Silk Road forums
Discussion => Silk Road discussion => Topic started by: smokecrack on April 16, 2013, 04:42 pm
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http://www.forbes.com/sites/andygreenberg/2013/04/16/founder-of-drug-site-silk-road-says-bitcoin-booms-and-busts-wont-kill-his-black-market/
As the crypto-currency Bitcoin has skyrocketed in value over the last weeks and then fallen even faster, it’s produced plenty of excitement and heartache for investors. But at least one Bitcoin enthusiast has been nonplussed by Bitcoin’s volatility: the entrepreneur who goes by the name the Dread Pirate Roberts, founder of the black market site Silk Road, where users can use Bitcoins to buy practically any illegal drug imaginable.
In a rare (and brief) public statement sent to me, the Dread Pirate Roberts (DPR) said that despite Silk Road’s reliance on Bitcoin, commerce on the site hasn’t been seriously hurt by Bitcoin’s wild rise and fall. “Bitcoin’s foundation, its algorithms and network, don’t change with the exchange rate,” the pseudonymous site administrator writes. “It is just as important to the functioning of Silk Road at $1 as it is at $1,000. A rapidly changing price does have some effect, but it’s not as big as you might think.”
Silk Road’s customers, after all, aren’t generally interested in Bitcoin’s worth as an investment vehicle, so much as in how it makes it possible to privately buy heroin, cocaine, pills or marijuana. They use Bitcoin because it’s not issued or stored by banks and doesn’t require any online registrations, and thus offers a certain amount of anonymity. (While those privacy protections are far from perfect, they can be increased by using so-called “laundry” services that mix users’ Bitcoins together and reissue them random ones to make any individual coin harder to trace.)
Silk Road has built-in protections against Bitcoin’s spikes and crashes. Although purchases on Silk Road can only be made with Bitcoin, sellers on the site have the option to peg their prices to the dollar, automatically adjusting them based on Bitcoin’s current exchange rate as defined by the central Bitcoin exchange Mt. Gox. To insulate those sellers against Bitcoin fluctuations, the eBay-like drug site also offers a hedging service. Sales are held in escrow until buyers receive their orders via mail, and vendors are given the choice to turn on a setting that pegs the escrow’s value to the dollar, with Silk Road itself covering any losses or taking any gains from Bitcoin’s swings in value that occur while the drugs are in transit. So while Bitcoin’s crash last week from $237 to less than $100 means that the Dread Pirate Roberts was likely forced to pay out much of the extra gains Silk Road made from Bitcoin’s rise, most of his sellers were protected from those price changes and continued to trade their drugs for Bitcoins despite the currency’s plummeting value.
As a result, only about 1,000 sales listings out of more than 11,000 were taken off the site during the crash, according to DPR. “Those were from vendors who didn’t protect themselves,” he (or she) says. “The volatility only hurts vendors who don’t hedge their escrow balance.”
In fact, Bitcoin’s bubbles may be a bigger problem for Silk Road more than its busts. In the site’s forums, some users have noted that they’re reluctant to spend their Bitcoins when they’re appreciating so quickly. In some cases, even vendors can make also make more by simply holding onto the Bitcoins they earn, rather than trading them for dollars to buy more drugs to sell.
One Silk Road buyer and small-time drug dealer with the name Joey Terrifying writes that he used the site to buy a gram of Molly, a form of ecstasy, with the intention of quickly selling it to his own customers. By the time he’d sold it three weeks later, Bitcoin had risen in value so much that it dwarfed his profits from the drug sales. “I would have more money now if I had just done nothing at all,” Terrifying laments.
“Hoarding is the rational response to runaway deflation,” adds one user with the name Astor. “If I spend $100 on drugs now and the price of [Bitcoin] doubles in a week, then I’ve effectively spent $200 on those drugs by next week.”
But Silk Road has one sustaining advantage: Buyers of drugs, unlike other goods, may be more willing to pay for their pleasure even if it means missing a big investment opportunity. As Astor points out in his comments on the forums:
What keeps [Silk Road's] business afloat in this deflationary period is the large percentage of irrational actors in the drug community. I think they fall into two categories:
1. Ignorant/uninformed people. These are people who just want drugs and don’t follow bitcoin. They buy when they need coins and spend immediately.
2. Addicts. People who need their drugs and will pay for them, despite knowing that they could buy twice as much for the same money in a week.
Another user by the name of AllDayLong chimed in to agree with that theory, using his or her own drug consumption as exhibit A.
“Maybe for people capable of watching the prices pretty consistently that would work, but I can’t do that,” the Silk Road customer writes. “But, if I deposit my $100 and spend it on the drugs I want right away then I get my drugs and I am happy.”
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lol. nice one mate.
you should put that on your resume :)
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LOL, they quote me like I'm an economics expert, even though I was totally wrong about what would happen after the crash.
