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Monday, June 6, 2011

Silk Road Was A Partial AgoristBay Implementation

This story was interesting. Silk Road is a website where people can buy and sell any drug. In the example cited in the story, someone bought LSD on Silk Road.

According to that article, Silk Road's operator explicitly calls himself an agorist.

Here's how Silk Road operated. You can only access the website via Tor. The only form of money accepted is Bitcoin. There was a seller feedback rating system. You would receive your drugs via mail.

After the article and mainstream media publicity, Silk Road shut itself down to new users. I wonder how many DEA agents are Silk Road users?

Here are the flaws in Silk Road's design:

  1. Tor probably is not secure.
  2. Bitcoin probably is not secure.
  3. You can only trade Anonymously.
  4. It is vulnerable to State infiltration.
  5. There should be both a seller feedback system and a buyer feedback system.
  6. Not every buyer and seller should be visible to each other. You should only see other trustworthy users.
  7. Silk Road itself should be P2P organized, rather than having one central website.
Here's a more detailed explanation.

1. Tor probably is not secure.

I suspect that a large number of Tor exit nodes are run by the NSA/State.

Stories like this one are interesting. Someone runs a Tor exit node. Police raid that person's home, saying he was "downloading child pornography". The person shuts down his Tor exit exit node.

This implies that State thugs are running all the Tor exit nodes. Here's the scam:
  1. See if anyone non-approved is operating a Tor exit node.
  2. Download child pornography via their Tor exit node.
  3. Accuse that person of a crime.
Notice how "child pornography" laws make it illegal for someone to operate a Tor exit node.

With Tor, the "exit nodes" are a vulnerability. If all exit nodes are run by the State, that makes it very easy for State thugs to monitor Tor.

State thugs have the resources to control most Tor nodes. The NSA may have put a backdoor encryption flaw in Tor. Tor is probably untrustworthy. I'm very suspicious. State thugs crack down on anyone running a Tor exit node from their PC.

Another downside of Tor is that Tor is *SLOW*!

I did briefly experiment with Tor. I concluded that it was slow and probably NSA-controlled.

2. Bitcoin is probably not secure.

I already mentioned that I don't like Bitcoin. I'll review the main flaws in Bitcoin.
  1. Every client has a copy of the full monetary base.
  2. Every client gets a copy of every transaction.
  3. Very few people have a Bitcoin client on their PC. State thugs can see who's running Bitcoin, and add them to their "subversive persons" list.
Every client gets a copy of everything! That's like handing your records to the State! All State thugs have to do is run a Bitcoin client, and they get to see what every other Bitcoin user is doing!

Bitcoin seems like an intentionally-flawed design.

I don't like Bitcoin. I would accept bitcoins as payment, only if I could immediately trade them for FRNs or gold or silver.

It was amusing that people accused me of pro-State trolling, for criticizing Bitcoin. Instead of addressing my concerns, they dismissed and ridiculed me. Is Bitcoin secretly run by the State? That is a pretty standard pro-State troll debating tactic, to ridicule someone without addressing their criticism.

I own zero bitcoins. I have no incentive to promote Bitcoin. Suppose you own 1000 bitcoins. Then, you have an incentive to promote Bitcoin. If more people use Bitcoin, then your bitcoins become worth more.

BTW, a simple arbitrage argument says "value of a bitcoin" should be close to "cost of mining". Bitcoins can never be worth more than the cost of mining, because then more people would mine.

If bitcoins were worth less than the cost of mining, then people would stop mining. If I were unethical, I could configure the servers at work to mine bitcoins at no cost to me. In that case, I'd be mining bitcoins at no cost to myself.

However, it is possible for bitcoins to be worth less than the mining cost. As an extreme example, if everyone stopped using bitcoin, then the value would go to zero, even though it would still cost electricity to mine more.

Bitcoins can never be worth more than the cost of mining. They could be worth much less.

3. You can only trade Anonymously.

Silk Road is only useful for Anonymous transactions, especially selling drugs. Silk Road does not facilitate in-person transactions.

You can't do the following on Silk Road:
  1. find a good unlicensed plumber/electrician/doctor
  2. find a good unlicensed restaurant
  3. buy raw milk
  4. trade State paper money for gold (but you probably could use bitcoins)
  5. find an off-the-books job
Silk Road is focused on destructive transactions, mainly drugs, rather than constructive transactions.

I disagree with "Certain drugs should be illegal." However, most drugs are harmful rather than beneficial.

4. Silk Road is vulnerable to State infiltration.

There almost definitely are some DEA agents and undercover police on Silk Road. It'd be pretty easy to buy some LSD and then trace the package back to the source. Also, DEA agents may pose as sellers. Due to State law, if you're in possession of a certain quantity of a drug, you're treated as equivalent a seller.

Once the DEA identifies a high-reputation user, they can say "give us your account as part of a plea bargain". Once a high-trust account is compromised, Silk Road will completely unravel.

