

Bitcoin Black Market Competition Heats Up - cgi_man
http://www.forbes.com/sites/andygreenberg/2013/06/26/bitcoin-black-market-competition-heats-up-with-pro-marketing-and-millions-at-stake/

======
gizmo686
It seems like this is a boom for law enforcement. One of the fundamental
aspects of bitcoin is that every transaction is recorded and publicly view
able. In order to anonomize your currency you bassicly need to go through a
mixing service, which takes bitcoins from a pool of users, and redistributes
them back to the same users, but at new accounts, so it would be 'impossible'
for someone to follow the money using only the blockchain.

There are two ways around the impossibility. One is to do statistical analysys
to try and infer which two accounts are the same person. If you reguarly use
the same service, this would likely be quite doable.

The other way around this is to compromise the mixing service (either hacking,
or with a warrent).

There is currently research being done to make bitcoin properly annonomous [1]

[1] [http://zerocoin.org/](http://zerocoin.org/)

~~~
johnyzee
I am wondering if mixing services might be illegal. As far as I know there are
laws prohibiting attempts to conceal or obscure the source of money.

Since almost all methods of acquiring bitcoin lead back to a bank account, it
would be trivial to trace anybody putting money into the mixing service and
potentially prosecute them under anti-laundering laws.

Paying cash for bitcoin (i.e. localbitcoin) is not traceable in this manner,
but if you have large amounts of untraceable cash then you have probably
already successfully laundered money, and though bitcoin is a more convenient
store of value it would not be the tool that enabled it.

So I agree, seems regulators should be fine with Bitcoin.

~~~
haakon
> it would be trivial to trace anybody putting money into the mixing service

Not really; you can't tell which bitcoin addresses belong to a mixing service
and which ones don't; it's all just transactions from one address to another.
You may know the owner of the originating address, but not the receiver. There
are also mixing service that run as Tor hidden services just like the illegal
marketplaces themselves, so you can't really prosecute those.

~~~
gizmo686
They could try using a mixing service themselves. Once they do, they have know
that where they sent money is part of the mixing service and can start from
their. Not to mention the fact that mixing services likely have statistical
properties different from other transactions.

~~~
davorak
The mixing service can create as many wallets as it wants, each wallet could
be used for one user, for one transfer if necessary too.

------
vichu
The attitude of the Atlantis CEO seems much different from the founder of
SilkRoad, Dread Pirate Roberts.

Whereas the Atlantis CEO seems very into this business for the money and fame,
DPR seems more interested in the ideological standpoint of it all (libertarian
ideals and all that jazz).

Quotation from Dread Pirate Roberts:

All that being said, my primary motivation is not personal wealth, but making
a difference. As corny as it sounds, I just want to look back on my life and
know that I did something worthwhile that helped people. It’s fulfilling to
me.

Source:

[http://www.forbes.com/sites/andygreenberg/2013/04/29/collect...](http://www.forbes.com/sites/andygreenberg/2013/04/29/collected-
quotations-of-the-dread-pirate-roberts-founder-of-the-drug-site-silk-road-and-
radical-libertarian/)

EDIT: some formatting mistakes

~~~
qwertzlcoatl
Atlantis CEO also claimed that their service is technically much more
sophisticated than SilkRoad. His/Her answer when asked what Atlantis has that
SR doesn't:

“To put it bluntly, a well written codebase and server setup. SR claims to
have suffered from ‘DDoS’ attacks, which is very unlikely due to the way Tor
hidden services are designed. It’s far more likely to me and technical gurus
I’ve consulted that it was a result of poor or uncoping infrastructure. Most
likely database related. Ironically we still received all the blame for the
supposed ‘attacks’.”

[http://weirderweb.com/2013/06/13/atlantis-wasnt-built-in-
a-d...](http://weirderweb.com/2013/06/13/atlantis-wasnt-built-in-a-
day-520800-in-sales-and-counting/)

~~~
haakon
> SR claims to have suffered from ‘DDoS’ attacks, which is very unlikely due
> to the way Tor hidden services are designed.

This is wrong; Tor hidden services are quite easy to DDoS for someone familiar
with Tor. In fact, the attack was described on the Tor blog [1] shortly before
it was executed against Silk Road, so this is likely where the attacker got
the idea.

