Silk Road has made a comeback

BuckTees

A team of administrators rebooted Silk Road as Silk Road 2.0

In news that worries bitcoin investors and internet drug dealers alike, Silk Road was robbed of an approximated $2.7 million worth of bitcoins. While no one can feel too sorry for the victims of the robbery, the effects could reach further than just the immediate victims.

Silk Road is a website that deals mainly in contraband. They sell everything from drugs to guns and are have more recently been caught brokering deals for hit men. They deal in all types of contraband and use several means to protect their clients.

But you can’t google it, and Silk Road is not going to show up on your browser. That’s because you’ve run into the first protection they possess. Silk Road is not listed on Google or any of the major search engines. You need to download a special browser which will give you access to the Deep Web.

The Deep Web is the name given to all unlisted and otherwise hidden websites listed on the Internet. Websites on the Deep Web are not listed on most search engines and tend to be focused on some sort of illegal or otherwise secretive activity. Silk Road is just one of those websites. They don’t only sell illegal items. They sell t-shirts and jeans to people in embargoed countries or countries with restricted trade. They also sell political and religious books to those living under repressive regimes, and they even sell art to countries that prohibit certain types of art. Nonetheless, about 70% of the products listed on the site are drugs.

Because of the sensitive nature of most of these deals, bitcoins are used exclusively as payment on the site. The use of bitcoins prevents money trail and allows users to remain anonymous for the most part. To add an extra layer still of anonymity, Silk Road brokers all exchanges. This means that they hold onto the bitcoins being traded in the deal, and as these deals often involve extended periods of time between the agreement and the confirmation of payment to allow products to ship internationally, Silk Road can be holding millions of dollars of bitcoins at any given time.

This was the case when Silk Road was hacked on Feb. 13 and $2.7 million bitcoins were stolen. The administrator of the site, who goes by Defcon, claims that the bitcoins were hacked due to a flaw in the code of the bitcoins themselves. This has led to further speculation that bitcoins are an unsafe currency and led to a drop in value of nearly $500 dollars a bitcoin over the course of the week following the hacking. They dropped from over $1000 to one bitcoin on February 13th to slightly over $500 on February 20th.

This is by no means an uncommon occurrence in bitcoins’ value, nor is it the largest drop in the last few months. The theft has only  further highlight the instability of bitcoins. Early investors in bitcoins had immediate gains that made millionaires literally overnight. However, bitcoin is entirely dependent on buyers and is thus massively unstable. Most currencies have some sort of assurance of value and this stabilizes their value whereas bitcoins are reliant on value assigned to them by a small group of websites that will exchange bitcoins for actual currency. Due to the lack of any regulation either on the national or international level, corruption is common within these websites.

Junior Will Lowe also warns of the creation of a “bitcoin bubble.” “Bitcoins are constantly deflating because no one is spending them,” Lowe said: “This is creating a bubble because no one is spending them.” The issues with bitcoin make it an incredibly unstable currency yet many choose to use it. It is used for the anonymity it provides the user, the lack of fees on exchanges of bitcoins, and many are choosing it to break free from national currencies which have become more unstable in recent years.

A team of administrators rebooted Silk Road as Silk Road 2.0. Senior Schuyler Kogan said, “Shutting it down is not possible, there will always be a demand for a site that provides what it does, so Silk Road will continue to exist in some form or another for a long time.” Silk Road and sites like it are beginning to focus more on security now as opposed to anonymity, which will lead to an interesting balance of privacy and protection.