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Monday, October 7, 2013

How the Silk Road Shutdown Makes Everyone Less Safe

It took someone named Dread Pirate Roberts to create a way for people to buy and sell illegal drugs without the threat of getting hurt and with little threat of getting ripped off. His deep website, Silk Road, was the eBay of the underworld until it was seized by the FBI last week. When the government shut down Silk Road, it kicked all its users back onto the streets, locking them out of the safest way anyone has ever devised for acquiring an illicit substance—whether a mind-altering substance or a not-yet-FDA-approved food or medication.

A Force for Peace

Charges against Ross William Ulbricht, also known as “Dread Pirate Roberts,” include narcotics trafficking conspiracy, computer hacking conspiracy, money laundering conspiracy, and more. Authorities also accuse Ulbricht of asking a Silk Road user to kill another user who was threatening to release sensitive user information. If Roberts made the threat, it’s a sad, sordid detail for someone who—based on his intellectual interests—would seem to have been an advocate of non-aggression. In any case, you’ll notice most of these charges are for non-violent crimes. And Silk Road is not its owner.

Silk Road is a peaceful place because it lives online. That alone makes it harder physically to hurt people. Indeed, thanks to technology, Silk Road solved most of the problems that lead to violence, which are a natural consequence of black markets. It’s difficult to rob anyone on Silk Road. You can’t easily commit fraud or reduce the quality of a product. Buyers can’t easily get ripped off, either, as sellers don’t get paid until product arrives. Quality issues are solved by the eBay-like ratings system. And the site replaced the deadly turf wars endemic to meatspace black markets with a mechanism by which sellers compete to deliver the best quality product more quickly and at the lowest price. As Harvard University economics professor Jeff Miron put it to The Daily Beast, Silk Road is “a Consumer Reports for drugs.”

Carnegie Mellon economics professor Nicolas Christin described it thus:

Silk Road doesn’t really sell drugs. It sells insurance and financial products. It doesn’t really matter whether you’re selling T-shirts or cocaine. The business model is to commoditize security.

The most violent thing ever to happen on Silk Road was a cyber attack that put it offline for a week.

So whatever one thinks about people using drugs, if one accepts the existence of a massive, often violent, black market, Silk Road was a miracle, not a menace (and not just for drug buyers and sellers, but for everyone affected by the violence wrought by the Drug War).

A Public Health Resource

The vast majority of deaths from drugs are caused by people not knowing what they’re taking or how much. This ignorance is a direct result of prohibition, which makes reliable information on illegal substances difficult to obtain.

Silk Road solved that problem by offering not just accurate product information, but a community of people offering informed harm-mitigation and prevention advice. Medical students and chemists would purchase testing kits and verify the content, strength, and purity of sellers’ drugs in exchange for free samples. Seller feedback ensured sellers couldn’t misrepresent their products for long. Not only was Silk Road the only way to buy and sell drugs without any threat of violence, but by way of knowing what you’re buying, these were also the healthiest and safest drugs one could consume, if one were determined to consume them.

The Violent Takedown

The FBI not only shut down the site, but it also took roughly 26,000 BTC from it. That’s around $3.6 million, the governments’ largest-ever seizure of Bitcoins. The FBI is currently going after all of Silk Road’s assets through civil forfeiture, a legal maneuver where law enforcement takes property from citizens without convicting them of crimes.

The Question

If Silk Road is the safest place to buy drugs, why shut it down? It’s certainly not because it was a big kahuna in the illegal drug market. While Christin estimates annual revenue at $30 million to $45 million, that represents 0.075 percent of the annual $60 billion drug trade in the United States alone. The zeal with which FBI agents hunted Ulbricht may have had more to do with pride. Or perhaps it’s a vestige of the magical thinking that the War on Drugs can still be won. Whatever the case, they got their man this time. But is Silk Road closed forever in the Deep Web?

Interestingly, Dread Pirate Roberts’s LinkedIn summary reads:

I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind. To that end, 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.

For succeeding in providing users a marketplace free of force, Ulbricht was confronted with the full force and power of the U.S. government. His peaceful online exchange was shut down, his assets were seized, and he is currently incarcerated.

Lessening social harms created by black markets has never been a goal of the U.S. government. If it were, seizing the safest way for people to acquire illegal substances would not have been on the table. Instead, the goal appears to be to engage in an unending struggle that keeps the enforcers’ coffers flush and violent cartels in power.

  • Cathy Reisenwitz is a D.C.-based writer. She is Editor-in-Chief of Sex and the State and her writing has appeared in The Week, Forbes, the Chicago Tribune, The Daily Beast, VICE Motherboard, Reason magazine, Talking Points Memo and other publications.