As the government has continually gone on the attack on the BitCoin community, their sole goal was to infiltrate the ranks of the Deepnet. Their first attempt was by trying to snag control of Freedom Hosting’s Tor servers which help the Deepnet operate since Tor is a peer to peer based network that uses advanced routing and anonymizing technology. Tor is one of those things that can be used for great good or for great evil. In the case of some political dissidents, Tor is an invaluable tool for the dissemination of information.
However, Tor can also be used to try to cover one’s tracks if someone is trying to participate in illegal activities. In order to access the Deepnet, one must first connect to the Tor network using the Tor anonymizing software. Once connected, then and only then can you even try to reach the sites inside of Deepnet that hold the ability to buy and sell illegal items. There are also sites that teach you how to commit certain crimes or how to build certain weapons, all kinds of information that could be considered to be pretty bad in the wrong hands.
The real problem with the Silk Road inside of the Deepnet through Tor’s network is that the government has had a very hard time controlling and monitoring what goes on inside of the marketplace. With the advent of BitCoins, people could pay each other without worrying about bank accounts and certain things that would generally be considered impossibly illegal to obtain could be sold. So, the government did their best to infiltrate this network by hacking into Freedom Hosting’s Tor servers and then monitoring the Tor traffic through that gateway until they found the information that they needed.
So, they went after the alleged creator of the Silk Road, a guy that went by the user name ‘Dread Pirate Roberts’. His actual name is Ross William Ulbricht and at the time of his arrest, he was in possession of 26,000 BitCoins which currently carry a going rate of about $3.5 million (the largest Seizure of BtC to date). This amount of BitCoins still pales in comparison to the sheer amount of volume of transactions that the Silk Road was responsible for. Over the course of the past two years, the Silk Road had over 9.5 million BitCoins change hands which ultimately resulted in the founder raking in about $80 million in commission fees. By the way 9.5 million BtC is approximately $1 Billion, which means hundreds of millions of dollars worth of illegal drugs and weapons likely changed hands every year through the Silk Road.
While I’m not going to be one to defend the Silk Road or Deepnet, I still do believe in Tor’s fundamental mission and ‘good’ uses. However, with the FBI controlling one of the biggest hosters of Tor servers, it seems pretty pointless to even bother using Tor for anonymity. What will be interesting to see is how much of an affect this seizure and takedown of the market place will have on the value of the BtC and its relevance.