[1] [https://blog.torproject.org/blog/hidden-services-need-
some-l...](https://blog.torproject.org/blog/hidden-services-need-some-love)

~~~
glomph
DoS not DDos.

------
contacternst
I kept hearing about how Bitcoin was so often used for "money laundering" and
illegal activities. Are these sites what all the fuss is about?

~~~
dlss
In general, money laundering is much a bigger problem than p2p drug sales.

Money laundering is anything that turns illegally acquired cash into seemingly
legitimate funds. People do this because they are worried about the physical
security aspects of having that much cash on hand, or would like to make a
purchase where cash won't be accepted (eg house, car, stock).

I think real money laundering using bitcoin would be hard right now -- most
current methods work by piggy backing on a real business, and just inflating
earnings. (For example, you might buy a laundromat and then add +50% income
from your dirty money, making it look legitimate to an auditor). As it stands
now, after you'd transfered the illegal money, you'd still have some awkward
questions about where you'd gotten it from if/when you get audited. (Perhaps
someone with more experience can comment here, but it seems bad to me).

Re: illegal transactions, I think the biggest kind of illegal activity that
bitcoin makes easier is illegal digital goods / services (eg, corporate
espionage, buying bulk stolen credit cards, etc). This is because using
bitcoin means you don't have to worry about masking your physical location or
banking details from your counter party (basically the same reason people used
liberty reserve before it was shut down).

I'm sure one day bitcoin will be used for larger scale money transfers, but
right now it just wouldn't make sense to move cartel levels of cash (eg 100
million+/wk) through bitcoin -- that's just too high percentage of the
network's total volume to be feasible

(mtgox volume is currently something like 20 million USD/wk)

~~~
Glyptodon
I think it also includes anything that intentionally obscures the provenance
of money _even if it 's never used illegally._

------
aj700
Big mistake in the first para. This is what happens when MSM covers tech. Tor
and the discretion of the sellers makes Silk Road EFFECTIVELY anon, not
bitcoin per se. The sellers have your postal address and your bitcoin data.

------
DanBC
Their aggressive twitter campaign is clearly against the Twitter ToS
([https://twitter.com/AtlantisMarket](https://twitter.com/AtlantisMarket))

~~~
qwertzlcoatl
I'm pretty sure their start-up style video advertising its illegal service
flouts the YouTube’s user guidelines too.

------
mxxx
10BTC says this is a DEA sting.

~~~
mvanvoorden
As long as you encrypt all your communications, you have nothing to fear,
especially not as a seller. Doing it right makes you completely anonymous.
Only if you're a buyer, there comes a moment when you have to give a postal
address to a seller and give up your anonimity. If the seller turns out to be
law enforcement, this might cause a problem. On the other hand, why would law
enforcement go after the buyers? That doesn't solve anything, it's the sellers
they want.

Even if the service is completely run by DEA/FBI/etc, taking the right
precautions can help you stay anonymous. That's what's so beautiful about Tor,
Bitcoin and PGP :)

~~~
TheAnimus
>On the other hand, why would law enforcement go after the buyers? That
doesn't solve anything, it's the sellers they want.

Because if you go after a seller, you have just removed a player from the
market, assuming constant demand, you have just raised the margins for those
who have the fixed amount of supply.

This is why after a 'big drugs bust' prices sometimes go up, which makes it
more attractive for new players.

Going after the consumer is exactly the way to stop that. As it removes the
demand. If you had even just a one in twenty chance of being busted for trying
to buy something on these markets, it would greatly reduce the number of
people willing to do so.

Or we could, you know, look again at prohibition.

------
al1x
Atlantis is significant because it's the first market of its kind to support
Litecoin, a lesser-known scrypt-based bitcoin alternative.

------
gesman
The sooner these "hard" drug sellers will be busted - the better for everyone,
including Bitcoin future.

~~~
eightyone
People should be allowed to put whatever they want in their body. The war on
drugs is a seismic failure that does nothing but propagate the prison
industrial complex. The most popular drugs on these sites are marijuana and
psychedelics such as LSD and psilocybin mushrooms that are by no means "hard"
drugs. Making things illegal, especially drugs, doesn't make them go away.
Your just pushing them underground where they aren't regulated.

