Lily Allen was offered 100,000 bitcoins to perform on 3D chat website Second Life. She turned it down. That became, at one stage, a 100 million dollar fortune on which she missed out.
Charlie Shrem, who once hacked into the University of Ghana website and then wrote a white paper on their security flaws, was an early Bitcoin adopter. He made himself enough money to buy a pukka New York pad, and an even more pukka bar, will only employ people if they drink or smoke weed with him, founded a $40 million company and now finds himself under house arrest on money-laundering charges related to the Silk Road. He’s still only 24.
Shrem has never even met his business partner, Gareth Nelson. Nelson is an Asperger’s sufferer from Wrexham, who’s now worth millions.
Olivier Janssens now flies from London to his new home in Monaco by private jet – paid for in bitcoins.
On my hunt for amusing Bitcoin stories, one chap emailed me, saying: ‘I bought $8,000 worth of Litecoin at $2.30 back in June, and when Bitcoin skyrocketed to $1,240, Litecoin went to $52.00. I made $140,000, cashed out $70,000 and bought a new Range Rover. I now drive a Range Rover because of what people laugh at and call fake money.’
But with the failure of companies such as MtGox, you can bet there are many stories that are as disheartening as the above are amusing.
The world of crypto-currencies (there are now over 300 altcoins) has attracted all sorts of crooks and fraudsters, as well as those who religiously think they are changing the world. There are scams and get-rich-quick schemes galore. It has become a free-for-all, like the gold rushes of the Wild West. Over time, things should settle.
But one of the things you quickly notice is the sense of humour to it all. Many altcoins are based around a joke – ‘Coinye West’, for example. (When my father read this he asked, ‘What’s the joke?’)
Many are simply in it for the laugh.
Dogecoin is, according to its website, ‘an open source peer-to-peer cryptocurrency, favored by Shiba Inus worldwide’. (Shibu Inus are petite Japanese dogs that have a surprised look on their faces.) The currency is, apparently, based on an internet meme about a dog’s inner thoughts. This has led to a heated discussion about the pronunciation of the word ‘doge’. Is the G hard as in ‘doggy’? Or is it soft as in ‘refuge’. ‘It’s only a matter of time’, says journalist Victoria McNally, ‘before this discussion becomes all-out war in the style of GIF vs JIF.’53
In a reference to the much-loved 1993 comedy Cool Runnings, the Dogecoin community raised the funds to send the Jamaican bobsled team to the 2014 Winter Olympics. They then did the same for an Indian luge contender Shiva Keshavan. He would become the 2014 Winter Olympics ‘underdoge’.
The community raised money earlier in the year for a water charity in Kenya. One person was able to donate $14,000 worth of coins with one tweet. The implications of that kind of ease of payment are enormous. Underlying Dogecoin, as well as technological advances, is a generosity of spirit.
Long may the spirit continue.
5
How a Computer Nerd became the FBI’s Most Wanted Drug Dealer
‘You’d make a wonderful Dread Pirate Roberts.’
William Goldman, The Princess Bride
Imagine a website, like Amazon or eBay, but for drugs.
Not just drugs, but anything you can think of that’s illegal: forged passports, counterfeit money, weapons even.
You type in what you’re looking for, and up come the names of various sellers. You choose one you like, place your order, pay your money and a day or two later whatever you ordered shows up in a brown envelope.
There are at least 25 sites like this now in operation. The first was the Silk Road. A New York senator called it ‘the most brazen attempt to peddle drugs online that we have ever seen’.54
Bitcoin made it possible.
I should say that, like our glorious Prime Minister, I may have erred while at university. But now, aged 44, my desire for most of the goods offered on Silk Road has faded. But that didn’t stop my curiosity, and back in 2013 when I first heard about the site, I went online to take a look.
You found the website using an encrypted browser on the anonymous Tor network – in order to keep your whereabouts and identity hidden. You registered just as you would register at Amazon or eBay (but best not with your real name). You typed in what you were looking for and up came your desired item offered by different merchants in varying quantities. You could buy forged passports, driving licences, student ID, erotica, books, academic papers, apparel, electronic items, art, jewellery, lifetime memberships to Spotify – just about anything you can think of, most of it dodgy. At one brief stage, I believe weapons were also sold, but this was discontinued in 2012. It’s not clear why. Some say it was lack of profitability, others say it was a reaction to shootings in the US, others put it down to simple fear.
The essence of the site was narcotics. Ninety-five per cent of the stuff on the site I had never even heard of. I bet you haven’t either. 25i-NBome Blotters (HPBCD Complexed)? Psilocbe cyanescens? Haizenberg’s Lord Shivas? Salvador Dalis? Superman Pills? Red Jokers? Dbol Dianabol Methandrostenolone? Goodness knows what most of this stuff was and what it could do to you.
Like eBay or Amazon, buyers and sellers, as well as the items they were supplying, had feedback ratings next to their account names, based on past trades. For example, Trader X might have got a five-star rating with a comment such as, ‘Great stuff. Arrived quickly, as described. Thank you. A+’ – or ‘Rubbish gear, bad seller, one star’. You could tell if someone was a good or bad trader, and you could vet them.
Whatever you may think about drug laws, the site worked. People were able to trade peacefully in a way that, for the most part, satisfied both buyer and seller. The feedback system was conducive to good conduct. I liked the fact that a site like the Silk Road was able to exist outside the law and to self-regulate peacefully without the intervention of the benevolent hand of the state.
To test things out, I bought a small amount of cannabis (don’t tell the authorities) from a vendor by the name of Mr Clonk. Lo and behold, two or three days later, said tiny amount arrived in a nondescript brown envelope. I would far rather do this (and even have my children do this) than have to go to some dark alleyway in some shady part of town at night.
The speed of growth of the site was testament to people’s needs for the service it provided. From its inception in 2011 to its demise in autumn 2013, some $1.2 billion’s worth of transactions are said to have taken place (this statistic depends on what bitcoin price you use, of course. You could use $10 or $1,200). Carnegie Mellon University professor Nicolas Christin ran a comprehensive analysis of the site in August 2012 and estimated sales of $15 million per year. In July 2013, he said, ‘Somewhere between $30 million and $45 million a year would not surprise me. It may even be more.’55 There were some 957,000 registered user accounts. I bet even the likes of Google, Amazon, eBay, Twitter, or Facebook would have struggled to compete with those kinds of numbers in their first two years of trading.
The site was run by the Dread Pirate Roberts. If you’ve seen The Princess Bride, you’ll know that the Dread Pirate Roberts is William Goldman’s notorious pirate, who ‘takes no prisoners’ and is ‘feared across the seven seas’ for his ruthlessness and swordsmanship. The Dread Pirate Roberts, it turns out, is not one man, but a succession of them. A Dread Pirate Roberts, when he is ready to retire, would pass the name and reputation to a chosen successor.
In other words, the person behind the Silk Road, the Dread Pirate Roberts, could – in theory – be anyone. And it appears there have been several already.
But it also looks like the most famous of them is now behind bars.
The millionaire drugs kingpin with a soft spot for Austrian economics
In October 2013, after over a year of cyber-detective work, five plain-clothes FBI agents walked into the Glen Park Library in San Francisco. They made their way to the science fiction section. There a skinn
y 29-year-old man with jeans and a T-shirt was sitting at his laptop chatting with someone online (unknown to him, it was an FBI stooge). The library staff heard a crash. Poking their heads round the shelves, they saw him being pressed up against the window and handcuffed. He was, the FBI said, the Dread Pirate Roberts, reported to own over $30 million worth of bitcoins, to earn about $20,000 a day and to have amassed an $80 million fortune in 18 months. But he was in the Glen Park Library for the free wifi.
