The Great Silk Road Crash of 20** ...?

[justusranvier]

If the CMU research is to be believed, and there are many flaws with their research (which they admit in the paper if you actually read the whole paper), SR contributes a non-trivial amount to the bitcoin economy.

I suspect that it's close to a majority of actual commerce (not trading).

[Desolator]

There are six nodes involved in a hidden service request. Three chosen by the client, and three chosen by the server. None of them know they are participating in a circuit that ends up at Silk

Except if your node is programmed to notice when response times are unnaturally fast.  Nodes just pass traffic.  They have no idea if you're heading to another node or an exit node or ending up at a hidden service or a real website but they do know if the response comes back down the line unnaturally fast, it certainly didn't leave the tor network so there's a darn good chance that the response came directly from a silkroad server.

Btw, mega elephant in the room.  How the hell do they deliver the products?  Drug sniffing dogs are at every mail processing hub.  If people could just fedex drugs somewhere, they wouldn't have submarines and mules and stuff, lol.  If it's all a giant in-person network or something, the FBI would post a fake buying offer and just arrest the dealer when they get there it'd be like shooting fish in a barrel.

[CryptoFreak33]

In my mind, it is inevitable that Silk Road will either be shut down or cease to operate in the not too distant future.

While successors will eventually spring up in its place, there will still be a large, sudden drop in demand for BTC.

How low will BTC go?

How soon might this happen?

I don't believe Silk Road is going to crash. The people who run it seem to be good techs who are working very hard to make it a success and keep it running while protecting their users. More likely, some government will come after them and shut them down.

Meh

I don't believe SR is large enough to crash Bitcoin. I don't think we'll even see that big of a dip in prices. The biggest threat I see to Bitcoin prices are continued scams, the lack of security standards at exchanges, and public gullibility. That's going to contribute to massive issues with Bitcoin prices long before SR going away would.

[thebaron]

Btw, mega elephant in the room.  How the hell do they deliver the products?  Drug sniffing dogs are at every mail processing hub.  If people could just fedex drugs somewhere, they wouldn't have submarines and mules and stuff, lol.  If it's all a giant in-person network or something, the FBI would post a fake buying offer and just arrest the dealer when they get there it'd be like shooting fish in a barrel.

Don't underestimate the inefficiency of a government-owned corporation. US Customs is barely even paying attention, nevermind a short-staffed postal service filled with cranky people who really don't give a shit.

The only busts I've read about in the news have come from someone sending stuff domestically via UPS. They actually seem to go out of their way to detect suspicious packages.

[Desolator]

From an economic standpoint, it'd be bad.  Yeah most BTC transactions are not related to silkroad but there's more to it.  Mining is usually people wanting BTC -> $$$ and sell offs drive the price down on exchanges.  Then there's tons of BTC -> BTC.  Then there's $$$ -> BTC.  It's generally all-around difficult to buy BTC which is a huge detriment.  If I decided right now today to go attempt to buy some, it's some serious hoops to jump through with some sketchy foreign 3rd party processor or I have to cross my fingers and hope a quicker method isn't a scam, etc.

But people who wants drugs will go through some serious BS to get what they want So as far as the amount of people pushing the price up by creating a demand on the exchange for BTC, yeah it's probably mostly druggies If you think about the sheer number of people attempting to acquire BTC then sell it off for USD (basically all miners and all shops), it took more people than that to drive the price from $4 to $12.  Who else could they be?

I heard a rumor about Greeks buying up BTC cuz of Euro shenaningans but it's hard to tell what portion of buyers they are.  And certainly people are not quite so ballsy now when it comes to buying BTC as an investment, seeing as how it crashed pretty hard twice

[FLHippy]

Btw, mega elephant in the room.  How the hell do they deliver the products?  Drug sniffing dogs are at every mail processing hub.  If people could just fedex drugs somewhere, they wouldn't have submarines and mules and stuff, lol.  If it's all a giant in-person network or something, the FBI would post a fake buying offer and just arrest the dealer when they get there it'd be like shooting fish in a barrel.

If you put all the dogs in the entire country capable of the task to work sniffing nothing but mail, they would only be able to sniff a very small portion of the mail sent. And then a large number of those dogs would be taken away from other important tasks like sniffing for bodies or sniffing for bombs or biting people who need to be bitten.

Also, I have a strong suspicion that SR is kind of "allowed to happen". I'm reluctant to give the .gov credit for being able to see the situation as it really is but when you consider the alternatives of buying drugs on the street, SR goes a long way towards harm reduction.

[Scott J]

I don't believe Silk Road is going to crash.

By 'The Great Silk Road Crash' I was referring to the BTC price crash that Silk Road disappearing would precipitate.

I don't believe SR is large enough to crash Bitcoin. I don't think we'll even see that big of a dip in prices.

Silk Road revenue is said to be "approximately USD 1.9 million per month". If this demand suddenly disappeared then I think there would be a massive dip. You can also add market panic to the mix.

I want to add that I am not trying to spread FUD with this topic - I just think this is something Bitcoin will have to go through during its evolution.

[thebaron]

Also, I have a strong suspicion that SR is kind of "allowed to happen". I'm reluctant to give the .gov credit for being able to see the situation as it really is but when you consider the alternatives of buying drugs on the street, SR goes a long way towards harm reduction.

I think it just costs to much to try and track down people who are sending mail anonymously. Street pharmacists are pretty easy to trap and confiscate property from to support LE efforts.

[Bitcoin Oz]

SR would just move the server to portugal which has less retarded drug laws than most places.

[kokojie]

Okay yeah, very very difficult unless you operate a ton of rigged exit nodes.  Then it's simple if you control all the country's ISPs like China does  Classic entry-exit attack.
Ohhhhhhhhhhhhhh that's right.  I almost forgot about Operation Adam Bomb.  Just kidding, I knew about it the whole time and just wanted all the arrogant, fake, know it all haters here to show how clueless they are first.
Anyway, mega lolz at everyone who's like "nah ah, silkroad is invincible!  2 years is like...FOREVER!  NOBODY could ever find it and shut it down!"

This article is titled:
"Feds shutter online narcotics store that used TOR to hide its tracks" <-- lol
http://arstechnica.com/tech-policy/2012/04/feds-shutter-online-narcotics-store-that-used-tor-to-hide-its-tracks/

Super short summary: an exact clone of silkroad got shut down despite existing only in Tor.  Oops, Des was right again.  I guess computers connected to the internet can be found after all! lol.

These guys used hushmail and accepted paypal/western union for payment, they might as well hold a sign to their head that says "I sell drugs". It's a miracle they even lasted over 2 years and 5000+ orders. the FBI would just need to place a single fake order and obtain their paypal address, then all is lost.

[Raoul Duke]

SR would just move the server to portugal which has less retarded drug laws than most places.

Those un-retarded drug laws only say a drug consumer can carry a quantity less than 10 days comsumption. In the case of Marijuana it means 5 grams maximum. You will not be imprisioned, but they will take it away from you and send you to a psychologist and you'll have to pay a fine for it also.

If SR moved the server to Portugal it would mean jail for them and to whoever hosted it if they knew what they were hosting.

Please don't spread misinformation.

[FLHippy]

Silk Road revenue is said to be "approximately USD 1.9 million per month". I

This number would be much higher if you count all the 2xMtGox coins sold on eBay heading directly to SR.

[WikileaksDude]

SR would just move the server to portugal which has less retarded drug laws than most places.

Those un-retarded drug laws only say a drug consumer can carry a quantity less than 10 days comsumption. In the case of Marijuana it means 5 grams maximum. You will not be imprisioned, but they will take it away from you and send you to a psychologist and you'll have to pay a fine for it also.

If SR moved the server to Portugal it would mean jail for them and to whoever hosted it if they knew what they were hosting.

Please don't spread misinformation.

Why moving to Portugal? That would be the same as moving to Sweden or Finland. Do you guys have any idea how much jailtime the operators would get if caught?
Running a criminal enterprise on the longterm, means lifetime jail, in almost any country.

From most posts DPR seems a educated person.

And please quit this conspirancy theories about SR going to shutdown. No one can shutdown a .onion domain or trace the server origins via hidden services if well config. The revenue SR is making thru Escrow system is more than deserved for the work they done.

[paulie_w]

@Desolator

i love a good troll as much as the next guy, but the tor developers aren't idiots. you haven't discovered anything new here, but you are indeed revealing a great deal of ignorance about it. read the docs, study the source, talk to the developers.