Then again, bitcoins are rallying...
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LOL, they quote me like I'm an economics expert, even though I was totally wrong about what would happen after the crash.
Then again, bitcoins are rallying...
you finally made it man youre famous!
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I just wanna be. I just wanna be Sucessful!
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That's funny I remember reading all those posts in that thread. Forbes is in the forums.
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Once you have over 1500 posts you can represent the Silk Road to the public. Pretty impressive.
Chaos
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Hello Forbes lol
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omigosh I remember being in that thread. Famous by association. Whats up? Awww yeah.
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Many journalists come on here.
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LOL, they quote me like I'm an economics expert, even though I was totally wrong about what would happen after the crash.
Then again, bitcoins are rallying...
karma for being quoted in Forbes! haha
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LOL, they quote me like I'm an economics expert, even though I was totally wrong about what would happen after the crash.
Then again, bitcoins are rallying...
we have a god damn celebrity amongst us!!! haha congratulations on the shoutout!
smokecrack- thanks for posting this, interesting, good read
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Umm...jealous!!!
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Brilliant!
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Lord. MiMM is the last person that should be featured in forbes for their product. :P Talk about some dumb luck for some free advertizing.
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Mimm is the featured vendor, I wonder if he is furious about this?
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lol. nice one mate.
you should put that on your resume :)
Hey, ya never know, right? ;)
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i dont think this publicity is good. might make more feds come here
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i dont think this publicity is good. might make more feds come here
People say this every time a story is posted, as if the feds don't know about us already.
A front page New York Times article, maybe. A Forbes online article, probably not.
Either way, it doesn't matter. Proper use of Tor and bitcoin makes us safe. Relying on the indifference of your adversary is bad security.
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Either way, it doesn't matter. Proper use of Tor and bitcoin makes us safe. Relying on the indifference of your adversary is bad security.
ASTOR 4 PREZ
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Astor has finally reached "internet famous" status. ;D
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Astor 2016
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That's pretty fantastic!
Since the feds do already know about us and it won't draw attention in that way, maybe it can help draw attention to bitcoin and SR from people that could be a benefit to the community(mature users who may finally accept the legitimacy of SR). I don't think a lot of immature 16(or 21) year olds read Forbes.
Side note: Glad to hear DPR and SR weren't killed in the crash. That's actually why I came here in the first place, I was worried. :)
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That's funny I remember reading all those posts in that thread. Forbes is in the forums.
Me too, I'm kinda creeped out though.
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That's funny I remember reading all those posts in that thread. Forbes is in the forums.
Me too, I'm kinda creeped out though.
That was my first thought, but shit that's awesome! This shit just totally made my day! Thanks Forbes.
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ticky tacky
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Awesome - you guys are famous!
Will you sign my bag of weed? PGP ofc ;D
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That's funny I remember reading all those posts in that thread. Forbes is in the forums.
Me too, I'm kinda creeped out though.
It's a reminder that anybody could be reading this forum, so be careful what you say.
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Lol at the journalists and forbes, come and read some shit and be jealous about us, they dont have eggs to buy some drugs here, rofl.
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Hey forbes journalists, I know you're reading this thread. Quoting me isn't free. Pay up if you want my inane ramblings.
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ive always wanted to be in forbes :(
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ive always wanted to be in forbes :(
And iv always wanted dat ass
Chaos
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Hey forbes journalists, I know you're reading this thread. Quoting me isn't free. Pay up if you want my inane ramblings.
SHIT! what do i owe you for this one?
:-* :-*
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man, i really wish I could tell ANYBODY that I was quoted in Forbes.
but this will have to remain a silent victory for me 8)
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man, i really wish I could tell ANYBODY that I was quoted in Forbes.
but this will have to remain a silent victory for me 8)
umm, you can tell everyone here :) LOUD as you want 8)
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That's funny I remember reading all those posts in that thread. Forbes is in the forums.
Me too, I'm kinda creeped out though.
It's a reminder that anybody could be reading this forum, so be careful what you say.
Words to remember, had to go back and delete a few, Thanks astor....
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man, i really wish I could tell ANYBODY that I was quoted in Forbes.
but this will have to remain a silent victory for me 8)
You bet your ass I'm telling em anyway! Just not in certain ways.
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man, i really wish I could tell ANYBODY that I was quoted in Forbes.
but this will have to remain a silent victory for me 8)
You bet your ass I'm telling em anyway! Just not in certain ways.
How do you do that? No one will believe you unless they see it.
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man, i really wish I could tell ANYBODY that I was quoted in Forbes.
but this will have to remain a silent victory for me 8)
You bet your ass I'm telling em anyway! Just not in certain ways.
How do you do that? No one will believe you unless they see it.
Uh. Well. Hm. I'm pretty certain they believe me. Else I wouldn't be telling them shit like that. I only told people I'm close to, though admittedly no did not show the article.