The man they arrested was Ross Ulbricht, a 29-year-old from Austin, Texas. He is hardly the millionaire kingpin of the Hollywood variety. Rather, he’s a handsome nerd, a former physics student, living in a sub-let San Francisco room for $1,200 a month, for whom, according to an old college buddy, ‘bathing is optional’.56
‘He’s a hippie. That’s the best way I can describe him,’ said his friend Jaspreet Sidhu. ‘Ross was the guy who had stinky feet, that wore shorts – a shirt if you were lucky. He’s one of the kindest and most good-natured people I know. He loves animals. He loves nature. Good people make bad choices.’57
One of the first things you notice about Ulbricht online is his admiration for the economist Ludwig Von Mises and the Austrian School of economic theory – its free-market doctrines and its attitudes towards liberty.
On his YouTube channel, as well as links to bands he likes, there are links to Ron Paul speeches and videos from the Von Mises Institute.
In 2010 Ulbricht posted an essay on Facebook, Thoughts on Freedom. The final words read, ‘Let us…build a world where we, and the generations that follow us, will be freer than any that have come before!’58
On his LinkedIn profile he says, since completing his studies in 2010, he wants ‘to use economic theory as a means to abolish the use of coercion and agression amongst mankind…The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed…To that end I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.’59
His ‘simulation’ was, say the FBI, the black market website, the Silk Road.
Indeed, the first thing you read when you came to the Silk Road was the welcome from the Dread Pirate Roberts, in which he declared that economist Ludwig von Mises had provided ‘the philosophical underpinnings’ for the site. Roberts’ signature even included a link to the Von Mises Institute website.
The Dread Pirate Roberts, at one stage, even started up a book club, saying:
We will focus on agorism, counter-economics, anarcho-capitalism, Austrian economics, political philosophy, freedom issues and related topics. My hope is that through this, we will discover what we stand for and foster a culture of peace, prosperity, justice and freedom. There is so much double-speak and misinformation in the world today that we must take our education into our own hands, and defend our minds with reason and critical thinking. 60
The Dread Pirate Roberts and Ulbricht seem to have had rather a lot in common.
Having split up with his girlfriend in November 2011, Ulbricht moved to Australia to stay with his older sister for several months. If he was the Dread Pirate Roberts, he was running the site from there. His sister thought he was trading currencies for a living (and he may well have been to provide the hedging functionality of the site). Then he came to San Francisco.
He went on one date with a woman he met on OKCupid and passed out drunk at the end of it. He paid his rent in cash, told his flat mates he was Australian and that his name was Josh, and pretty much cut himself off from friends and family back home. But he seemed to like San Francisco. ‘Paradise is here or nowhere’ he posted on Facebook.
The internet is a dangerous place. Often you do not know who you are talking to, and you cannot vet them as you would if you were to see them in person. You can become victim to all sorts of persuasion, influence and doctrine that psychologists are only just starting to study, let alone understand. We are all vulnerable, but the young, impressionable and idealistic, cut off from their friends and family and detached from reality, are particularly so.
Now he was charged with drugs trafficking, money laundering and attempted murder.
A poster who went by the name of Altoid was the first person to mention the Silk Road on the internet. On January 27th 2011 he wrote on a magic mushroom forum – Shroomery.org:
I came across this website called Silk Road. It’s a Tor hidden service that claims to allow you to buy and sell anything online anonymously. I’m thinking of buying off it, but wanted to see if anyone here had heard of it and could recommend it.
I found it through silkroad420.wordpress.com, which, if you have a tor browser, directs you to the real site at LINK REMOVED
Let me know what you think… 61
Two days later, Altoid found a thread at BitcoinTalk, discussing the logistics of trading drugs using Bitcoin. The thread had been dead for over a month, but he revived it:
What an awesome thread! You guys have a ton of great ideas. Has anyone seen Silk Road yet? It’s kind of like an anonymous amazon.com. I don’t think they have heroin on there, but they are selling other stuff. They basically use bitcoin and tor to broker anonymous transactions. It’s at LINK REMOVED Those not familiar with Tor can go to silkroad420.wordpress.com for instructions on how to access the .onion site.