~~~
tunesmith
I realize it's a popular sentiment here, but it's based off of a philosophy
that isn't universal and that reasonable people can disagree on. When you
consider that some drugs are physically addictive and that some people are
more susceptible to the addiction, there's a societal incentive to protect
people from the opportunity to become addicted. I get that to some people that
is a "nanny state", but I also think that the belief that "every man for
himself" scales to a population size of n is overly simplistic.

~~~
eightyone
There are plenty of things that are physically addictive and still legal:
caffeine, alcohol, cigarettes and a cornucopia of various pharmaceuticals
(both prescription and over the counter). Also, there are an abundance of
illegal drugs that aren't physically addictive such as LSD [1], psilocybin
mushrooms [2], DMT [3], mescaline [4], or MDMA [5]. So that's a pretty bad
argument. I've not once said I have an "every man for himself" belief system.
From your language, it seems that your may be assuming I'm a libertarian. I'm
not. Not that it matters if I was because there's a solid case to be made
against prohibition. Honestly that doesn't even make any sense in this
context. We should give people unbiased information and let them make their
own decisions. Society has no place telling me or anyone else what they can
put in their body. Just like we do a wide variety of other things we consume
and make use of daily. Should we take acetaminophen (Tylenol) off the market
because 500 people per year overdose and die from it? [13] How about caffeine?
That kills people too and is physically addictive. Should we go back to
prohibiting alcohol, which kills 75,000 people per year in the United States
alone? [14] How about tobacco which kills 5 million people per year? [15] What
about all the research chemicals that no one knows the side effects of because
they haven't been studied like the more popular drugs? They get banned and all
you have to do is change a couple molecules and it's a new drug. heroin deaths
are a pimple compared to alcohol deaths, a couple thousand per year most. And
how much of that is because of a dealer who gave bad, impure product to a
customer that required them to shoot up a ton to get a high? Who knows. I'm
going to preemptively stop you. Don't you dare say that if heroin was legal
that significantly more people would die from it. No one wakes up one day and
says, "Gee I think I'd like to buy some China white heroin." If something like
Naloxone, which is a drug used in hospitals as a counter to heroin and other
opiate related overdoes was allowed to be sold everywhere I'm sure you would
see that number go down, as well. [18]

The drug war is a colossal failure that has done nothing but contributed to
the deaths of hundreds of thousands of people (most likely millions worldwide,
but I don't have stat for that.) and ripped families a part. In Mexico alone
between 2006 and 2012 drug related violence hit 60,00 deaths. That's in Mexico
alone in only a few years. [6] as well as make a select few richer. Statistics
show that it disproportionately effects those in the African-American
community. [7] You obviously haven't seen your father ripped from your arms
for possessing an ounce of weed, a sheet of acid, or a couple grams of
cocaine. History is a major indicator that the war on drugs is not going to
get better. It's only going to get worse. Legalize and regulate drugs and you
will see crime go down across the board. Not to mention that you can then
control the quality of drugs. When you can produce heroin in a grade a
chemical facility and not some guys shed you can make a drastically healthier
product.

You're making the assertion that making drugs illegal makes them go away.
Simple put: that's false. People who are physically addicted to drugs such as
heroin can't seek out help as it currently lies because they are treated as
criminals if they relapse and are sent to prison.

