My experience using silkroad, an online drug website

December 28, 2012 at 6:00 pm | Posted in Uncategorized | 4 Comments
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A lot of my hacker buddies have been adopting bitcoin lately, and one of the “killer apps” that drive this thing is a website called “Silkroad” . It’s basically an underground website where buyers and sellers can buy and sell drugs online. So I decided to try it out. Naturally there is a lot of illegal activity on this website which I obviously don’t condone but I figure I would at least look around and document my experiences. From what I understand there are legal uses of this site, so you don’t have to do anything illegal.

Anyway, in order to use the site, you first have to download this program called “Tor“. Tor is basically software that hides your ip address from the feds. It contains a special version of Mozilla Firefox that doesn’t record your history or cache files, so it becomes very hard for the authorities to track you even if they seize your computer. It’s often used by chinese dissidents to view websites censored by their oppressive regime. Most hackers I know feel comfortable using it to hide their identity, so I figure if it’s good enough for them, it’s good enough for me. It’s downloadable for mac, windows, or linux here. It’s also free software, both in “free as in beer” and “free as in speech”. Richard Stallman would be proud.

Ok, so once I download it, I visited the the silkroad url: http://silkroadvb5piz3r.onion/index.php . This url will only work with browsers running tor. This barren screen came on:

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As you can see, the interface is dead simple. Reminds me of craig’s list in a way.

So I signed up. Note: if you sign up with a username and password on this site, I suggest you use long password. Meaning use 12+ characters. A sentence (“or pass phrase”) is even better. Reason being if you were ever able to be hacked, someone can steal your bitcoins and there is nothing you can do about it. Unlike paypal or checking accounts, there are no such thing as “returns” with bitcoin. Once they’re gone, they’re gone.

Anyway, I signed up and got in. This is what the front page of the website looks like:

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Man, this thing has the whole smograshboard of illegal narcotics. Weed, acid, pain killers, Xanax  ritalin, mescalin, whatever. Wow. Almost every drug I heard of is on here! The vendors seem to be coming from all parts of the the world as well. So at random, I clicked on one of the vendors. This particular one was from india:

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Seems legit to me. Silkroad has it’s own escrow system to prevent fraud. There is also a reputation system here for both buyers and sellers. It works more or less like ebay’s reputation system. If either the buyer or seller does something bad, they get a negative rating. Get too many negative ratings and no one will do business with you. This keeps everyone good. My impression from poking around is that there seems to be an inherent trust in this system. One administrator claims that “over 99% of all transactions conducted within the escrow system are completed to the satisfaction of both buyer and seller, or a mutually agreed upon resolution is found.”

Also, anyone can be a buyer or seller. There are some limits to what silkroad will allow you to sell. Kiddie porn, weapons, credit card numbers, counterfeit money or basically anything intended to harm an individual is not allowed. I heard they are pretty nazi about this policy as well. Basically, normal common sense stuff isn’t allowed.

As I stated before, the system doesn’t use credit cards, paypal or even cash for transactions, it uses bitcoins , which is a sort of underground hacker currency. You can think of bitcoin as giant virtual locker in cyberspace. Each locker has a locker number, a “public bitcoin address”. And behind that locker is a private bitcoin key, which can be looked at as a kind of combination to the virtual locker. Once you have that key, you can digitally sign the contents of that locker to someone else’s public key – now that person owns the locker. There are no identities behind each locker number (only keys), so the feds can’t trace they key to any one particular person. If they somehow manage to link the bitcoin public key to an identity, just assign it to a different public key (there are an infinite number of them). There are also “tumblers” which is basically a way to digitally launder the money so it becomes even harder to trace.

So how do you get bitcoins? I got mine through bitinstant , but there is also bitcoinary, coinbase, localbitcoins, and mtgox. Bitinstant was particularly easy to use and you can deposit money using moneygram . The form is super simple. Here:

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It takes bitinstant maybe 60 minutes or so to convert it to bitcoins. However, it took silkroad a few additional hours for it to actually appear in my account. I am not sure why this is so.

Ok, so as an experiment, I decided to buy something fairly innocuous. . . money. So i ordered $100 cash on silkroad. This is what the ad said:

i can deliver up to $5000 cash next day. all cash packages must FE. if you want large amounts i suggest you spend the extra coin and ship express. its registered, arrives next day, comes with tracking, signature confirmation, and $100 insurance. if you order $1000+ i will insure your package for its full value at my own expense.

As of this writing, it is ฿11.33 for $100. So it costs $135 worth of bitcoin to get $100 cash. A bit high. Silkroad adds 7-10% for all transactions which explains some of the cost. It’s probably cheaper to use localbitcoins, as it is completely private party and there are no additional fees.

A few days later, i get this in the mail:

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Silkroad sellers often cash out to dollars by using localbitcoin. There are other services like btc buy where you can trade bitcoins for amazon.com gift certificates. And then have the goods delivered to an address or an anonymous locker at a 7/11 or something. The anonymous nature of bitcoin means its “off the radar” of the official global financial system.

Basically, once you get used to how the system works, silkroad is no harder to use than ebay. I’m sure most teenagers who are somewhat “with it” regarding computers can easily use this. It will be interesting ot see what becomes of both bitcoin and silkroad.

Other random notes about silkroad:
TorChat and Tormail are popular ways to comunicate securely if you are concerned about anonymity  Don’t use sites like facebook, gmail, or hushmail because the feds can petition these companies to give up your private information.

– It’s probably a good idea to use gpg to encrypt communications so it can’t be sniffed in case the servers get confiscated. This is the de facto way people communicate across silkroad when you message someone on the site.

– If you use microsoft windows in any meaningful way, you probably already have a virus and are therefore “0wned”. You don’t want your bitcoins stolen because there is no way to retrieve them back (as you can with a traditional bank). It’s best to boot off a live cd such as knoppix and go from there.

 

Bitcoin-Central

December 7, 2012 at 12:50 am | Posted in Uncategorized | Leave a comment

Bitcoin-Central is going to be the first bitcoin company that will be looked at  as a bank by regulators: https://bitcointalk.org/index.php?topic=129461.0

Wow. . .

This means, bicoin-central will get FDIC-like insurance with the account, it will be trivial to convert bitcoins to cash, and debit cards will probably be linked to it. 

This is a major step to the global adoption of bitcoin.

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