Why You Can't Blame Bitcoin For Silk Road Shadiness

Why You Can't Blame Bitcoin for Silk Road Shadiness

The man alleged to be "Dread Pirate Roberts," the founder and operator of the Silk Road -- an online marketplace where bitcoins were traded for a range of goods and services, including drugs -- was arrested by the FBI in San Francisco Wednesday. The criminal complaint, released today, provides many details about how the site and its users relied on widespread anonymity technology, including Tor and Bitcoin.

The increased attention on this technology is a good reminder about how important it is not to blame these tools for the actions of a small portion of their users. The public wouldn't tolerate a campaign to malign the car because of its utility as a getaway vehicle for bank robbers; we must apply the same critical thinking to essential privacy-preserving technology.

In certain parts of the complaint, even the federal agent behind the investigation and the US Justice Department attorney in charge of the case acknowledge this. In describing how Tor was required to access the Silk Road (the site was configured as a Tor hidden service), they state that "Tor has known legitimate uses". Similarly, "Bitcoins are not illegal in and of themselves and have known legitimate uses."

Elsewhere the complaint goes astray. For example, it asserts that the suspect's efforts to "'hide the identities of those that run Silk Road' reflect his awareness of the illegal nature of the Silk Road enterprise." Of course, that explanation overlooks the countless lawful reasons why a person would want to engage in anonymous speech -- and in the process hide the identities of those behind the technical infrastructure -- that don't involve breaking the law.

Similarly, the complaint's description of the bitcoin "tumbler" that the Silk Road employed to obscure the parties involved in each transaction is alarmingly limited. According to the complaint, "the only function served by such 'tumblers' is to assist with the laundering of criminal proceeds." Really, the purpose of a tumbler is to attempt to make a bitcoin transaction as anonymous and private as cash. Certainly one can take issue with Silk Road's use of the technology in particular. It's incredibly dangerous, though, to say that anonymous currency -- whether bitcoins or traditional cash -- is only of interest to drug dealers or money launderers.

It's essential that the use of encryption, anonymisation techniques, and other privacy practices is not deemed a suspicious activity. Rather, it must be recognised as an essential element for practising freedom of speech in a digital environment.

In some ways, the complaint provides encouragement to those who depend on this technology to engage in speech privately and anonymously. After all, it was human error, and the chance discovery of nine fake ID cards in a routine package inspection at the border, that led to the final round of investigation. This summer's revelations about the NSA's subverting certain cryptographic technologies have definitely heightened fears in the security community. Although there are still some unanswered questions about the investigation, it's a small relief that, for now, those fears weren't confirmed by the criminal complaint.

The point remains, however, that relegating these technologies by associating them only with their criminal use threatens to undermine their ability to enable important, lawful speech.

Unfortunately, we've witnessed that sort of demonisation of technology before. We've seen it in attempts to target peer-to-peer protocols because they can be used for copyright infringement; in the outrageous stacking of penalties that can result in decades of possible prison time for violations of the Computer Fraud and Abuse Act; in the original "Crypto Wars" of the 1990s and their reprise today; and in many other places besides.

The allegations against the Silk Road are serious, and may get even more so as the case progresses to formal charges and a trial. But if the government puts undue weight on the suspect's use of technology, instead of the actual crimes of which he is accused, the public will be worse off for it.

Republished from the Electronic Frontier Foundation under Creative Commons



    The car analogy is a bad one, I think a better analogy would be an unregistered gun with it's serial numbers filed off... The gun itself doesn't have to be bad, it's nothing more than an inanimate object after all, however the majority of the uses for such a gun are illegal.

    Bitcoins and very dodgy. I immediately associate dodgy dealings with anyone who claims to use them. Just ask yourself, why you need an anonymous currency?

    You get all the tin-foil hat wearers complaining about being watch by the NSA. But in reality, they don't give a shit what you're doing. Do you think they really care that you've purchased another monthly subscription to brazzers?

    Sure there are some more nefarious people within the NSA who seem to use this technology for their own purpose (ie, personal spying), but that's the vast minority, and again, most of them don't give a shit about you or know you from anyone else walking down the street.