[tiberiandusk]

I heard on these forums that TOR is broken so everyone should stop using it. Why is it broken? Jeez, can't you people google?

/sarcasm

[hannesnaude]

Silk Road revenue is said to be "approximately USD 1.9 million per month". If this demand suddenly disappeared then I think there would be a massive dip.

Yeah, but as others have already pointed out, approximately USD 1.9 million of supply per month also disappears at the same time (unless you believe that SR sellers keep their income in BTC form). So in a rational market, this is a market neutral event.

You can also add market panic to the mix.

Now there's a good point. It will almost certainly cause a price dip in the short term, because people will panic sell. Meanwhile, those who assessed the situation a little more thoroughly will snatch up cheap coins.

All of the above is under the assumption that SR shuts down due to some human error or bad luck (incorrectly configured server, inadequate money laundering allowing a known SR address to be linked to an address with a known owner, SR operators being busted for some unrelated crime in RL, or DPR being run over by a bus). In this case SR will quickly be replaced by one of it's competitors waiting in the wings.

But in the exceedingly unlikely event that SR was to shut down or be shut down due to some previously unknown weakness in TOR itself, that cannot easily be patched, the long term price impact on bitcoin will indeed be quite negative, since untraceable trade is one of the major bitcoin value propositions.

[thebaron]

But in the exceedingly unlikely event that SR was to shut down or be shut down due to some previously unknown weakness in TOR itself, that cannot easily be patched, the long term price impact on bitcoin will indeed be quite negative, since untraceable trade is one of the major bitcoin value propositions.

Since TOR is used by our own government so it can get away with whatever fucked up shit they do anonymously over the internet, I don't see that happening. Sites on TOR even survive DDoS'ing.

[tpantlik]

But in the exceedingly unlikely event that SR was to shut down or be shut down due to some previously unknown weakness in TOR itself, that cannot easily be patched, the long term price impact on bitcoin will indeed be quite negative, since untraceable trade is one of the major bitcoin value propositions.

Since TOR is used by our own government so it can get away with whatever fucked up shit they do anonymously over the internet, I don't see that happening. Sites on TOR even survive DDoS'ing.

And what if I tell you that Tor was made by CIA... Now it is developed by geeks and nodes, relays and bridges are sustained by privacy geeks. They need it for some of their operations. I bet that this is the very same reason why Gavin was invited to CIA - they were looking for anonymous global payments system for their operations so they invited main developer to consult it. Maybe they are using Bitcoin for a while 

[teamhugs]

And what if I tell you that Tor was made by CIA... Now it is developed by geeks and nodes, relays and bridges are sustained by privacy geeks. They need it for some of their operations. I bet that this is the very same reason why Gavin was invited to CIA - they were looking for anonymous global payments system for their operations so they invited main developer to consult it. Maybe they are using Bitcoin for a while 

It appears it was the Navy, not the CIA:

Tor was originally designed, implemented, and deployed as a third-generation onion routing project (http://www.onion-router.net/) of the U.S. Naval Research Laboratory. It was originally developed with the U.S. Navy in mind, for the primary purpose of protecting government communications. Today, it is used every day for a wide variety of purposes by normal people, the military, journalists, law enforcement officers, activists, and many others.

Taken from https://www.torproject.org/about/overview.html.en at Fri Sep 21 12:28:19 UTC 2012.

[tpantlik]

And what if I tell you that Tor was made by CIA... Now it is developed by geeks and nodes, relays and bridges are sustained by privacy geeks. They need it for some of their operations. I bet that this is the very same reason why Gavin was invited to CIA - they were looking for anonymous global payments system for their operations so they invited main developer to consult it. Maybe they are using Bitcoin for a while 

It appears it was the Navy, not the CIA:

Tor was originally designed, implemented, and deployed as a third-generation onion routing project (http://www.onion-router.net/) of the U.S. Naval Research Laboratory. It was originally developed with the U.S. Navy in mind, for the primary purpose of protecting government communications. Today, it is used every day for a wide variety of purposes by normal people, the military, journalists, law enforcement officers, activists, and many others.

Taken from https://www.torproject.org/about/overview.html.en at Fri Sep 21 12:28:19 UTC 2012.

Ah, sorry, you are right.