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 
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.
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.
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.
EDIT: some formatting mistakes
“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’.”
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  shortly before it was executed against Silk Road, so this is likely where the attacker got the idea.
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)
That, and the potential for tax evasion, of course.
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 :)
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.
If they don't tumble I could see this being a major honeypot, as people could be traced.
- Terence McKenna
"It is likely, however, that drafts of the documents were written on paper made from hemp. In that period, most paper was made from hemp or flax and a mixture of recycled rags and cloth."
So, technically, the Declaration of Independence was written on hemp. It was then transferred to a more durable platform provided by the Netherlands.
Technically, it doesn't really matter. I'm sure the founders meant that we should have "the right to experiment with your own consciousness", a sentiment which, FWIW, I wholeheartedly agree with.
Coercion isn't the only way to help people. And absence of coercion isn't "every man for himself"
Sometimes people need to be protected against themselves, this is particularly true for the less educated (which tends to coincide with the underpriviledged), because they will seriously fuck up their lives (which in turn affects their dependants and communities) unless provided guidance and, yes, certain restrictions.
Drugs are mostly destroying people and communities because they are illegal. Maybe if your dad went to prison for an ounce of weed, you would have a different sentiment.
When a drug can be produced in a sterile environment, you can yield greater purity and an overall safer product. Not to mention when drugs are legal people who are addicted are more apt to seek treatment. You might be surprised to hear several countries are treating heroine addictions via making heroine available under a controlled environment where addicts can seek help. They're seeing great results.  Also make sure to look at  to see how much HIV rates have dropped in Portugal because of decriminalization of drugs like heroine.
Do you want to ban alcohol, tobacco, stairs, cars, and swimming pools in the name of people you deem incapable of making wise decisions? You have no right to tell someone what they can put in their body or do to their body. Give people unbiased information and let them make their own decisions.
Stop making the assumption that people aren't going to do drugs if they're illegal. That's not true. Lower-classes, particularly poorer African-Americans have been devastated by the drug war. See the book the New Jim Crow laws for more information regarding this. If you're a young black kid with an ounce of weed you're probably going to jail, where as if you're a wealthy white executive who lives in a private gated community and happen to have a few grams of coke and you get caught, you'll get a fine and a slap on the wrist.
I've been as close to hard drugs as you can probably get without actually being an addict. It destroys lives, families and communities, far beyond the addicts themselves, and it happens in a very nefarious way where addicts gradually lose control, without ever intending to go that route. I have seen some of the smartest and most sensible people turn into zombies who would and did sell themselves, their kids' toys and baby's diapers for drugs. This is not the choice they thought they made when they started on drugs. A lot of people aren't capable of making this choice, they can't fathom the consequences, and those consequences affect many others than just themselves. That makes it a societal matter, not just about individual freedom.
The fact that underground markets exist with all their associated ills is neither here nor there, this is the case for anything illegal.
This is because the prices for drugs are artificially inflated by prohibition. Make drugs legal, or -- at least -- make methadone replacement therapy readily available, and price problem solved.
At the same time there is no guarantee that crime would go away, addicts will still need drugs very badly every day, so unless it was extremely cheap or free (I don't know what the price target would be) they would still need to be out hustling.
The biggest reason why drugs tear apart communities is because they are illegal. Make them legal, give proper information, and let people decide on their own. Open up clinics to treat people and to use as a demonstration as one of the possible dangers if you do harder drugs.
Btw, do you think that cannabis, LSD, magic mushrooms, mescaline, and MDMA should be illegal? Do you think we should make Naloxone over the counter and be allowed to be sold everywhere?
> At the same time there is no guarantee that crime would go away, addicts will still need drugs very badly every day, so unless it was extremely cheap or free (I don't know what the price target would be) they would still need to be out hustling.
There is no guarantee in anything. Portugal has seen crime go down. That's data, baby. Also, when drugs are legal they are way cheaper than they are right now. The biggest reason why they can be expensive is because they are part of a black market which inflates the price artificially. Did you read my link above about how countries are experimenting with giving unadulterated heroin to heroin addicts and are helping treat them? They are seeing very successful results.
Once again: People who want to do heroin are already doing heroin. Stop parroting the false notion that people aren't doing drugs. They are.
You're not refuting my comment because it's irrefutable. You can't argue with a decline in overdoses and HIV outbreaks attributed to drug use, so you're trying to shift the conversation.
> "Nobody with a little worldly experience would compare crack or heroin with tobacco or even alcohol."
That's absolutely ludicrous. Alcohol has killed millions of more people than heroin has and has been just as devastating if not more. If you are saying that we should ban heroin because of it's dangerous properties and alcohol shouldn't be banned that's a mighty big contradiction on your part. I have plenty of "worldly experience", thank you very much.
