Silk Road Day- What is the Silk Road marketplace?

What is the Silk Road Marketplace?

The Silk Road, created by Ross Ulbricht (also known as “Dread Pirate Roberts” in February 2011, was an online black market that sells everything. Not only people could buy common tech items such as phones, tablets, and laptops, they could also buy illegal drugs, stolen credit cards and hitman services.  

The name Silk Road was based on the historical network of trade routes between Europe and Asia 

Not everyone could create an account easily. Limited number of seller accounts are put into auction for users to purchase. When the seller account is bought, the user can sell their goods or services to more than 100,000 buyers.  

Why was the Silk Road Marketplace popular among Bitcoin users?

Firstly, the Silk Road was popular for online consumers because the platform allows them to make their purchases without judgement due to the ability to protect their identities and transactions using anonymization techniques 

These techniques include being able to use Bitcoin as a means of payment for the products and services on the black market. Bitcoin (BTC) is a cryptocurrency, which is a form of digital currency that operates without the dependence on third party gate keepers such as banks. 

Bitcoin uses a decentralized blockchain network that allows transactions to be made to and from 16-character encrypted addresses and keeps a track record of every activity. 

Users do not have to share their personal information (name, home address, contact number, email etc.) to conduct activities with Bitcoin.  

The Silk Road Payment Process

As a result of using Bitcoin for transactions in the dark web marketplace, dark wallets were invented to encrypt and mask all Bitcoin transactions. Using these dark wallets give another layer of privacy for Silk Road buyers and sellers. The marketplace eventually managed to handle over $1.2 billion worth of illegal goods and services with $79.2 million in commissions 

What happened to the Silk Road Marketplace?

US Attorney David Anderson said, “Silk Road was the most notorious online criminal marketplace of its day.” Being able to buy illegal goods and harmful services raised a lot of concerns to authorities which eventually led to the shut down of the website in October 2013 by the FBI (Federal Bureau of Investigation). 

The founder, Ross Ulbricht, was found guilty for money laundering, hacking and conspiracy to traffic narcotics. It was reported that he made about $80 million in commissions from all the transactions carried out within the site. Ulbricht was sent to jail and is currently service a life sentence without the possibility of parole.  

During the shutdown, the FBI managed to seize $28.5 million worth of Bitcoin (at the time) which was worth 144,000 BTC. The authorities sold off the BTC in four separate auctions. 

There were other attempts to bring the website back. In November 2013, Silk Road 2.0 came online by the former admins of Silk Road. Eventually, it was shut down in November 2014 and the operators of the site were arrested. 

Although the website has been shut downthe Silk Road is still being talked about. Vanity Fair reported that Donald Trump was “exploring pardoning Ulbricht and has expressed some sympathy for Ulbricht’s situation privately. Trump has been considering Ulbricht’s name for his next round of commutations and pardons.  

Since the Silk Road launch, other modern illicit online marketplaces have been launched dedicated to the sales of drugs. One of the marketplaces that was recently shut down was the DarkMarket (founded by a 34-year-old Australian man), which had almost 500,000 users and more than 2,400 sellers. 

Leading up to the shutdown of the site by German authorities in January 2021, the marketplace had more than 320,000 cryptocurrency transactions, which valued more than $220 million (at the time of the writing).   

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