A Heroin Store

[teppy]

As a Libertarian, the thing I love most about the Bitcoin project is the chance that it could be truly disruptive.

I think that drug prohibition is one of the most socially harmful things that the US has ever done, and so I would like to do a thought experiment about how a heroin store might operate, accepting Bitcoins, and ending drug prohibition in the process. We'll assume that the drug store is very high profile, and that law enforcement makes discovering the operator a high priority. We'll also assume that heroin is cheap when bought in bulk; the street price reflects the risk that street dealers must take to sell their product.

A drug dealer would set up a website that accepts Bitcoins for heroin. Orders would require a physical address for shipping. When an order comes in, the dealer would send heroin through the mail to two addresses: the address provided, and another random address. Because packages of heroin are now arriving at addresses across the country, receiving a package does not imply that you ordered it. Random addresses would be heavily reused to prevent law enforcement from making a statistical argument.

Now law enforcement could set up such a website as well, in order to discover buyers. So, the drug dealer must take half of his profits (and remember, he's already shipping 2x the amount paid for), and use them to buy heroin at other random websites, on behalf of both his customers and the random addresses that he has used.

If the post office knows that a package contains drugs, then they could send an undercover officer to deliver the mail to your door, or surreptitiously watch your mailbox to see who collects the mail, and then get a warrant to search your house to see if the package has been opened and not discarded. (IIRC, discarded materials are no longer considered in your possession.)

So, it would be important for buyers to not open any package that they suspect may contain their heroin, until they wish to consume it: they would only be in danger of possession between when the package was opened and when the contents was consumed.

Can anyone see a way to attack the store?

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[laszlo]

Sounds interesting.. but the US government has endless resources and nothing to stop them from doing things they're not supposed to.. I think if it's high profile enough you would still get busted somehow, something you didn't think of.  If you're always shipping them from the same post office they might figure it out.. 

[Max Stirner]

Teppy, what a brilliant idea! Just for the theoretical approach of course!
I think a better concept would be to leave out the official mail system all together. There are just too many ways to get caught once you expand your business.  What you need is a bitcoin operated anonymous delivery-service. Of couse to operate a secret mail service is very dangerous for the postman. So the concept would be that the postman delivers the packet to a secret spot and never meets the recipient in person.
The heroin shop would need a website running on freenet or i2p of course - like the postal service.
Once the packet is placed on the secret spot, you will get the info - could be gps-coordinates - or some advanced app on your iphone.

[teppy]

Yes, I2P or Tor would work for such a website. Freenet is probably more secure because there are no entry/exit nodes to monitor, but Freesites can only serve static content, and anonymous Bitcoin payments don't have a way to include a message with them.

If every package originated at the same mailbox, then yes, I could imagine the government being able to detect the drug dealer by intensive surveillance. If the drug dealer used a random local mailbox, then it would get quite difficult because the set of people that use one of (let's say) 20 mailboxes would be huge.

And if the concept really is bulletproof, then I'd imagine 100's of such websites would quickly spring up, making LE's job even more impossible.

[laszlo]

So when/where can I place an order?

[Anonymous]

Im sure the biggest drug gang (the government) wouldn't mind you competing on their home turf.

[sirius]

You'd need some kind of a reputation system before sending money to an anonymous merchant. Maybe something PGP based to verify he's the same guy people have successfully traded with previously. But even that is difficult, because in this case his customers want to remain anonymous too, and anonymous recommendations are next to nothing.

[Anonymous]

You'd need some kind of a reputation system before sending money to an anonymous merchant. Maybe something PGP based to verify he's the same guy people have successfully traded with previously. But even that is difficult, because in this case his customers want to remain anonymous too, and anonymous recommendations are next to nothing.

Set up shop on second life or xbox live....or a similar service.Does freenet have a social network?

As long as you were connected securely you could just give your client the gps coordinates of the package-sort of like geocaching and tell them your bitcoin address.

[sirius]

Set up shop on second life or xbox live....or a similar service.Does freenet have a social network?

As long as you were connected securely you could just give your client the gps coordinates of the package-sort of like geocaching and tell them your bitcoin address.

