Silk Road Launched
What is Silk Road Day?
Silk Road Day commemorates the launch of the darknet market “Silk Road”. Silk Road Day specifically takes place on January 27th, though the actual launch appears to have happened a week or so later in early February.
Silk Road is notable in bitcoin circles because it was the first to use bitcoin as its native currency.
What was Silk Road?
The Silk Road was a darknet market created by a young man named Ross Ulbricht (also known online as “Dread Pirate Roberts”).
It operated from February 2011 to October 2013.
Silk Road enabled users to purchase and sell illegal goods and services anonymously with Bitcoin.
The market was named after the ancient Silk Road trade route that connected Asia and Europe, and the website’s logo was a nod to the ancient caravans that traveled the route.
During its operation, The Silk Road was regarded as the largest and most notorious online black market.
It was a marketplace for a variety of illegal items, including drugs, stolen credit card numbers, and assassination services.
However, the website also contained an obscure section dedicated to “harmless” items.
The seizure and closure of Silk Road had a profound effect on the darknet market ecosystem, resulting in the emergence of new marketplaces such as Agora, Evolution, and AlphaBay.
NOTE: Accessing, purchasing, or selling on darknet markets is illegal in most countries and can result in severe legal consequences.
Development and Launch of Silk Road
The Ulbricht’s vision for the Silk Road was to create a “free market” that operated outside of the traditional financial system and was unreachable by law enforcement.
He believed that using the dark web and the digital currency Bitcoin would enable the creation of a truly anonymous marketplace.
Development
To create the Silk Road, Ulbricht notably utilized two privacy-enhancing technologies to develop the website:
Users would use the Tor Network to anonymously access Silk Road and hide their real IP address and spend bitcoin to purchase goods and services.
Launch
While Silk Road Day is celebrated on January 27th, the actual launch day appears to be later than that - on or around February 8th, 2011, as expressed by Ross himself on the Bitcoin Forum.
It quickly gained popularity among those seeking a venue to buy and sell illicit goods and services.
Initially, there was a limited selection of products, but this expanded over time.
NOTE: contrary to popular belief, Silk Road never allowed hitman services or stolen credit card info to be sold. There was a very strict policy to minimize harm on the platform, so even guns were not allowed to be sold.
Ulbricht took a commission of approximately 10% per transaction for the sale of any item or service on the site.
This was the primary source of revenue for the Silk Road.
Ulbricht also developed a system of incentives and rewards for the merchants who assisted him in constructing the platform.
The Silk Road also had a robust user community, and Ulbricht encouraged user feedback and platform enhancement suggestions, as seen below in his announcement of the launch on Bitcoin Forum.
In addition, he implemented a reputation system that allowed users to rate vendors based on their performance, thereby fostering user trust.
Screenshots of this reputation system would later be used as evidentiary exhibits in the formal documents used to charge Ulbricht.
Silk Road was able to establish itself as the most extensive and infamous online black market of its time despite facing numerous legal and technical obstacles during its operation.
However, that didn’t stop law enforcement agencies across the world from seeking to shut down silk road and arrest its creator.
In one candid admission, Australian law enforcement agencies admitted there was little they could do about the website and its activities because they “had no jurisdiction”.
And, in an interview with GQ, one Tor Developer advising law enforcement has this to say:
It’s privacy by design. The same functionality that protects users in China or Iran from oppressive governments shields people using Silk Road. We work with the law-enforcement agencies to make sure they know how Tor works, what it can and cannot do, and we make it clear we can’t trace users ourselves. Configured correctly, there’s nothing you can really do.
But Tor and bitcoin were not enough to save Ulbricht and Silk Road in the end.
Collapse of Silk Road
For more than two years, Ulbricht operated Silk Road with relative impunity until October 2nd, 2013, when he was arrested by the FBI.
The FBI was able to locate Ulbricht by tracing the IP address of the server hosting the Silk Road website to an Icelandic data center.
From there, they were able to determine Ulbricht’s identity.
He was then followed to a San Francisco public library where he was arrested while logged into the Silk Road website as “Dread Pirate Roberts”, his pseudonym.
Following Ulbricht’s arrest, the FBI seized the Silk Road server and shut down the website.
All content on the site was replaced by this message from the FBI:
They also froze the site’s assets, which included Bitcoins held in escrow accounts.
As a result of the demise of the Silk Road, many of its users and vendors migrated to other darknet markets such as Agora, Evolution, and AlphaBay.
However, law enforcement eventually shut down these markets as well.
Ulbricht was found guilty of multiple charges related to the operation of the Silk Road, including drug trafficking, money laundering, and computer hacking, and sentenced to life in prison.
Why is Silk Road Day Important?
The trial and conviction of Ross Ulbricht drew widespread attention and sparked a discussion about Silk Road and the criminal justice system’s capacity to handle cases involving the dark web.
Silk Road itself proved that while authorities may be able to arrest the creators of these websites and shut them down, they cannot easily stop the markets themselves.
Silk Road was important to Bitcoin because it was the first platform to use the digital currency as its native form of payment.