle.

    The news­pa­per report­ed that, over the years, Ogborn has been in legal trou­ble for drug pos­ses­sion, dri­ving with a sus­pend­ed license, auto theft, com­mit­ting insur­ance fraud and “pos­sess­ing ille­gal met­al knuck­les.”

    ...

    “The idea we have for this per­son is, while he sleep­ing we put grenade in back of truck and run to our car 20 to 30 meters away, then the truck blow up, he heres [sic] truck blow up and come out­side while he out­side we blow up house...Tell me about the grenade please. How far do we need to be away? What postal car­ri­er for this pack­age?”

    Isn’t the Dark Web fun? You can get dyna­mite with a wire­less fuse all ready to go. Just add bat­ter­ies. Plus a hand grenade. The only draw­back is that the per­son sell­ing you this mate­r­i­al might be a law enforce­ment agent.

    But if this guy had­n’t end­ed up mak­ing the buy from the FBI it seems rea­son­able to assume that a local news sto­ry about a Hous­ton area cab­in burn­ing down dur­ing a grenade attack was just around the cor­ner. At least it seems quite pos­si­ble that he could have eas­i­ly end­ed up hook­ing up with a non-FBI sell­er since he appar­ent­ly used “AlphaBay” before. 32 times:

    ...

    The under­cov­er inves­ti­ga­tion revealed that “boat­manstv” had pre­vi­ous­ly placed 32 orders, total­ing more than $15,000 in Bit­coin, on that under­ground mar­ket­place.

    ...

    That sure could buy a lot of dyna­mite. Or $15,000 of what­ev­er else he might have want­ed on AlphaBay. It will be inter­est­ing to learn what else he bought. Espe­cial­ly since AlphaBay claims to be a kinder, gen­tler sort of law­less Dark Web mar­ket­place that won’t allow peo­ple to hire hit­men or oth­er “ser­vices that are here only to hurt peo­ple”. Yep, that’s the claim:

    Vice Moth­er­board

    This Dark Web Mar­ket Just Start­ed Offer­ing Con­tracts for Any­thing

    Writ­ten by Joseph Cox
    Con­trib­u­tor

    May 1, 2015 // 05:40 PM EST

    Rep­u­ta­tion is every­thing on the dark web. In a space where each per­son in a deal is anony­mous, users need to be able to be rea­son­ably sure they are going to receive the spe­cif­ic drug or weapon they ordered.

    Now, recent­ly launched AlphaBay dark web mar­ket is intro­duc­ing a sys­tem that should allow prac­ti­cal­ly any type of deal to be linked to a user’s rep­u­ta­tion through the use of “dig­i­tal con­tracts” ver­i­fied by AlphaBay.

    Each con­tract costs $5 to ini­ti­ate, paid to the mar­ket admin­is­tra­tors, and it’s entire­ly up to the users what to put in the con­tract.

    Buy­ers and ven­dors can already make cus­tom agree­ments. That isn’t new, “but con­tracts are for more long term busi­ness,” alpha02 told me over encrypt­ed chat.

    “For exam­ple, a user wants to buy X pieces a week of some­thing, or some­one wants to give spe­cial treat­ment,” alpha02 said.

    When one of the par­ties of the con­tract feels they’ve been cheat­ed, they can, in a sim­i­lar way to Pay­Pal, raise a dis­pute. At this point, an AlphaBay mod­er­a­tor will step in and decide on an appro­pri­ate action. That might result in a “failed” con­tract being added to the offend­ing user’s pro­file, mean­ing that oth­ers can see that they have a habit of going back on their promis­es.

    “Too much may result in ban­ning,” alpha02 con­tin­ued.

    ...

    Pre­sum­ably, since these con­tracts are just between two dif­fer­ent users, those par­tic­i­pat­ing can decide to sell what­ev­er they want. How­ev­er, alpha02 says they will still try to keep the deal­ings with­in the rules of the mar­ket.

    “Hit­men will nev­er be allowed, as we don’t want this kind of atten­tion. We don’t allow ser­vices that are here only to hurt peo­ple, like hit­men,” alpha02 said.

    In the volatile dark web, with scams, dis­ap­pear­ances and site clo­sures, any­thing that even hints at sta­bil­i­ty is prob­a­bly going to be wel­comed by users. Whether these con­tracts will actu­al­ly be used remains to be seen, but they are anoth­er man­i­fes­ta­tion of an appar­ent­ly law­less space reg­u­lat­ing itself.

    “Hit­men will nev­er be allowed, as we don’t want this kind of atten­tion. We don’t allow ser­vices that are here only to hurt peo­ple, like hit­men”.

    So now we know: If you have the need burn some­one’s house down and blow up their car, AlphaBay won’t irre­spon­si­bly allow you to hire some­one else to do that. But if you want to order a remote­ly det­o­nat­ed stick of dyna­mite and a hand grenade, that’s total­ly cool. Just be aware that you might be mak­ing that pur­chase from an FBI agent so, you know, make it clear that this is just for send­ing a mes­sage and you don’t want to actu­al­ly kill any­one. You would­n’t want to give AlphaBay a bad rep­u­ta­tion.

    Posted by Pterrafractyl | September 22, 2016, 2:02 pm

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