Let me know what you guys think
Altoid later deleted the post, but it had been quoted in the replies, which meant it would remain.
Altoid continued posting at BitcoinTalk for several months. He was trading bitcoins with mixed success – it appeared he had sold too soon on some occasions, but he also claimed to have made $200,000 on one trade.62 He also had issues getting money out of MtGox.
From June to October, he would go quiet. Then, on October 11th 2011, he would write a post that everyone would ignore, except one person – an FBI Special Agent named Christopher Tarbell. That post would be the beginning of the end for Ulbricht.
Hello, sorry if there is another thread for this kind of post, but I couldn’t find one. I’m looking for the best and brightest IT pro in the bitcoin community to be the lead developer in a venture backed bitcoin startup company. The ideal candidate would have at least several years of web application development experience, having built applications from the ground up. A solid understanding of oop and software architecture is a must. Experience in a start-up environment is a plus, or just being super hard working, self-motivated, and creative.
Compensation can be in the form of equity or a salary, or somewhere in-between.
If interested, please send your answers to the following questions to rossulbricht at Gmail dot com
1) What are your qualifications for this position?
2) What interests you about bitcoin?
From there, we can talk about things like compensation and references and I can answer your questions as well. Thanks in advance to any interested parties. If anyone knows another good place to recruit, I am all ears. 63
The same Altoid who had made the first mention of the Silk Road on the internet had left his name and email address – [email protected]. And the FBI would read it all.
He then left another clue.
In 2012, Ulbricht opened an account in his own name at a question-and-answer website for programmers called Stack Overflow. He posted 12 lines of computer code and asked for advice about a problem. He then changed his username to Frosty and the registered email address to [email protected]. But a revised version of that same code was used on the Silk Road website, along with encryption keys that end with ‘frosty@frosty’.
The FBI had their prime suspect. Now to snare him.
How a nerd was tricked into becoming a murderer
An FBI agent, posing as a drug dealer, emailed the Dread Pirate Roberts directly, seeking help finding a buyer for a kilogram of cocaine. Roberts is said to have found a
buyer – one of his employees, Curtis Clark Green. Green sent $27,000 of bitcoins and arranged shipment, amazingly, to his home.
When the coke showed up, so did the FBI and Green was arrested.
Roberts must have trusted the supposed drug dealer (the FBI agent) with whom he was communicating. It’s not yet clear how much he was goaded and how much he knew about Green’s arrest, but he wrote to the FBI agent, ‘I’d like him beat up, then forced to send the bitcoins he stole back’.64 The agent offered to do it.
The following day Roberts wrote, says the FBI, ‘now that he’s been arrested, I’m afraid he’ll give up info…Can you change the order to execute rather than torture?’ Roberts said he had ‘never killed a man or had one killed before, but it is the right move in this case’.65 An $80,000 fee for the hit was agreed.
$40,000 was sent from Technocash Limited in Australia (where Ulbricht was with his sister) to a bank account at Capital One in Washington. The Dread Pirate Roberts was emailed staged photographs of the killing. ‘A little disturbed, but I’m OK’, he wrote. ‘I’m new to this…I don’t think I’ve done the wrong thing’. Another $40,000 was deposited. And the grounds for the attempted murder charge were laid.
Then there would be another bizarre and rather frightening twist in the tale. Roberts soon requested a second killing.
A Silk Road user called FriendlyChemist made a blackmail threat. He demanded the Dread Pirate Roberts pay him $500,000 or he would release all sorts of personal data he hacked from the Silk Road’s online community.
Another Silk Road user, Redandwhite (an alias for Hell’s Angels), then emailed claiming that they were owed money by FriendlyChemist. Roberts, it is claimed by the FBI, invited Redandwhite to start dealing through the Silk Road, ‘If you don’t already sell here on Silk Road, I’d like you to consider becoming a vendor’.66
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