Hard-Core Online Drug Bazaar Thumbs its Nose at The Law

It was inevitable, really. We buy so many goods online, and we’ve become so used to sites like Amazon, always ready to sell us what we need at a microsecond’s notice. People of a certain inclination may have already nosed around enough to know that products like high-end marijuana seeds, starter kits for psychedelic mushrooms, and endless amounts of drug growing and drug taking paraphernalia are available in a broad but furtive gray market, where giving out a credit card has to be counted as either an act of great faith or of great desperation. But Silk Road has an answer. Silk Road, a website that bills itself as an “anonymous marketplace," is pioneering a brazen trade in illegal drugs by using sophisticated cryptographic software to protect its customers.
Let’s say you want to sell drugs on the Internet. Not black-market prescription drugs, but illegal drugs, all kinds, all sizes. A digital dream market, where a portion of the day’s specials on sale might read like: “A gram of Afghani hash; 1/8 ounce of “sour 13″ weed; 14 grams of ecstasy; .1 gram tar heroin.” An Internet drugstore this wide open must be either a DEA sting or the dumbest idea in web history, you say to yourself. But maybe not. An investigation by Gawker found enough satisfied customers to give us pause. The site uses a reputation-based rating system for keeping track of seller performance, a setup familiar to anyone who has made purchases on Amazon or eBay. One customer wrote of his purchase of psychedelic drugs: “Excellent quality, packing and communication. Arrived exactly as described.” Five stars for that one. "It's Amazon," wrote Adrian Chen at Gawker, "if Amazon sold mind-altering chemicals."
Well, how do they get away with it? For now, they seem to be getting away with it using the same digital cryptographic tools that enabled the great digital music download era. An encryption algorithm disguises users, courtesy of the anonymous network TOR. Buyers then use a proprietary form of money—Bitcoins—made possible by the same technology that brought us the peer-to-peer file sharing protocol known as Bittorrent. Bitcoins are a form of peer-to-peer money which can be purchased with regular money at other obscure sites, and then deposited in an account at Silk Road as cyber-currency.
So, to recap: The DEA probably can’t ID Silk Road purchasers, due to the TOR anonymizer, and they can’t follow the money because there isn’t any. Gawker managed to communicate with the Silk Road overlords, who wrote back: “Stop funding the state with your tax dollars and direct your productive energies into the black market.” Which gives us a pretty good idea where they stand, politically. Libertarian anarchists, rejoice! This site’s for you.
Dirk Henson @'The Fix'

Bitcoin, Silk Road, and LulzSec oh my!