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October 7, 2013

Silk Road was a valuable, if uncontrollable, counterbalance to government intrusion

By Spear's

Last week Ross William Ulbricht, aka Dread Pirate Roberts (pictured below), was arrested for violation of US narcotics law. Ulbricht is founder of Silk Road a website dubbed ‘eBay for drugs’. Silk Road, now closed, was accessible via Tor, a server system originally designed by the US Navy, that protects anonymity of the user ‘by bouncing your communications around a distributed network of relays run by volunteers all around the world’.

The Tor download page also states its purpose to ‘defend against traffic analysis, a form of network surveillance that threatens personal freedom and privacy, confidential business activities and relationships, and state security’. It lists its users as families, journalists and state bodies all concerned about privacy and seeking unscrutinised web access.

Such libertarianism has, as you would expect, encouraged a market. Websites such as Silk Road have championed their statelessness on the ‘dark web’ and made a market for substances and services that would be illegal and largely unavailable on the street. Drug varieties were catalogued and suppliers reviewed much like eBay. Dealers were anonymous and money was often held by an intermediary to ensure reputable and fair transactions. The currency was Bitcoins.

Watch more: Editor Josh Spero on what Silk Road teaches us about Swiss banking

Ulbricht is alleged to have hired a hitman, via Silk Road, to take out a former employee who was attempting to blackmail him. Ulbricht himself is a physics graduate who champions liberty of the individual created by unrestricted markets and an absence of imposing and violent masters.

His LinkedIn account reveals: ‘I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind… I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.’

The power of free markets to improve the world remains at the centre of the Western liberal project. It is rightly seen as the vehicle to lift developing economies and bring about harmony and common interest in a diverse world. The role of states and governments in this process will be a subject of constant debate. The internet, as shown by the Arab Spring, has gone a long way to complementing processes typical of free markets. However with the advent of Wikileaks, cyber warfare, 3D printing and Bitcoins governments have a mandate to monitor and protect.

But Silk Road has its guardians too. It was credited by its creators and users as mitigating gangs and cartels, providing quality and going someway to breaking dependency cycles (by breaking people’s relationships with dealers on the street) – all objectives the unsuccessful state waged War on Drugs has put a premium on.

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Those with the hard power couched in law courts, the Pentagon and GCHQ tread the razor’s edge of freedom. Real security stems from mutual interests (often embodied by healthy markets), not arbitrary censorship that makes enemies by miscomprehension.

Two key points will illuminate the road ahead: Following the closure of a website selling illegal drugs, Bitcoin fell 8.6 per cent, wiping approximately $130 million of its value, and Silk Road 2.0 is already set to launch.

Read more by Alex Matchett

Read more from Talking Points


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