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Author Topic: Bitcoin and the Silk Road...Buy pretty much anything.  (Read 1907 times)
daddy8ball
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« on: April 11, 2013, 12:45:18 PM »

Does the concept of crypto currency have any long term traction?
==============

The Underground Website Where You Can Buy Any Drug Imaginable

Making small talk with your pot dealer sucks. Buying cocaine can get you shot. What if you could buy and sell drugs online like books or light bulbs? Now you can: Welcome to Silk Road.

http://gawker.com/5805928/

About three weeks ago, the U.S. Postal Service delivered an ordinary envelope to Mark's door. Inside was a tiny plastic bag containing 10 tabs of LSD. "If you had opened it, unless you were looking for it, you wouldn't have even noticed," Mark told us in a phone interview.

Mark, a software developer, had ordered the 100 micrograms of acid through a listing on the online marketplace Silk Road. He found a seller with lots of good feedback who seemed to know what they were talking about, added the acid to his digital shopping cart and hit "check out." He entered his address and paid the seller 50 Bitcoins—untraceable digital currency—worth around $150. Four days later the drugs, sent from Canada, arrived at his house.

"It kind of felt like I was in the future," Mark said.

Silk Road, a digital black market that sits just below most internet users' purview, does resemble something from a cyberpunk novel. Through a combination of anonymity technology and a sophisticated user-feedback system, Silk Road makes buying and selling illegal drugs as easy as buying used electronics—and seemingly as safe. It's Amazon—if Amazon sold mind-altering chemicals.

Here is just a small selection of the 340 items available for purchase on Silk Road by anyone, right now: a gram of Afghani hash; 1/8th ounce of "sour 13" weed; 14 grams of ecstasy; .1 grams tar heroin. A listing for "Avatar" LSD includes a picture of blotter paper with big blue faces from the James Cameron movie on it. The sellers are located all over the world, a large portion from the U.S. and Canada.

But even Silk Road has limits: You won't find any weapons-grade plutonium, for example. Its terms of service ban the sale of "anything who's purpose is to harm or defraud, such as stolen credit cards, assassinations, and weapons of mass destruction."

Getting to Silk Road is tricky. The URL seems made to be forgotten. But don't point your browser there yet. It's only accessible through the anonymizing network TOR, which requires a bit of technical skill to configure.

Once you're there, it's hard to believe that Silk Road isn't simply a scam. Such brazenness is usually displayed only by those fake "online pharmacies" that dupe the dumb and flaccid. There's no sly, Craigslist-style code names here. But while scammers do use the site, most of the listings are legit. Mark's acid worked as advertised. "It was quite enjoyable, to be honest," he said. We spoke to one Connecticut engineer who enjoyed sampling some "silver haze" pot purchased off Silk Road. "It was legit," he said. "It was better than anything I've seen."

Silk Road cuts down on scams with a reputation-based trading system familiar to anyone who's used Amazon or eBay. The user Bloomingcolor appears to be an especially trusted vendor, specializing in psychedelics. One happy customer wrote on his profile: "Excellent quality. Packing, and communication. Arrived exactly as described." They gave the transaction five points out of five.

"Our community is amazing," Silk Road's anonymous administrator, known on forums as "Silk Road," told us in an email. "They are generally bright, honest and fair people, very understanding, and willing to cooperate with each other."

Sellers feel comfortable openly trading hardcore drugs because the real identities of those involved in Silk Road transactions are utterly obscured. If the authorities wanted to ID Silk Road's users with computer forensics, they'd have nowhere to look. TOR masks a user's tracks on the site. The site urges sellers to "creatively disguise" their shipments and vacuum seal any drugs that could be detected through smell. As for transactions, Silk Road doesn't accept credit cards, PayPal , or any other form of payment that can be traced or blocked. The only money good here is Bitcoins.

