In 1972, long before eBay or Amazon, students from Stanford University in California and MIT in Massachusetts conducted the first ever bit of e-commerce. Using the "Arpanet" account at their artificial intelligence lab, the Stanford students sold their counterparts a small amount of marijuana.
It was the first in a very long and successful online trade in narcotics: according to a 2014 survey of approximately 14 percent of U.S. drug users scored from the net. Most of them went to the Silk Road. Between 2011-2013 this was the largest anonymous market on the hidden ‘dark net,’ processing over $1.2 billion worth of sales. Over that period almost 4,000 vendors sold products (mainly, but not only, drugs) to 150,000 customers across the world. Running this vast criminal enterprise landed 31-year old Ross Ulbricht, aka ‘Dread Pirate Roberts,’ life imprisonment without parole. On delivering this draconian sentence last week, Judge Forrest told the court that the Silk Road's very existence was "…deeply troubling, terribly misguided, and very dangerous.”
The reason such an exemplary punishment was handed down was because the Silk Road was a dazzling experiment, a phenomenal achievement. Had it been another industry, Ross Ulbricht would be rightly feted as a 'guru,' championed by the great and the good as a business genius. He managed to create a competitive, functioning market in the most hostile conditions imaginable: buyers and sellers were anonymous, and never met. There were no regulators to turn to if the seller or the site administrators decided to take your money. It was all illegal, and at constant risk of take-downs or infiltration by law enforcement agencies.
And yet, despite these conditions, using crypto-currencies and encryption software, the Silk Road thrived. For many users, the site had a profound impact on the way narcotics were procured – like all good markets it tilted power from the sellers and to the customers. And its impact lives on, of course. The Silk Road is gone, but there are many more anonymous markets that have taken its place (around 20 similar markets the last time I checked). Might they be an answer to the war on drugs?
The clever trick about the Silk Road was to combine user anonymity with trust, since a functioning illegal market requires plenty of both. The Silk Road wasn’t accessible using a normal web browser such as Chrome or Internet Explorer. It sat on an encrypted part of the Internet called ‘Tor Hidden Services’ – often dubbed the dark net – where URLs are a string of seemingly meaningless numbers and letters that end in ".onion," and are accessed using a special browser called Tor. Tor allows people to browse the net without giving away their location, and has as many good and bad uses as the human mind can conceive.
The first thing that struck anyone who signed up to The Silk Road – as I did when researching my book "The Dark Net" – is how eerily familiar it all felt to anyone who's used eBay or Amazon. Every one of the thousands of products on offer had a detailed description, photograph and price. All products and vendors were rated out of five by buyers, who also provided detailed written feedback. There were customer service buttons and shopping trolley carts and free-package-and-delivery and one-off specials. You made your choice, placed your order, paid in the crypto-currency Bitcoin and waited for your package to arrive in the post: which it nearly always did.
But it's the customer reviews, not clever encryption, that was the oil in the machine, the key to understanding how these markets tick. All the vendors used pseudonyms, but they kept the same fake name to build up their reputation. Because it was easy for buyers to switch allegiance to any one of hundreds of competitors at any moment, the vendors were forced to aggressively compete for custom.
Exhibit: when I was browsing through the thousands of marijuana listings, I found 3,000 offers advertised by more than 200 dealers. So (what else?) I began to scour user reviews, trying to spot those that others had found reliable and trustworthy: "First order was lost … I got a reship and now I'm very happy … He is one of the best vendors on the road!! Very friendly and very good communication too. I will be back soon."; "Please check out this vendor … 5 Stars."
The competition and choice meant the dealers were usually polite, attentive, and consumer-centric – offering free packaging and delivery on big purchases, refunds, special offers and even loyalty systems. I got in touch with "DrugsHeaven" on the site's internal, encrypted, email system. He or she was based overseas, but the vendor page advertised "excellent and consistent top quality weed & hash for a fair price". There was a refund policy, estimated shipping times, detailed terms and conditions, and close to 2,000 pieces of feedback over the last four months, averaging around 4.8 out of 5.
"I'm new here," I said. "Do you think I could just buy a tiny amount of marijuana?" DrugsHeaven quickly responded: "Hi there! Thanks for the mail. My advice is that starting small is the smart thing to do, so no problem if you want to start with 1 gram. I would too if I were you. I hope we can do some business! Kind regards. DrugsHeaven."
Restless competition is always good for customers. The offline drugs market as it stands is all local monopolies and cartels, run by dealers and gangsters. By introducing clever payment mechanisms, feedback systems, and real competition, power shifted to the users. When I analysed 120,000 customer reviews made on one of these dark net market sites in 2014, more than 95 percent scored 5/5. The overwhelming consensus among users of the Silk Road was that the quality of the product was far higher and its purity far more reliable than anything you’d find on a street corner.
