The Cryptomarket Conundrum: The Silk Road

Aug 05, 2018   |   by Anya Tang   |   Basics & Beyond

During the Han dynasty’s rule, the Silk Road was a sprawling myriad of trade routes interconnecting the West and the East. During the 2010s, however, the Silk Road was a black market eBay run by a mysterious libertarian man (or group) known only as ‘Dread Pirate Roberts’. Its founder noted the site was designed to “use economic theory as a means to abolish the use of coercion and aggression among mankind”. Unlike its ancient counterpart, the digital Silk Road specialized in facilitating trade of illegal drugs rather than spices and porcelain. The business was both lucrative and dangerous -- according to Associate Research Professor Andrew Christin, the monthly revenue of the Silk Road at its peak reached “about USD 1.2 million”. After the site came to public attention, the U.S. Federal Government dedicated its resources to shutting down the Silk Road.

Ross Ulbricht's Arrest

On October 2 2013, Ross Ulbricht, the founder of the Silk Road, was finally arrested; Ulbricht faced life in prison without parole for multiple charges. Now, attorney Robert Hur has called to drop one of these charges - Ross's pending murder-for-hire charge. What's more, Ross Ulbricht has been recently granted Twitter access. With these sudden shifts in this cryptomarket conundrum, it becomes key to understand both the history, purpose, and impacts of the Silk Road in order to better comprehend the current situation.

The Beginnings

Founded in February 2011, the Silk Road was a darknet digital market designed to allow untraceable, privatized economic freedom. Users could buy and sell a variety of products or services, but the market specialized in drugs. In March 2013, out of the 10,000 products on sale, 70% were illicit drugs. From psychedelics to prescriptions, users could exchange Bitcoin for goods and services.

The purpose of Bitcoin in The Silk Road was to ensure anonymity of purchasers, especially when paired with the incorporation of Tor. The anonymous communication network allowed for untraceable buyer history, which further lent to the essential component of freedom that separated Ross Ulbricht’s dream from so many other online markets. Of course, the content was another factor that made the Silk Road’s purpose so unique.

Anonymity Led to Success

The easily-accessible anonymity and relative obscurity was what allowed the Silk Road to function without government oversight but this boon was also a bane for Ross Ulbricht. Such an untraceable site undoubtedly posed verification issues for both parties, and as such, Ulbricht implemented an escrow system as well as user-generated reviews to remedy this. The role of the escrow in his Wild West marketplace lent reliability to the Silk Road, and the user-generated reviews further supported the authentic and dependable flow of service. A key point to note about the escrow is that Ulbricht covered any shifts in Bitcoin’s value while they were held in escrow, essentially ensuring a certain element of control over what was otherwise an unpredictable situation. However, this control came to be the very aspect of oversight Ulbricht planned to avoid with the Silk Road.

Upon the creation of the Silk Road, services attempting to “harm or defraud” others were banned -- other, less restrictive sites quickly gained popularity and traffic for their wider range of goods. This dilemma, when considered in light of the anonymity provided by Bitcoin and Tor, must be considered especially in the present day where identity ethics is gradually becoming a crucial part of cryptocurrency. Identity happens to be the one thing Ross Ulbricht still has control over following his arrest in October 2013.

After the site was taken down, Ulbricht was charged with money laundering, computer hacking, conspiracy to traffic narcotics, and procuring murder; he was, and is facing life sentence without parole. However, on July 19, 2018, Ross Ulbricht joined Twitter. In a letter posted to, a website run by the Ulbricht family, Ross stated he did not know what exactly he’d be Tweeting about. His recent Tweets range from talking about a new workout routine to the fact that a murder-for-hire charge against him was finally dropped. By establishing his identity through social media, Ross Ulbricht’s influence over the internet persists.

From the grandiose trade routes connecting the world to an entirely digitized anonymous marketplace doing the exact same thing, the concept of the Silk Road is one that has evolved to focus not just on the buyer and the consumer, but on the currency. Ross Ulbricht’s Silk Road impacted the importance of cryptocurrency in the 21st century -- it has already become an integral part of our lives, and the Silk Road showed us what it was capable of. We are depending on the Internet more, and perhaps it is not just time to start looking at how we are connected, but also why we are connected.

Anya Tang