Bitcoins have been called a "crypto-currency," the online equivalent of a brown paper bag of cash. Bitcoins are a peer-to-peer currency, not issued by banks or governments, but created and regulated by a network of other bitcoin holders' computers. (The name "Bitcoin" is derived from the pioneering file-sharing technology Bittorrent.) They are purportedly untraceable and have been championed by cyberpunks, libertarians and anarchists who dream of a distributed digital economy outside the law, one where money flows across borders as free as bits.

To purchase something on Silk Road, you need first to buy some Bitcoins using a service like Mt. Gox Bitcoin Exchange. Then, create an account on Silk Road, deposit some bitcoins, and start buying drugs. One bitcoin is worth about $8.67, though the exchange rate fluctuates wildly every day. Right now you can buy an 1/8th of pot on Silk Road for 7.63 Bitcoins. That's probably more than you would pay on the street, but most Silk Road users seem happy to pay a premium for convenience.

Since it launched this February, Silk Road has represented the most complete implementation of the Bitcoin vision. Many of its users come from Bitcoin's utopian geek community and see Silk Road as more than just a place to buy drugs. Silk Road's administrator cites the anarcho-libertarian philosophy of Agorism. "The state is the primary source of violence, oppression, theft and all forms of coercion," Silk Road wrote to us. "Stop funding the state with your tax dollars and direct your productive energies into the black market."

Mark, the LSD buyer, had similar views. "I'm a libertarian anarchist and I believe that anything that's not violent should not be criminalized," he said.

But not all Bitcoin enthusiasts embrace Silk Road. Some think the association with drugs will tarnish the young technology, or might draw the attention of federal authorities. "The real story with Silk Road is the quantity of people anxious to escape a centralized currency and trade," a longtime bitcoin user named Maiya told us in a chat. "Some of us view Bitcoin as a real currency, not drug barter tokens."

Silk Road and Bitcoins could herald a black market eCommerce revolution. But anonymity cuts both ways. How long until a DEA agent sets up a fake Silk Road account and starts sending SWAT teams instead of LSD to the addresses she gets? As Silk Road inevitably spills out of the bitcoin bubble, its drug-swapping utopians will meet a harsh reality no anonymizing network can blur.

Update: Jeff Garzik, a member of the Bitcoin core development team, says in an email that bitcoin is not as anonymous as the denizens of Silk Road would like to believe. He explains that because all Bitcoin transactions are recorded in a public log, though the identities of all the parties are anonymous, law enforcement could use sophisticated network analysis techniques to parse the transaction flow and track down individual Bitcoin users.

"Attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb," he says.
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The answer is "yes".
blinky
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« Reply #1 on: April 11, 2013, 05:01:07 PM »

ive been on there and looked around...pretty wild(as well as most of the rest of TOR
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arce1988
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« Reply #2 on: April 11, 2013, 05:30:29 PM »

  PED?
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« Reply #3 on: May 07, 2013, 02:05:29 AM »

I think putting any faith in Bitcoin is asking for trouble.
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Irongrip400
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« Reply #4 on: May 07, 2013, 02:38:57 PM »

Dude, I was just looking at shit about this bitcoin. I saw something about it. Pretty cool you just brought it up.
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Roger Bacon
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« Reply #5 on: May 08, 2013, 07:25:55 PM »

I like this, hope bitcoins, silk road, and tor continue to be successful.
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« Reply #6 on: May 09, 2013, 06:51:06 AM »

I like this, hope bitcoins, silk road, and tor continue to be successful.

Don't hold your breath on that. I believe Bitcoin is going down.
It is no where near as anonymous as people believe it to be.
It's also on gov't radars all over, and easily compromised.

I think the reasons we haven't heard all it's flaws more widely publicized is because for the most part it has always been a medium of exchange for those operating outside of the law. Criminals don't usually complain the BBB about getting shafted or losing their money. Now that more & more people are putting legitimate money into Bitcoin, we will start to hear the complaints.
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Archer77
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« Reply #7 on: May 09, 2013, 06:53:12 AM »

You'd be amazed what you can purchase. 
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« Reply #8 on: May 09, 2013, 07:08:47 AM »

You'd be amazed what you can purchase. 

