In the beginning, Bitcoin quickly emerged as the preferred method of payment for a variety of illicit organizations that were actively involved in illegal transactions on the dark web. It's difficult to talk about the background of Bitcoin without not mentioning its infamous connections with the dark web, and how these connections were used as a main argument against the validity of digital assets.
Particularly, the very first market on the dark internet, called the Silk Road, relied heavily on Bitcoin as a substitute for conventional and highly-censored systems of payment. In this article we'll explore the development of the dark web and the way Bitcoin was incorporated into its web.
While this black web was originally designed to be an alternative to censorship and privacy-infringing internet services, the web quickly became popular within the criminal world. The security and anonymity that the dark web offers has resulted new and sophisticated players who are linked to all kinds of illicit activities. Since anonymity is guaranteed it was challenging for authorities to limit the growth of companies that evidently had something to hide.
The popularity of dark websites increased and it became more convenient to access the dark corners on the web to purchase and sell illegal drugs, counterfeit documents, weapons and documents, as well as child pornography, and other illicit goods. The sites or platforms on which the transactions are conducted are referred to as dark marketplaces on the web.
As previously mentioned the strides made in creating a more secure internet are possible due to the introduction of private browsers. Particularly Tor. Private browsing first came into existence in 2002. It basically opened the door for users of the internet to hide their identity and conduct online activities.
The founders of Tor --- David Goldschlag, Mike Reed and Paul Syverson of the U.S. Naval Research Lab -- searched for a method to route online traffic anonymously. In the end, they came up with the concept of encryption and routing traffic through multiple servers, which makes it difficult to trace the origin and destination of the traffic. They named this technique "the onion routing," or TOR, and then released their open source Tor software in 2002.
It wasn't until 2008 when they announced their Tor browser (which made it simpler to use the software) that marketplaces on the dark web began to pop up in large quantities.
Silk Road was a digital black market marketplace which was well-known for hosting money laundering operations and illicit drug transactions made using Bitcoin. Silk Road, regarded as the first darknet market, first came into existence in the year 2011, and was closed in 2013 by FBI in 2013. Silk Road was created with the help of Ross William Ulbricht, who is currently serving a life term in jail for his part as a participant in Silk Road.
The age of digital has brought a variety of technological advancements to our homes and has altered the way we are used to it. It is now possible to perform transactions online through ecommerce websites as well as use online payments with virtual currency, obtain loans through social lending websites, work in anonymity on the internet by using anonymous data technologies, and connect with recruiters from companies using social media websites. A list of the latest digital tech inventions continues to grow and is a part of every sector of the global economy, including the financial industry or the retail industry. A rise in the use of cyber technology such as crypto and online marketplaces has resulted in an increase in demand for privacy of data. Privacy concerns led to an increase in regulations and laws regarding the use of data and also an increase in the number of platforms and tools designed to help users enjoy privacy. While the introduction of tools to anonymize data aids in protecting the privacy of individuals with their personally identified information (PII) These tools are also employed by those who plan to carry out illegal and criminal operations. In 2011 the Silk Road was created in 2011. Silk Road was born out of the need to connect drug dealers from the underground with buyers who are interested in safeguarding their identities and transactions with anonymization methods.
By combining technology for data anonymization and a trading system that uses feedback, Silk Road created a safe haven for drug dealers. Silk Road was accessible through a system known as Tor that is used primarily to conceal user information and online activities. Tor hides user's addresses making them invisible to anyone who wants to monitor user's transactions and actions. This is why Silk Road buyers and sellers confidently carried out illegal drug transactions with no fear of the possibility of their identities being tracked back to their IP addresses. One factor that made Silk Road thrived was the customer feedback system that was incorporated into the site. Customers usually give feedback to sellers following receiving the items. The feedback provided was utilized by the website to identify fraudulent sellers, while trustworthy sellers' products were popularly sought-after. This increased buyer confidence on the platform.
All transactions that took place on Silk Road were conducting using the ever-popular digital currency dubbed Bitcoin. All Bitcoin trade is recorded in the public ledger, which is readily accessible to regulatory and legal agencies. Because of the transparency that is evident within Bitcoin transaction, the dark wallets were created with the primary objective of encrypting and hiding the entire Bitcoin transactions. Silk Road participants who used these Bitcoin wallets to pay for their transactions had the added protection of privacy.
Silk Road Silk Road came to its death in 2013 because the FBI discovered its existence as a underground market, conspired with DEA, IRS, and Customs agents. Even though the federal agents acknowledged that using Tor as well as Bitcoin to hide addresses was a major obstacle they had to overcome, they nevertheless able to crackdown on the illegal trade in drugs.