> "It destroys lives, families and communities, far beyond the addicts themselves, and it happens in a very nefarious way where addicts gradually lose control, without ever intending to go that route."
If heroin was legal we could remove next to all impurities, make a cheaper product, and have treatment facilities that could both treat addicts who need help and serve as a model for other citizens as the dangers involved if you decide to do a drug such as heroin. People have less of incentive to try to get clean because if they relapse they risk going to prison.
Yep. Same thing can happen with alcohol.
> "I have seen some of the smartest and most sensible people turn into zombies who would and did sell themselves, their kids' toys and baby's diapers for drugs."
Wait, I thought making drugs illegal was supposed to keep people from doing them? I know several high-functional members of society that partake in various drugs. You're anecdotal evidence doesn't mean anything to me.
> "A lot of people aren't capable of making this choice, they can't fathom the consequences, and those consequences affect many others than just themselves."
People are already making that choice, as you essentially just said in your last sentence.
> "A lot of people aren't capable of making this choice, they can't fathom the consequences, and those consequences affect many others than just themselves. That makes it a societal matter, not just about individual freedom."
If drugs were legal it doesn't mean that everyone is going to start doing them. Lowering HIV rates is a societal matter and so is lowering overdoes. So is not tearing families a apart by sending responsible parents to jail because they happen to like a specific drug that happens to be illegal.
> "The fact that underground markets exist with all their associated ills is neither here nor there, this is the case for anything illegal."
What? How is the fact that there is a multi-billion dollar underground market that is run by the cartels "neither here nor there". People are doing drugs no matter if you like it or not. It's never been easier to get drugs than it is right now. I am a responsible adult and deserve to ingest any god damn substance that I please. You want people like me to go to prison.
The drug war is hits the African-American community the hardest, police men aren't going after day traders who do blow. You should really read both the Glenn Greenwald paper I linked above and the book The New Jim Crow.
Some people are going to abuse some things and it's none of your business to tell them what they can and can't do with their own body.
Sending people to jail over drug offenses doesn't solve any thing. You're lying to yourself if you think that it does.
You're argument is full of holes.
People don't need to be protected against themselves. That's exactly what makes people not being able to care for themselves. Prohibition usually means no awareness is being raised about the risks or effects of a certain drug.
We get raised with the idea that drugs are bad and awful, that all of them are highly addictive and super deadly. Except for alcohol of course, please drink as much as you like, it's safe.
This scare campaign works for most of us, but not for the lucky few who are curious and try it anyway. Guess what? They find out it's not bad, awful, deadly or addictive at all, but of course most of them are, still ignorant of all the other details of the drugs they used. So this first time drug user tells his friends that drugs aren't so bad at all. Some friends will probably try it as well.
If this concerns weed or mdma, this is not really a problem. These are safe to use, hard to overdose, make you a social human being and they are not (physically) addictive, but it might just as easy be cocaine, speed (meth), lsd or shrooms. The first two are addictive, bad for your body and brain and cocaine changes most people into irritating macho men while prolonged use of speed can make one paranoid. The latter two are psychedelics. These can be dangerous if you don't know what you're doing. These drugs open your mind, makes you realize things you never really thought about before and confronts you with unprocessed experiences or trauma's you may have, which can be quite scary, especially if you don't expect it.
Imagine your friend had a super duper happy lsd trip and recommends this to his depressed friend. Chances are high that he will go 'bad' resulting in psychosis. On the other hand, he might suddenly see the light and find out how he can get out of his depression.
If drugs were legal and awareness about their pro's, cons and dangers is being raised, more people will be encouraged to do some reading before they use something or at least the friend who brings the drugs knows what he's carrying and what the effects are.
People only need to be protected for misinformation, by informing them with facts instead of fear, uncertainty and doubt. Informed people make less (stupid) mistakes, and no one should be protected against themselves. If you die because of ignorance in an informed society, it's your own effing fault.
Drugs don't destroy people and communities, misinformation and ignorance does.
We could reach everyone in the country if we spent just a fraction of the trillion dollars we've spent on fighting the unsuccessful drug war. The key is that you have to be willing to give people unbiased information. In DARE they tried to tell us that acid drips down your spine which is absolute bullshit.
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.  as well as make a select few richer. Statistics show that it disproportionately effects those in the African-American community.  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 
- Reduction in HIV among drug users by 17% 
- Drug use among adolescents declined 
- Decreased value of street drugs 
For more see See Drug Decriminalization in Portugal by Glenn Greenwald 
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.  LSD has been known to help alcoholics see the light and give it up. 
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.
Edit: Some formatting and thanks to klearvue for bringing a prevalent spelling error to my attention. Sometimes I get ahead of myself.
Can I list domains on your bazaar? Got a juicy one: