“Silk Road doesn’t really sell drugs. It sells insurance and financial products,” says Carnegie Mellon computer engineering professor Nicolas Christin. “It doesn’t really matter whether you’re selling T-shirts or cocaine. The business model is to commoditize security.”
I thought this was an interesting look at it. In a sense Silk Road is like the Pirate Bay in that it doesn't hold the items it generates traffic from.
Well, it becomes pretty obvious when you look at how SR actually operates: why don't sellers just post a list of products on a forum or wiki and buyers send them bitcoins? Because there would be no form of escrow or feedback tracking or interventions by third-parties or bonds required of sellers; with pseudonymous identities and irrevocable payments, it'd be an incredibly tempting lemon market. It's those additional features which turn it into a working marketplace.
Interesting link, particularly the part about ways law enforcement might try to shut down SR. One approach police might take is to set up shop as sellers, and then instead of running a scam, actually ship the illicit goods and have the police show up right after the mailman. If I understand correctly, the buyer's address must go to the seller instead of the SR admins.
This might be considered entrapment, but if the buyer seeks out SR themselves and gets unlucky in their choice of seller, entrapment might be hard to argue.
The US is already doing something similar for potential terrorists - - they essentially handhold people they believe to have the potential to carry out a terrorist plot. This American Life had an episode called The Convert [1] and Rolling Stones had a similar article [2]
Most people will only buy from established sellers with a history of good reviews. To my knowledge, those reviews cannot be readily faked. It would be possible for LE to create a number of seller accounts, slowly build up a good reputation, and then bust a bunch of people across the country within a day or two (before news spread). That immediately fails a cost-benefit analysis.
Yes, that's one approach, but I think it'd be a major logistical challenge to coordinate with every single local police department whose zip code you happen to be shipping to. Easier to just scam customers and not deliver. :)
So you have a marketplace now for illegal (stolen) digital products and one for illegal physical products. What other illegal marketplaces will crop up because of tor and bitcoin?
I thought this was an interesting look at it. In a sense Silk Road is like the Pirate Bay in that it doesn't hold the items it generates traffic from.