The Transformation II
The Story of the Silk Road, part two
The Transformation I
In the Paradise of Real Life
The Surfer Boy
The young man born and raised in Austin, as the second child of Lyn and Kirk Ulbricht, seemed destined for a fate different from that of the sinister Dread Pirate Roberts. The child, who looks so peaceful and like a balanced little Buddha to his mother, has a happy childhood in Austin's suburbia. The family isn't wealthy, but well enough off to settle down in Lakeway, where golf courses, wellness facilities behind trees and gardens, and all the pretty detached houses. Little Ross is enthusiastic about scouting and becomes an Eagle Scout. On vacation, they go to Costa Rica, where his parents own solar-powered vacation homes rented out to tourists, and his father teaches him how to surf the big waves. He wasn't interested in computers for a long time, immersing himself in comics, preferring to draw and romp around in nature. The usual high school jokes, girlfriends, and marijuana use followed in his teenage years. His peers regard the Rossman as an easy-going, universally popular hippie who is also highly intelligent. After high school, he studied physics at the University of Texas in Dallas, and after completing his bachelor's degree, he received a scholarship to Penn State University in Philadelphia. There, he was an assistant at the School of Materials Science and Engineering, where he worked on growing nanocrystals and wrote his master's thesis with his professor Darrell Schlom. During his studies, he encounters the libertarian worldview, which, perhaps his most reliable companion, will also outlast his psychological transformation into Dread Pirate Roberts. He reads Murray Rothbard’s libertarian manifesto, For a New Liberty: The Libertarian Manifesto, which, in the thinking of the Austrian school, identifies the state as the enemy of all freedom, and, as an enthusiastic supporter, he campaigns for Ron Paul in the 2008 election campaign.
It is difficult to say whether his love of freedom is reflected as a political or an existential attitude to life: in any case, this boundary dissolution moment goes hand in hand with an enthusiasm for Eastern philosophy and West African djembé drumming.
During one of the drumming sessions, he meets a young woman, an 18-year-old photographer, with whom he falls hopelessly in love. After completing his master's thesis in 2009, he returned to Austin with his girlfriend. But it's a stormy relationship - a constant up and down. Not only does his private life begin to flounder, but his professional orientation also becomes increasingly unclear. As his experiences with nanotechnology haven't convinced him to pursue a career in science, he now feels called to entrepreneurship. Admittedly, his first steps weren't crowned with success. He first tries his hand as a day trader, then at a video game startup. Finally, his neighbor, who has launched a second-hand book trade, asks him if he wants to get involved. The company's business model is simple: it aims to tackle people's need to declutter their libraries by collecting used books in the neighborhood and selling them on Amazon. To be able to sell a good story, Good Wagon Books is given a social touch: 10% of the proceeds are to be donated to charitable causes.
Over time, 50,000 books accumulate in a garage, carefully stowed away on shelves they built. He writes in his diary about his local bookshop: »Donny and I had worked on it the last quarter of 2009 and were trying to ramp up by hiring people to go door-to-door. It was a real struggle and by the end of our trial partnership, it was clear that we hadn’t grown the business to the point that it made sense for me to stay on.« The moment that seals the venture's end is almost symbolic: the bookshelves collapse because of two missing screws – and in a domino effect, one shelf after the other falls to the floor. The days and months of sorting are destroyed in one fell swoop. »There I was, with nothing. My investment company came to nothing, my game company came to nothing, Good Wagon came to nothing, and then this.« To keep from falling off the cliff, he worked as an editor for a scientific journal while pondering where his entrepreneurial path would lead him.
At some point, during the low end of his entrepreneurial activities, Ulbricht must have come up with the idea of an anonymized store system based on the Bitcoin currency: ›The was to create a website where people could buy all sorts of things without leaving traces leading back to them.‹ Although this project was in keeping with his libertarian worldview, his knowledge as a programmer was extremely limited. He didn't know how to run his server or integrate the Bitcoin library. Perhaps this naivety, combined with a mixture of ambition and wounded pride, led him to stumble into this venture, an undertaking already megalomaniacal in its approach. In any event, it was clear he was entering a game of unknowns as the mere fact that the Tor browser's logic and the Bitcoin library, its essential components, brought together the cryptographic knowledge of an entire generation would have struck fear into the heart of a professional programmer. But Ulbricht approached the task with astonishing fearlessness. Maybe this was also because the business ideas themselves were in the air. The Bitcoin network was launched on January 3, 2009, and a year later, its associated Bitcoin Talk forum was established. Very soon, all kinds of business ideas began germinating in readers' minds, and a heated yet highly theoretical discussion broke out about whether the currency could be used to sell drugs.1 Insofar Ulbricht was merely the first to take up this cause, fed by the philosophy of his libertarian role models – and in such a believable, convincing way that he succeeded in doing what a purely profit-oriented criminal energy would never have succeeded in doing: namely winning the trust of many, many people.