At this point, nothing much would amaze me about Silk Road.
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deadpan
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« Reply #9 on: May 13, 2013, 12:08:15 PM »

kind of old news.

Don't hold your breath on that. I believe Bitcoin is going down.
It is no where near as anonymous as people believe it to be.
It's also on gov't radars all over, and easily compromised.

I think the reasons we haven't heard all it's flaws more widely publicized is because for the most part it has always been a medium of exchange for those operating outside of the law. Criminals don't usually complain the BBB about getting shafted or losing their money. Now that more & more people are putting legitimate money into Bitcoin, we will start to hear the complaints.

yeah that's why their value went up by like 30 times over the course of the last few years and a bunch of countries in europe are starting to use them in the place of real currency  Roll Eyes

and they're pretty damned anonymous if you actually know something about security. it would cost millions if not billions of taxpayer dollars for...what exactly? cracking down on everyone that orders a few grams of pot or mdma?

this country can't even afford to build its own goddamn roads without borrowing money from china and the "war on drugs" is already drawing tons of negative press as is. besides, look at the PED market. no one bothers cracking down on eroids or naps or strango and those guys have been around for years with little to no security measures whatsoever, SR is fort knox compared to them. darknet services and e-currency isn't going anywhere, it's getting more popular every day. i wouldn't be surprised if it was the new norm in a few decades, our currency already has no intrinsic value so it's not like it would be that huge of a leap.
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« Reply #10 on: May 16, 2013, 04:39:55 AM »

kind of old news.

yeah that's why their value went up by like 30 times over the course of the last few years and a bunch of countries in europe are starting to use them in the place of real currency  Roll Eyes

and they're pretty damned anonymous if you actually know something about security. it would cost millions if not billions of taxpayer dollars for...what exactly? cracking down on everyone that orders a few grams of pot or mdma?

this country can't even afford to build its own goddamn roads without borrowing money from china and the "war on drugs" is already drawing tons of negative press as is. besides, look at the PED market. no one bothers cracking down on eroids or naps or strango and those guys have been around for years with little to no security measures whatsoever, SR is fort knox compared to them. darknet services and e-currency isn't going anywhere, it's getting more popular every day. i wouldn't be surprised if it was the new norm in a few decades, our currency already has no intrinsic value so it's not like it would be that huge of a leap.

It's easy for something to increase in value 30 x's when it has crashed to zero previously.

I stand by my original statement.

In other Global Currency Trends ...  Cheesy

Bitcoin: Mt. Gox,
World's Largest Bitcoin Exchange, Seized By Federal Government

Aubrey Bloomfield in Business,Currency 12 hours ago




It what could be the first move in a wider attempt by the federal government to clamp down on the online currency Bitcoin, on Tuesday the Department of Homeland Security (not the first agency I would have picked) issued an order restricting the transfer of funds in and out of Mt. Gox, the world's largest Bitcoin exchange, which is based in Japan.

Although launched back in 2009, the electronic currency first came to mainstream attention in 2011 when a Gawker article explained how to use Bitcoins to buy drugs. More recently, the value of Bitcoins experienced a massive spike before their value then plummeted. To find out more about Bitcoins, check out this handy little video which explains how they work with the help of Super Mario Bros clips.

The legal status of Bitcoins is unclear. As Adam Serwer and Dana Liebelson of Mother Jones note, they are "probably" legal in the U.S., "but it could depend on what state you're in. Doing something illegal with Bitcoins — like bribing someone or buying drugs — is still illegal." But despite the unclear legal status of the currency, and the moves by the federal government, it appears Bitcoins are not going anywhere just yet.

The Department of Homeland Security is "focusing on Dwolla, an online payment system (sort of like PayPal) that has become a popular way for Bitcoin users to transfer money to and from Mt. Gox." A spokesman for Dwolla confirmed the order:

“The Department of Homeland Security and U.S. District Court for the District of Maryland issued a ‘Seizure Warrant’ for the funds associated with Mutum Sigillium’s Dwolla account (a.k.a. Mt. Gox) ... In light of the court order, procured by the Department of Homeland Security, Dwolla has ceased all account activities associated with Dwolla services for Mutum Sigillum while Dwolla’s holding partner transferred Mutum Sigillium’s balance, per the warrant.”

