What happened to Silk Road?
One of the big stories in the short history of the Bitcoin cryptocurrency is that of Silk Road.
Established on the first of January 2011, Silk Road was a website that effectively operated as an online black market. It was often referred to as the eBay or Amazon of the black market, believed to facilitate the buying and selling of drugs and weapons.
Silk Road ran as a Tor service, effectively hidden from view – accessed via an onion address that helped protect the anonymity of its users.
The Silk Road website was shut down in October 2013.
A man called Ross Ulbricht was suspected of being the founder of Silk Road and was arrested in 2013 and finally convicted in 2015.
The link to Bitcoin is that Silk Road enabled its users to transact using the digital, virtual currency – an additional protection for their anonymity and helping to create the perception that Silk Road was being used to enable illegal activities.
The downfall of Silk Road began in November of 2011 when FBI agents began making drug purchases on the website as part of an investigation.
Their investigation continued until the early days of January 2013 when a sting operation was mounted by the FBI – offering to sell large amounts of cocaine in exchange for Bitcoin.
Ulbricht was finally confronted by the FBI in July of 2013 when they confronted him with documentation regarding aliases that were associated with the Silk Road website.
Ulbricht was finally indicted in October of 2013, charged with offenses that the FBI had uncovered during their sting operation on the Silk Road website – primarily drug trafficking, computer hacking, and money laundering.
The Silk Road website was shut down at the same time, seized by law enforcement agencies.
In direct response to the news of the closure of the Silk Road website, the value of the Bitcoin currency crashed abruptly – falling from USD$125 to USD$99.
As part of their actions against Ulbricht and Silk Road, the FBI seized a huge amount of Bitcoin – believed to 144,000 that were found in a Bitcoin wallet belonging to Ulbricht.
One of the interesting facts of the rise and fall of the Silk Road website is the notoriety that it brought to dark web markets.
Silk Road was not the only dark web market available online, but since its demise it appears that the number of dark web markets has grown significantly. Dark web markets transact almost exclusively in Bitcoin – primarily they are trading in illicit drugs.
It is estimated that at its peak Silk Road transactions accounted for 4.5% of all Bitcoin transactions, so it isn’t really surprising that Bitcoin has an ongoing association with activity associated with criminal or terrorist organizations.
The dark web is that section of the internet that is intentionally hidden so that it can’t be accessed by a standard web browser. Dark web sites generally have addresses that fall outside the standard framework of domain names. For example, websites on the Tor network (which is where Silk Road was housed) end with the .onion suffix. To access sites such as this you need a specific piece of software such as a Tor Browser.
Silk Road may be gone, but many other bitcoin dark web markets appeared in its place and Bitcoin is worth now over $8000, almost 100 times more than what its value was when Ross Ulbricht was arrested.