But there was more to the Silk Road than market forces. It was also riven through with a libertarian philosophy, one which lionises individual liberty and peer-to-peer transactions without the meddling of governments. Although Ulbricht and others surely benefited from covering their criminal activity in philosophical polish, it was part of the motivation. For example, Ulbricht’s assumed pseudonym, Dread Pirate Roberts, was taken from the 1973 book "The Princess Bride" in which the Pirate was not one man, but a series of individuals who periodically passed the name and reputation to a successor. The name was chosen specifically. Silk Road was a movement, something more than just one man. ‘We are NOT beasts of burden to be taxed and controlled and regulated,’ wrote D/P/R in April 2012 at the height of his, and the site’s, arrogance. ‘The future can be a time where the human spirit flourishes, unbridled, wild and free!’
The hope that modern, digital cryptographic software could create perfect, unregulated (and unregulatable) markets as a political and economic goes back to the 1990s Californian ‘Cypherpunks.’ All were radical libertarians and early adopters of computer technology, sharing an interest in the effects it would have on politics and society. But while many West Coast liberals at the time were toasting the dawn of a new and liberating electronic age, these Cypherpunks spotted that networked computing might just as likely herald a golden age of state spying and control. They all believed that the great political issue of the day was whether governments of the world would use the Internet to strangle individual freedom and privacy through digital surveillance, or whether autonomous individuals would undermine and even destroy the state through the subversive tools digital computing also promised.
At their first meeting, Tim May, as close to a leader as the group ever had, set out his vision to the excited group of rebellious, ponytailed twenty- and thirty-somethings. If the government can’t monitor you, he argued, it can’t control you. Fortunately, said May, thanks to modern computing, individual liberty can be assured by something more reliable than man-made laws: the unflinching rules of math and physics, existing on software that couldn’t be deleted. ‘Politics has never given anyone lasting freedom, and it never will,’ he wrote in 1993. But computer systems could. What was needed, May argued, was new software that could help ordinary people evade government surveillance.
The group quickly grew to include hundreds of subscribers who were soon posting on a dedicated email list every day: exchanging ideas, discussing developments, proposing and testing cyphers. This remarkable email list predicted, developed or invented almost every technique now employed by computer users to avoid government surveillance. Tim May proposed, among other things, secure crypto-currencies, a tool enabling people to browse the web anonymously, an unregulated marketplace—which he called ‘BlackNet’—where anything could be bought or sold without being tracked. Everything needed for The Silk Road.
They also hoped their endeavors would eventually bring about an economic, political and social revolution. In 1994 May published "Cyphernomicon," his manifesto of the cypher-punk world view, on the mailing list. In it, he explained that ‘many of us are explicitly anti-democratic and hope to use encryption to undermine the so-called democratic governments of the world.’ On the whole, the cypherpunks were rugged libertarians who believed that far too many decisions that affected the liberty of the individual were determined by a popular vote of democratic governments. They saw encryption as the way out. This explains why the judge described the site as 'deeply troubling, terribly misguided and very dangerous.' Its very existence is a threat to order of things. And as more people start to use encryption systems – especially since the Edward Snowden revelations – that threat will, for better or worse, worsen. And that is what lies behind the sentencing: it’s revolutionary possibilities.
This political radicalism buzzed around the Silk Road, since it was the realisation of the cypherpunks’ vision. A bustling ecosystem grew up around the site, uniting an eclectic mix of libertarians, bitcoin fanatics, drugs aficionados and dealers, all committed for their own reasons to the idea of an unregulated online market. This sprawling community constantly monitored the market, checked security vulnerabilities and performance, and updated others on what they found. I contacted one of the moderators who ran Silk Road’s popular Reddit group before it was closed down. ‘It’s become a sort of safe haven for people who agree that no government should be able to tell them what they can put in their own bodies,’ he told me. ‘Users and sellers alike can have the freedom to be open and express themselves in ways that are impossible in real life.’ It became, it quite a real sense, a community.
And this community enjoyed a remarkable level of camaraderie – which is often found it outsider groups – which frequently resulted in unexpected solutions to problems. For seven months before the Silk Road was shut down by the FBI in October 2013, one user called ‘Doctor X’ gave free health advice on the Silk Road forums to anyone who asked for it. Judge Katherine Forrest called Doctor X “despicable” and “breathtakingly irresponsible”. (Evidence was presented in the court which suggested Doctor X told someone was okay to use MDMA if diabetic, which he strongly denies.