While some reports have said the reason for the seizure is not entirely clear, Kashmir Hill of Forbes says it is a result of "Mt. Gox’s failure to partner with a FinCEN-approved U.S. agent." FinCEN is the Financial Crimes Enforcement Network, "the bureau of the Treasury Department that seeks to prevent money laundering, terrorism financing, and other financial no-nos."

Recent FinCEN guidelines for virtual currencies state that "exchangers of virtual currency are money transmitters for the purpose of FinCEN regulations" according to James Freis, counsel at the law firm Cleary Gottlieb. But apparently Mutum Sigillum, a U.S. intermediary that Mt. Gox has been using to exchange the virtual currency for U.S. dollars, is "not registered as a money transmitter with the Treasury Department."


Hill argues that it is "important to note here that Homeland Security is not cracking down on Bitcoin itself, just on how it’s being exchanged by Mt. Gox," and that "Mt. Gox’s legal troubles don’t seem to be affecting the value of Bitcoin." Moreover, the Department of Homeland Security order is good news for Mt. Gox's U.S.-based competitors.

It is hard to tell at this stage whether the federal government will eventually target Bitcoin itself or just seek to regulate it like any other currency. But while the federal government may not be trying to shut down Bitcoin just yet, it is keeping an eye on it.
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« Reply #11 on: May 16, 2013, 06:39:18 AM »

Do you use bitcoins, 24kt?
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« Reply #12 on: May 16, 2013, 01:37:43 PM »

if you think digital currency will be wiped out just because some backwards-ass politicians (from america, big surprise  Roll Eyes) don't want some tech guy taking LSD, you are mistaken. this is just the first exchange, more exist and others will arrive to replace it.

just because you have a stake in selling people shiny metal baubles doesn't mean this is going anywhere. the seeds have already taken root in other countries around the world and the US will soon follow, kicking and screaming as usual, of course.

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« Reply #13 on: May 28, 2013, 11:44:27 PM »

Do you use bitcoins, 24kt?

Nope
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« Reply #14 on: May 28, 2013, 11:48:40 PM »

if you think digital currency will be wiped out just because some backwards-ass politicians (from america, big surprise  Roll Eyes) don't want some tech guy taking LSD, you are mistaken. this is just the first exchange, more exist and others will arrive to replace it.

just because you have a stake in selling people shiny metal baubles doesn't mean this is going anywhere. the seeds have already taken root in other countries around the world and the US will soon follow, kicking and screaming as usual, of course.



I didn't say that I thought digital currency will be wiped out, ...I said I had a feeling that Bitcoin was going down. It is not as anonymous as people believe it to be, and it's value is extremely vulnerable to manipulation.
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« Reply #15 on: May 28, 2013, 11:55:20 PM »


Bitcoin Users Will Freak Out When They See The Cruise Missile The Justice Department Just Fired Against Another Digital Currency
Rob Wile | May 28, 2013  4:31 PM


Today, the Department of Justice arrested the founders of Liberty Reserve, a digital currency service, and charged them with money laundering.

Created in 2006, Liberty Reserve was both a virtual currency — its denomination was called "LR's" — and an allegedly illict wire transfer service. According to DOJ's complaint, the scope of Liberty Reserve's operations was almost exclusively limited to criminal activity.

But as the FT's Stephen Foley Tweeted, the text of DOJ's complaint is a cruise missile across the bow of Bitcoin users:


The story continues at... : http://www.businessinsider.com/implications-of-liberty-reserve-for-bitcoin-2013-5
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« Reply #16 on: May 30, 2013, 10:36:05 PM »


In other Global Currency Trends ...   Cheesy

Virtual Currencies Run Into Trouble in the US

By Stephen Foley
Financial Times, London
Thursday, May 30, 2013



According to the website Localbitcoins.com, in the United States alone there are more than 2,000 people in 650 towns and cities who want to sell you Bitcoins for cash, right now.