5. There should be both a buyer and seller rating system. The buyer needs to trust the seller, to not cheat him. The seller needs to know that the buyer isn't an undercover policeman.

Silk Road has insufficient protection against infiltration by the State.

For example, a better system is "You only get to join Silk Road if an existing user refers you." Even better, the person who refers you pledges to make a payment, if you turn out to be an undercover cop or otherwise break the trading network rules.

6. Not every buyer and seller should be visible to each other. You should only see trustworthy people.

It's much safer if you only see "trusted partners" rather than everyone. There should be a user referral system, where one person says "I promise this person isn't an undercover cop."

Of course, a "user referral system" only works once you have a certain number of users. If you're starting from zero customers, you need to advertise just to get started!

7. Silk Road still is centralized. It's only one server hidden behind Tor. That's a vulnerability.

Another precaution is to decentralize it in P2P fashion, rather than keep everything on one server. You don't get to see all transactions and sale offers, only those of people who trust you.

Also, if Silk Road were decentralized P2P, then they could use their own encryption system rather than Tor. They could use their own internal accounting system rather than Bitcoin. They would allow pay-in and pay-out via any system. For example, you could send someone some bitcoins or mail someone an ounce of gold.

Silk Road seems like a partial implementation of AgoristBay. It's a nice try. It still has some flaws.

Silk Road has been outed by the mainstream media. Undercover State police have probably infiltrated it. If the site operator is smart, the most trustworthy users should move somewhere else and start over. I'd avoid Tor and Bitcoin. I don't trust them.

"AgoristBay" should use its own encryption and accounting system, and not rely on Tor or Bitcoin.

Silk Road was an interesting partial implementation of "AgoristBay". It was outed by the mainstream media, which makes it very risky now. Silk Road has definitely drawn the attention of the State. The most trustworthy Silk Road users should develop a better system and start over.


Anonymous said...

Bitcoins are actually worth $18.75/bitcoin right now on

Anonymous said...

I've been a long time reader of your blog. In fact, I discovered bitcoin in the comments section of your blog back in 2009. But the simple truth is, you have no idea what you're talking about with regards to Bitcoin.

Study the crytography and code behind Bitcoin, and you'll know why so many of your fellow agorists (like myself) appreciate the system and its potential: Point-to-point trade without middlemen, smart contracts, secure storage of value, complete avoidance of the fractional-reserve and central banking system...

FSK said...

I studied the algorithm. Police can run a Bitcoin client and see every single transaction. That's a *HUGE* flaw.

Anonymous said...


Yes, shows you the bitcoin block chain transaction history. However, bitcoin value can and is transferred outside of the scope of these recorded btc transfers.,,, bitcoinlaundry are all mechanisms to unlink your your transaction history.

The fact is you can actually use blockexplorer to VERIFY that your transactions have been entirely unlinked. In the future, there may be automated tools to facilitate such unlinking and verification.

Anonymous said...

This FSK guy is just another agent of disinformation due to ignorance. See you at the meat farm.

Anonymous said...

You don't understand how Tor works either.

No exit node if you are accessing something within the Tor domain.

and exit nodes cant uncover end to end encryption.

Anonymous said...

Having a place to send gold or statist currencies to a seller would endanger the seller.

After the media wash, silk-road went down for some days (some speculated that it was to secure their systems, or just lay low with all the media-hype). In fact, with the free advertising, their traffic became too large for their server to handle, so they had to invest in more hardware (hopefully decentralizing it as well), and have been up and running ever since.

Yes, there will quite likely be some publicity arrests, but drug enforcement agencies tend to not go after the little guys.

Think bittorrent. Yes, many people have been arrested/prosecuted for downloading "protected" material, but many more millions download the same stuff every day. Drug enforcement agencies arrest the little guy because he/she can lead further up the chain. But if/when they arrest a silk-road customer, and confiscate their computer etc, it shows that they bought something from UserABC. . .it helps the agencies not, hence is not a sustainable business plan.

As others have commented, there are many and varied ways to make anonymous your ties with bitcoin. The blockchain says "this address sent to this address", but does not say "Mr. Joe Blow sent 20btc to Mr. Jack Black".

The main bitcoin exchanger (Mt.Gox) was compromised some weeks ago (note:the bitcoin protocol/crypto was NOT compromised), and some scam by came to light, and in spite of all this, the currency has remained resilient. Combine with the system, the glbse, and OpenTransactions, bitcoin is a glue that binds them all together.

I've been a fan of your blog for quite some time, but I feel you owe it to your readers to do more actual homework on these things, and not just dump on it just because "it's not gold" and you do not understand it.

Anonymous said...

Sending gold to a vendor would not protect the buyer and that is why escrow is in place, to help stop scammers.
Silk road could not make there own currency, they would have to open bank accounts in every country ect.
It would leave a money trail

Do a little more research before making bogus claims

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