Portugal decriminalized a wide array of drugs including heroin, LSD,
marijuana, and cocaine and they saw:

\- More people opted to seek out treatment for their drug problems [8]

\- Reduction in HIV among drug users by 17% [9]

\- Drug use among adolescents declined [10]

\- Decreased value of street drugs [11]

For more see See Drug Decriminalization in Portugal by Glenn Greenwald [6]

Further more I want to touch on the fact that the way scheduling is handled in
the United States, several important drugs are kept from being studied by
scientists in universities. That is absolutely ridiculous. Drugs like MDMA are
going to pave the way in treating things like depression and PTSD. [16] LSD
has been known to help alcoholics see the light and give it up. [17]

Marinol, a synthetic form of THC that costs thousands of percents more than
the price of marijuana, is allowed to be prescribed and sold, but marijuana is
illegal. That's messed up.

You're way of thinking is dangerous and is irrational and your certainty not
being reasonable.

[1]
[http://www.erowid.org/chemicals/lsd/lsd_basics.shtml](http://www.erowid.org/chemicals/lsd/lsd_basics.shtml)

[2]
[http://brown.edu/Student_Services/Health_Services/Health_Edu...](http://brown.edu/Student_Services/Health_Services/Health_Education/alcohol,_tobacco,_&_other_drugs/psilocybin.php#6)

[3]
[http://www.erowid.org/chemicals/dmt/dmt_basics.shtml](http://www.erowid.org/chemicals/dmt/dmt_basics.shtml)

[4]
[http://www.erowid.org/chemicals/mescaline/mescaline_basics.s...](http://www.erowid.org/chemicals/mescaline/mescaline_basics.shtml)

[5]
[http://www.dartmouth.edu/~healthed/groups/dapa/otherdrugs/md...](http://www.dartmouth.edu/~healthed/groups/dapa/otherdrugs/mdma.html)

[6] [http://www.bbc.co.uk/news/world-latin-
america-10681249](http://www.bbc.co.uk/news/world-latin-america-10681249)

[7] [http://newjimcrow.com/](http://newjimcrow.com/)

[8]
[http://www.beckleyfoundation.org/bib/doc/bf/2007_Caitlin_211...](http://www.beckleyfoundation.org/bib/doc/bf/2007_Caitlin_211672_1.pdf)

[9]
[http://www.idt.pt/PT/IDT/Documents/Ponto_Focal/2009_National...](http://www.idt.pt/PT/IDT/Documents/Ponto_Focal/2009_NationalReport.pdf)

[10]
[http://www.beckleyfoundation.org/bib/doc/bf/2010_Caitlin_211...](http://www.beckleyfoundation.org/bib/doc/bf/2010_Caitlin_211621_1.pdf)

[11]
[http://www.beckleyfoundation.org/bib/doc/bf/2010_Caitlin_211...](http://www.beckleyfoundation.org/bib/doc/bf/2010_Caitlin_211621_1.pdf)

[12]
[http://www.cato.org/sites/cato.org/files/pubs/pdf/greenwald_...](http://www.cato.org/sites/cato.org/files/pubs/pdf/greenwald_whitepaper.pdf)

[13]
[http://www.fda.gov/drugs/drugsafety/ucm239821.htm](http://www.fda.gov/drugs/drugsafety/ucm239821.htm)

[14] [http://www.nbcnews.com/id/6089353/ns/health-
addictions/t/alc...](http://www.nbcnews.com/id/6089353/ns/health-
addictions/t/alcohol-linked-us-deaths-year/)

[15]
[http://www.cdc.gov/tobacco/data_statistics/fact_sheets/fast_...](http://www.cdc.gov/tobacco/data_statistics/fact_sheets/fast_facts/)

[16] [http://www.guardian.co.uk/science/2012/dec/27/mdma-
ecstasy-p...](http://www.guardian.co.uk/science/2012/dec/27/mdma-ecstasy-post-
traumatic-stress-disorder)

[17]
[http://www.bbc.co.uk/news/health-17297714](http://www.bbc.co.uk/news/health-17297714)

[18]
[http://en.wikipedia.org/wiki/Naloxone](http://en.wikipedia.org/wiki/Naloxone)

Edit: Some formatting and thanks to klearvue for bringing a prevalent spelling
error to my attention. Sometimes I get ahead of myself.

~~~
klearvue
Upvoted for a very good post. Just a small note - it's "heroin". "Heroine"
means something entirely different :)

~~~
eightyone
Oops. Thank you so much. I've corrected the error(s). I got so excited that I
was bashing away on the keyboard and must have misspelled heroin and it
autocorrected to heroine. I think I need to relearn how to type with Mavis
Beacon, haha.

------
bitcoindomains
Dear Atlantis,

Can I list domains on your bazaar? Got a juicy one:

[http://atlantisrky4es5q.com](http://atlantisrky4es5q.com)