Transactions in the virtual currency, which came to mainstream attention this year, are anonymous and untraceable -- and they are increasingly drawing the scrutiny of law enforcement authorities who fear they will become a tool of money launderers.

A string of legal actions and regulatory manoeuvres in the United States in recent weeks has made life more complicated for people who hope to make a living from trading virtual currencies, which are created by individuals or companies instead of governments, and which are used outside the traditional banking system.

A glance at the US section of Localbitcoins.com elicits a stark warning from one legal expert.

"You better get yourself registered, or you better get your name off the list real fast," says Carol Van Cleef, a partner in Patton Boggs' banking practice and an adviser on anti-money laundering policies.
The bout of concern over the future of virtual currencies was sparked this week as the Department of Justice and the US Treasury moved against Liberty Reserve, the creators of "LR," a currency that a criminal complaint said was used to launder the proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking.

The action comes less than a fortnight after the Department of Homeland Security seized the US bank accounts of the largest Bitcoin exchange, saying its owner had failed to register the company as a money services business (MSB).

One of Bitcoin's early uses was as the currency of choice for buyers and sellers of drugs on the website Silk Road, although its supporters point to a gathering number of legitimate businesses that use it.

But the burgeoning number of virtual currencies, and the wave of entrepreneurial interest in building payments systems on the back of them, could be held back by the costs of acceding to government demands that they root out illicit uses. This could particularly be the case with Bitcoin and similar experiments, which rely on a decentralised and anonymous network of computers around the world to manage transactions.

"Criminals are always the first adopters," Ms Van Cleef says. "They will hit it and hit it, and they will keep hitting it until controls are put in place."

For the libertarians who have been drawn to virtual currencies as a means of wresting economic control from governments and central banks, recent developments have put them in a spot, she adds.

"This is the issue for those people who do not believe in government. They are going to have to 'cut a deal with the devil.' If they are in the financial services world, they are going to have to recognise that."

This is by no means accepted across the Bitcoin community.

"People are way too US-centric when discussing Bitcoin," says Erik Voorhees, an early evangelist for the currency, who moved from the US to Panama to pursue his business ventures.

"Bitcoin's early successes will not be in the US. They will be in the developing world where a banking system is practically non-existent or where currencies are being destroyed, such as in Argentina. US Bitcoin businesses absolutely need to follow the US regulations or they'll be shut down, and that doesn't help anyone, but US regulations do not apply to, for example, a Kenyan company doing business with Kenyans."

Venture capital money has flowed into Bitcoin payments businesses on the theory that the currency could be used to increase the speed and reduce the cost of international transactions, even through the US.

In March, the Financial Crimes Enforcement Network, a division of the US Treasury, clarified that all virtual currency exchangers needed to register as MSBs, and to set up procedures to identify and report suspicious transactions, in the same way as traditional banks must.

Since then, some Bitcoin businesses have reported having their accounts shut down by their banks.

Steve Hudak, spokesman for FinCEN, says it is not the Treasury's intention to stifle innovation in virtual currencies.

"We do expect banks to assess their risk tolerance and assess their customers, but we certainly did not intend to label all these businesses as unfit for banking," he says. "Our intention is only to set out what they need to do to make themselves legitimate under FinCEN regulations."

http://www.ft.com/intl/cms/s/2/dc18a5be-c872-11e2-8cb7-00144feab7de.html
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deadpan
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« Reply #17 on: May 31, 2013, 07:00:05 AM »

"People are way too US-centric when discussing Bitcoin"

pretty much exactly what i've been saying in my past comments
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« Reply #18 on: June 07, 2013, 10:08:16 PM »

"People are way too US-centric when discussing Bitcoin"

pretty much exactly what i've been saying in my past comments

Unfortunately, one has to consider the USA position on this, since it's clear that they intend to exert their power across borders in a desperate bid for any potential additional tax revenues.
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