You still have the lack of trust problem. The one who fulfills his part of the deal first (sending the coins or the gps coordinates) needs to trust the other guy.

[theymos]

You could build an anonymous trust system by combining some aspects of BitCoin with a web of trust. In this system, anyone would be able to send as many "trust coins" as they want to other identities, but how many of these transactions you view as valid would depend on who you trust in the network. You might say that certain identities can send unlimited coins, while others can send up to 50. No identity would have an objective balance -- the balance would be determined entirely by how you process the public list of transactions.

Example:
-You know Identity A personally, so you allow him to send unlimited trust coins.
-He buys a CD from Identity B. Since it went OK, A sends B 100 trust coins.
-Randomly and over a long period of time, B sends these coins to addresses he controls. It is impossible for an observer to know whether any of these transactions were to real people or not, so B has plausible deniability. (This is clearly more secure if there are more real people between B and you, though.)
-B wants to sell you heroin online. To prove his legitimacy, he tells you one of his anonymized trust addresses. When you enter it into your software, you see that he has a number of trust coins, somehow gotten from your trusted peers (possibly in a very indirect way, but directly in this case).

[Max Stirner]

I just thought about the heroin store again, and I would propose to start with
a marihuana store first. It has many advantages to start with a dope store:
the risk of getting caught is much more calculable. Your clients are much trustworthier,
and your competitioners are not as dangerous. The most profitable place to start
such a business is a university campus. Demand is huge, the people are sane and the
area is small, so you and all your clients can reach the secret spots in a short amount of time.
Once the word has spread around that your store is reliable, the clients will trust
you.
The principle is the same as I proposed for the heroin store with a anonymous delivery system.
Your freenet/i2p page will be "dope-university-xyz"
A client orders the joint (for your first order, you cannot order more than one joint),
a new client has to pay first, before he gets the gps cordinates of the secret place you have
put the joint. In this scenario the web of trust is the social circle of the campus
where people spread the word about your reliability. If you always find a new spot to hide
the joints, it is a quite safe system. What do you think?

[lachesis]

I like it, Max. I wonder how much overlap there is between university pot smokers and university bitcoin users, though.

[Timo Y]

It would be easy to trace store using forensic methods, for someone with enough determination, manpower, resources, and time.  Unfortunately, when it comes to opiates, the government has an amost infinite supply of all 4 of those. As long as only a small number of stores springs up they would be wiped out immediately and never reach critical mass.

[teppy]

What flaw do you see in my description that would allow either the buyer or seller to be discovered, including statistical attacks?

The government does have huge resources, but they have not, to anyone's knowledge, broken PGP.

See if you can come up with a specific attack that the government could do that would allow either a buyer or the seller to be discovered.

[Timo Y]

Theoretically, your plan is perfect, but in practice you need to factor in human error.

Wikileaks is a good example. The website is set up in a way that makes it impossible to trace whistleblowers using technical means. But as we have seen, if they brag about their whisleblowing to the wrong friend then they can be tracked down in meatspace.

Nothing will protect your store against old fashioned forensic analysis of the packaging you use for your parcels, for instance.

[SmokeTooMuch]

tl;dr

there already is a marijuhana store in the .onion network


(will read the whole thread when I got some more time)

[Babylon]

As was stated forensic approaches could crack this.  Analyzing the packaging, for instance, and then watching the mailboxes it was sent from for someone using similar packaging (after placing an order)  Analyzing incidences of people shipping two packages of the same weight at the same time to different addresses. 

And, of course, there is the issue of establishing trust.

[FreeMoney]

Yeah, no one legit would send multiple packages of the same weight. And would't a dealer be sending different weight packages anyway?

I'm not saying there aren't problems, but those aren't them.

[Babylon]

Yeah, no one legit would send multiple packages of the same weight. And would't a dealer be sending different weight packages anyway?

I'm not saying there aren't problems, but those aren't them.

The dealer would be sending multiple packages of exactly the same weight, according to the OP.  One to the real purchaser, one to a random address.

Of course this is something done for legal reasons, and often.   The point is that it is one more factor that can be used to cut down on the suspect pool and once it is cut down enough they can use other techniques to find out just who is the dealer.

[FreeMoney]

Oh, missed that. That's a valid point.