vCash, Crypto, and Anonymization Equals Drugs to Your Door

Pssst. Dude, wanna score? What do you want? Acid, weed, X, 'Ludes? No problem ... you can now buy your favorite illegal substances online with (in theory) complete anonymity. Moreover, you won't be buying the "bad" stuff because you can see the seller's reputation as rated by his or hers previous clients!

You pay for the "products" with untraceable digital cash and the seller ships to whatever address you provide. The system keeps the buyer and seller anonymous, allows for funds to be transferred, and the purchase is mailed to whatever address the buyer gives, which allows for plausible deniability by the recipient ("But officer, my name isn't on the package and I have no idea where it came from.").

Don't believe me? Check out Silk Road. Of course, as you might suspect, doing so will not be straightforward but, then again, we're talking about illegal activities so, a little fence hurdling shouldn't deter you if you're serious.

First, if you're going to buy from Silk Road, you'll need to acquire a stash of a currency called "bitcoin" from any of several bitcoin exchanges.

Bitcoin is peer-to-peer digital money system or, as the Mt. Gox Bitcoin Exchange describes it: "a decentralized Internet commodity". I don't have space to go into exactly how bitcoin works (it's based on public key encryption), but the result is funds can be transferred anonymously.

The Mt. Gox site only deals in U.S. dollars which are converted at whatever rate the bitcoin market offers (you can also sell your bitcoin on the market to convert back to dollars). If you want to buy or sell in some other currency, there are more than 20 other exchanges world wide you can use.

As of 11 a.m on June 2, the selling price of bitcoin has fluctuated from a low of $9.122 to a high of $10.57. Had you purchased bitcoin back in October last year when the Mt. Gox exchange started, you could have got a rate as low as $0.0505, so a $1 investment back then could have returned as much as $209 today!

So, now you've got your bitcoin account you need to connect to Silk Road. To do this, you'll need to have the Tor Network client software installed. The Tor Network is a distributed browser anonymizing service that is also used by political dissidents and the like to avoid the scrutiny of their governments. Installing Tor is not hard but it may be rather technical for the average stoner.

Once you've got that far, you can connect to the Silk Road Web site (the URL only resolves if you're going through Tor) and you're there ... let the illegality begin!

The implications of bitcoin are immense. First, there's the question of taxation. The U.S. government started considering taxing virtual currencies a few years ago and a system like this with something around $50 million tied up is more than enough to attract serious government interest. Second, bitcoin could be used for illegal activities other than buying and selling drugs. For example, it could mediate money laundering or, gasp, gambling!

Of course, there are more serious issues with this system, of which the biggest is that the current bitcoin implementation logs all transactions publicly so, although the owners of the end points are anonymous, there are techniques used by any and all of the three letter agencies that can reveal the identities of the parties involved.

Even so, Silk Road is up and running and transactions are frequent. The value of bitcoin continues to increase and the Tor Network is getting a lot of interest due to its political implications. Watch out for this to become a huge issue in Washington where the drug of choice is legislation.

Gibbs does not take part in such illegal ways while in Ventura, Calif. He can be reached at backspin@gibbs.com.

Read more about software in Network World's Software section.

This story, "vCash, Crypto, and Anonymization Equals Drugs to Your Door" was originally published by Network World.

Copyright © 2011 IDG Communications, Inc.

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