Doctor X doesn’t seem irresponsible to me. I managed to find him, which was not that difficult since he’s very open about what he does. His real name is Fernando Caudevilla and he is a trained doctor who has a PhD in Drug Dependence, and specializes in family medicine and drug dependency. He is 41 and has worked for 15 years in harm reduction among drug users in Spain. His credentials are solid: he’s frequently invited to speak at various conferences and events, and a paper he’s written will shortly be published by the European Monitoring Centre for Drugs and Drug Addiction.
Fernando started on the Silk Road in 2013 because ‘drugs forums are the places drugs users go.’ And so he went there too. In April 2013 he joined the forums under his pseudonym, and invited users to ask questions ‘to a health professional’ about taking drugs responsibly and any related health advice they might need. He was quickly inundated, and started receiving between 10-15 queries a day, ‘about doses, mixing prescriptions, adverse effect, long-term effects, how to detoxify’, he explained. He started setting aside 2 hours a day to get through the requests for advice. In her recent book on the Silk Road, Eileen Ormsby, tells the story of one heroin addict who had been wrongly diagnosed with withdrawal symptoms – which Fernando advised was likely incorrect and suggest he return to the hospital. Following tests, the individual was diagnosed with leukaemia. Then there a heroin user whose girlfriend suffered an overdose while Fernando was online, and he provided instructions on the necessary emergency measure.
This service made Fernando popular. He started receiving anonymous Bitcoin donations from users – including Ulbricht himself.
‘Those who work in harm reduction are always struggling for money,’ he told me. ‘I am proud of my work.’
‘Are the dark net markets a better way of doing things?’ I asked him. After all, it’s replete with fairly obvious problems.
‘It’s not perfect. But drugs users don’t go to medical services to talk about their health problems, because they fear being judged. They are more open in online forums. It’s better than what’s happening now.’
Fernando seems both indignant about the way his work has been dismissed by the judge in the Ulbricht case, and slightly worried about the possibility of some kind of legal ramification to himself. ‘I’m going to wait a little bit. But I will continue,’ he said. ‘I am very proud of my work’.
Ulbricht broke the law, and deserved to be punished for it. I don't think he created the site to reduce harm. I think he did it primarily to make money. But the dislike of government control, the belief that decentralised markets could work improve the world, including for drugs users, was always lurking somewhere in the background – from him and others involved in the site.
The truth is that the Silk Road creates a moral dilemma to anyone who worries about drugs policy. Sadly, 'deeply troubling, terribly misguided and very dangerous' is also a reasonably accurate description of the war on drugs. In October 2013, a large-scale study by the International Centre for Science in Drug Policy brought together data from seven drugs surveillance systems around the world. The unsurprising conclusion? The war is failing. Illicit substances are more available than ever.
Can market based competition provide a solution? Judge Forrest in her statement correctly stated that the Silk Road will tend to increase demand – because when it comes to illegal substances, supply often drives demand, as well as vice-versa. The Silk Road made more drugs more available to more people; and that leads to more people using them. “I strongly believe my son would still be alive today if Mr. Ulbricht had never created Silk Road,” said one father to the court, whose son had died from a heroin overdose he’d bought from the site. What’s more, there is violence and corruption at every point in the supply chain as drugs move from producers to street dealers. Dark net markets can’t really do much about Mexican gang drugs wars – and may even exacerbate the problem if they are fueling demand.
But people will take illegal drugs. And reputation-based trading produces a powerful but informal consumer-led system of self-regulation, which allows users to make more informed decisions on the products they purchase. When you buy drugs on the street, you have no reliable way of judging what you’re buying, and no recourse if things go wrong. That’s why on the streets drug purity is wildly variable: the average purity of street cocaine is 25 percent, but has been found as low as 2 percent—typically cut with mixing substances such as benzocaine by middlemen and pushers.
Not knowing what you’re putting in your body can have tragic consequences. In 2009–10, for example, a contaminated product led to forty-seven heroin users in Scotland being infected with anthrax. Fourteen died. Then there’s the colossal amount of street crime associated with turf wars over street corners would also likely reduce, as buyers cut out the street dealer. Although reliable figures for the exact cost of street trading are notoriously difficult to find, according to The Drugs Policy Alliance, in 2013 alone the U.S. government spent $50 billion a year on the war on drugs, yet still arrested 1.5 million people on non-violent drugs charges; and around 44 thousand people died from an overdose.
Those who want drugs will always find a way to get them. On Silk Road, they can get a better product and with fewer negative risks associated with buying drugs on the street. Criminals and pariahs are often the harbingers of what’s to come, offering glimpses of how things might be. Ulbricht might never be free to see it, but his impact on drugs policy will outlast even his lengthy incarceration.