The FBI closed the site permanently, and seized over $34 million and also arrested several users of the website, including the site's founder, Ross Ulbricht, who earned around $80 million in commissions on transactions conducted on the website. Ulbricht was found guilty in the year 2015, and currently being sentenced to life in prison without parole.
Ross Ulbricht is the founder of Silk Road. He was able to envision and was able to create Silk Road as a platform which allowed you to trade and purchase all kinds of goods from the comfort of your own home, and then receive them by mail. the main thing to remember was that the transactions were private, making Silk Road a popular marketplace for buyers and sellers of illicit products.
Ulbricht seemed to have liberal tendencies that were evident when he created his Silk Road, creating a marketplace that did not have supervision from government. However, as these kinds of events usually do it was the growth that was the Silk Road attracted unwanted scrutiny from the FBI.
In the course of months, infiltrating into the Silk Road community, the FBI finally took the liberty of arresting Ulbricht in 2013 at his home in the San Francisco Library. One unidentified Homeland Security Officer convinced Ulbricht to allow access to the back door of the Silk Road. Two arrested FBI officers made up to appear to be an argumentative couple to create a distraction. They then took the laptop swiftly to stop Ulbricht in removing any data on his laptop.
In 2015, following his refusal of a plea bargain, Ulbricht was convicted and sentenced to life in prison without parole. Ulbricht was accused of the laundering of money, computer hacking and trafficking fake ID documents in addition to being accused of paying to have two people killed, and other narcotics-related charges.
Ulbricht was born in Austin, Texas, studying Physics within Texas State University, University of Texas at Dallas and later Pennsylvania State University to pursue an advanced master's degree in materials science.
In this period, Ulbricht developed a keen fascination with libertarian perspectives in economics. He was a defender to the philosopher Ludwig Von Mises and aligned his opinions with the most prominent libertarian politicians.
In 2009, following the completion of his studies at Penn State, Ulbricht returned to Austin to start a business. His first ventures failed, and he was able to switch between various jobs. He attempted day trading and creating video games, in addition to creating a company that sold books online.
It was in this period Ulbricht was the first to come up with the concept of creating an online marketplace that utilized the Tor security along with bitcoin which was in its infancy when the idea was first proposed.
Through the use of cryptography and crypto, Ulbricht believed that his market could offer privacy and security to its users and allow them to stay out of any government scrutiny.
Tor transmits user data through a massive security network that effectively hides the identity and location of the participants on the network. Likewise, bitcoin provides a decentralized, anonymous platform for transactions. The initial idea would later evolve into an actual Silk Road marketplace.
Ulbricht established Silk Road in 2011, declaring himself "Dread Pirate Roberts" online. Silk Road became popular over only a short period of time. After a variety of media outlets began to report stories about the site in the mid-2011 timeframe, a large number of people became interested in Silk Road, and the number of visitors was able to grow exponentially. Naturally as the website became more popular authorities also took steps to track Silk Road customers and stop the site.
Since the Ulbricht's arrest over 435,000 people have registered the petition online that was created in the name of Lyn Ulbricht, Ross' mother, to reduce his sentence of life imprisonment. The Ulbricht family has also put together an online fact sheet that provides more information regarding Ross's case.
Following being arrested by Ulbricht, the FBI took over one billion dollars worth of Bitcoin related to Silk Road. Silk Road. Since the time many critics have tried to highlight the illegal use of Bitcoin on the dark web as a reason against the movement towards the widespread adoption.
As we learned during the investigation of the Silk Road saga, the Bitcoin network makes use of an open ledger to record the history of transactions. This means that anyone can check the history of transactions and associate them with wallet addresses. If the accounts are connected to verified and registered accounts, it is possible to connect them to the real identity.
It turns out that the anonymity of Bitcoin is actually helped sometimes for police investigations of online criminal activities instead of a hindrance.
However, cryptocurrencies are being used in the shadow web. But, it is important to note that this isn't specific for digital currencies. Fiat currencies are also employed to facilitate illegal activities, just as they have been since before the beginning of time.
The spotlight is often focused attracted to cryptocurrencies and the dark web because of the perceived privacy that many digital assets offer users. What people do not realize is that it is easy to monitor transactions of blockchain payment systems with the exception of specific protocols in place to conceal transactions' information. It's also important to know that a number of studies have shown that just a tiny percentage of global cryptocurrency transaction volume is tied via the dark internet.
In spite of these misconceptions that surround digital assets, the market is becoming more controlled and the likelihood of being caught with making illegal purchases with cryptocurrency are decreasing each day. If you are planning to make a purchase that is illegal with cryptocurrency via the dark web it is a good idea to reconsider your decision.