      I agree with your point; but you do hav to make the distinction between regular bitcoin and the 'tumblers' completely anonymous bitcoin.
      Obviously; the majority of reasons that people would use totally anonymous payments is for illegal or suspicious purchases (similar to how 80-90% of torrents are used for technically illegal downloads)
      But regular (Un-tumbled) bitcoin has a much wider user base of legal purchases.
      They were Instrumental in the Cyprus collapse, helping people to access money when the banks shut down.
      Regular bitcoin transfers Are traceable; but obviously more difficult than regular bank transfers; but the method they talk about here is totally untraceable.

      BItcoin is a legitimate currency. It has lots of legitimate uses.

      Cash is anonymous, doesn't make it 'dodgy'.

      Your gun analogy makes no sense.

      Last edited 06/10/13 5:29 pm

        If I give someone a paper bag full of cash, that's fucking dodgy. If I transfer someone a heap of cash via online banking, that's perfectly legit.

        It's the same thing. What are you trying to hide?

          So, walking into your nearest supermarket and handing over cash is 'dodgy'? Jesus, I might be a criminal under that logic.

          Please don't use the 'you don't have to worry if you have nothing to hide', it's an idiotic rhetoric designed to facilitate governmental encroaches on free speech.

          Bitcoin is digital cash - money laundering exists in all forms, to decry bitcoin as 'dodgy' because of how it is handled is pretty silly.

          Back to your gun analogy, it's flawed for a number of uses - it doesn't really have an alternative, legal means (yes, we could argue about uses in hunting etc, but that would be counterproductive) of use. You're also fundamentally altering the product, which leads to its 'dodginess'. Parker's original metaphor is still more apt.

            Bitcoins are dodgy because they deliberately go out of the way to make things anonymous. Why do you need that?

            Please don't use the 'you don't have to worry if you have nothing to hide', it's an idiotic rhetoric designed to facilitate governmental encroaches on free speech.

            How is purchasing drugs free speech? This isn't some idealist manifesto being passed around under cloak and dagger, this is a method of payment being used to purchase goods and services. There has always been requirements to keep track of these things, at the very least for taxation purposes. The idea that now, because we've got our tinfoil hats on, we should somehow expect some kind of privacy in the transactions we conduct, is just ridiculous.

            The gun analogy stands, for the same reason you pointed out it's flaws. It doesn't really have an alternative legal means, except for small cases (in the case of guns, hunting, law enforcement and military; in the case of bitcoins, transacting in countries where people are ACTUALLY oppressed, not in the USA or Australia, and certainly not to buy drugs). The majority of it's uses are dodgy.

              I'm talking about the principle.

              Way to avoid the main point, which is about how it is essentially electronic cash.

          I've bought things with a wad of cash before, generally for less money than the same purchase would of cost with my credit card. The merchant doesn't have to pay the transaction fee's, what's dodgy about that?

    Except that bitcoins are so hard to convert to and from (and equipment needed to "mine" these days requires a lot of investment) that few legitimate stores are being set up.

    Heck, most of the proclaimed benefits are either only a benefit if you are an extreme economic libertarian (such as transactions not being reversible), or will be unable to function if it ever did get popular. Even the untraceable nature only applies so long as you keep your wallet ID a secret.

    So it's not that its a crypto-currency (though most of the competing ones are based off bitcoin's code anyway) that made it popular for illegal purposes, it's that it is so much effort to use for legal purposes (especially if you plan to pay taxes, because you will need to keep track of both the value of the coins, and either lose quite a bit of money converting it to pay taxes, or keep a separate account to pay taxes with) that setting up an online store is only worth the effort if you either want to avoid a money trail on your bank accounts, or you if you hate fiat currency more than you hate all the disadvantages.

    tl:dr the illegal uses of bitcoin are over represented in its economy because even ignoring its volatile value, it is too much effort for most people to use for legal purposes (for both vendors and consumers)

    How many criminal organisations traffic USD? Does that make the USD itself bad currency?

      Well if the republicans in the US Congress keep being stubborn buffoons and holding back funding the government because they don't want something that's already been passed by Congress that is in fact Law being funded, these criminals may need a new currency to trade in.

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