Unsure whether he'd even be able to get this unheard-of project off the ground, he made all the mistakes that later would prove to be his undoing. His main problem wasn’t even technical; it was psychological: the inability to think of entirely separate parallel existences. One of his other problems was his friend Richard Bates’ conscience, whom he’d become close to since his return to Austin – not least because Bates, as a professional programmer, could help the self-taught Ulbricht. Unsurprisingly, Ulbricht begins bombarding his friend with every conceivable programming question. While Bates initially helps him, Ulbricht's questions tend to go in a direction that seems suspicious to Bates, a meticulously precise programmer: it’s as if his friend was setting out to hack into other people's websites. For a while, Ulbricht refused to talk about his ultra-secret project. But at some point, BaronSyntax (Bates' pseudonym) gave Ross the choice of not talking about his ultra-secret project or telling him about its details. When Ulbricht finally shows him the Silk Road website, with the camel logo, photographs of the drugs, and a shopping basket, Bates is shocked – but also fascinated by its forbidden nature. So he helps Ulbricht when he calls in a panic shortly after the website’s launch: his server was down, but he didn't know why. As a reliable friend, Bates comes to the rescue – but declines Ulbricht's offer to become the site's administrator – and instead contented himself with observing the venture from afar.
The traces Ulbricht left behind on the Internet were much more sensitive than the collaboration of his friend, who carefully guarded his secret. For example, he used his real name in questions he posted on the StackOverflow programmers' forum about programming Tor and Bitcoin libraries, just as his rossulbricht@gmail.com address left nothing to be desired regarding clarity. And, while he soon changed it, he repeatedly made such serious blunders in the first few months. One of his diary entries revealed the problematic depth of his inability to split his existence.
»I then went out with Jessica. Our conversation was somewhat deep. I felt compelled to reveal myself to her. It was terrible. I told her I have secrets. (….) It felt wrong to lie completely so I tried to tell the truth without revealing the bad part, but now I am in a jam. Everyone knows too much. Dammit.«
Again and again, he left traces behind, making it easy for Gary Alford, the agent assigned to unmask the Silk Road’s founder two years later, to expose his camouflage. Alford's calculation was simple: even if the Silk Road was hidden in the depths of the web, there must have been clues from its early days pointing to this hidden address – and these clues must have found their way onto the public web. So Alford narrowed the period down to before Silk Road became popular – and, with a simple Google search, found a site dedicated to psychotropic mushrooms (called shroomery.org) where a user named altoid posted Silk Road's TOR address. The same user had also created a trail to Silk Road in the Bitcoin Talk forum. Then, a few months after the portal had been up and running, he advertised for a professional programmer under the heading ›IT pro needed for a venture-backed Bitcoin startup. Interested parties should contact the Gmail address rossulbricht@gmail.com.‹ In fact, Alford had only to put two and two together to ascribe a real name to the Dread Pirate Roberts – and the FBI agent wasn't the first to read the tracks. When Ulbricht, a good year after launching Silk Road, decided to change his Stackoverflow account from Ross Ulbricht to frosty by himself, a Twitter user with the hacker name th3j35t3r gave him the following advice: Dread Pirate Roberts. Stay Frosty. It's not as if Ross Ulbricht took this advice literally; even the SSH password used for accessing his server was identical to his persona on Stackoverflow: frosty.
Ulbricht had no idea what a tremendous success Silk Road would become when he set to work on launching his underground forum between 2010 and 2011. However, the site’s programming wasn't his only difficulty: unsure whether it'd even be possible to interest sellers in his website, he decided to grow a few psychotropic mushrooms himself in the small suburb of his hometown, where he'd moved after completing his Master's degree. That way, the site would have a seller when it launched. He actually managed to grow a few kilograms of his mushrooms while working on his programming, ending the bookshop project – and the strained relationship with his photographer girlfriend. In any case, he generated the venture capital his start-up needed this way. In his diary, he describes his company's launch as:
»Only a few days after launch, I got my first signups, and then my first message. I was so excited I didn't know what to do with myself. Little by little, people signed up, and vendors signed up, and then it happened. My first order. I'll never forget it. The next couple of months, I sold about 10 lbs of shrooms through my site. Some orders were as small as a gram, and others were in the qp range. Before long, I completely sold out. Looking back on it, I maybe should have raised my prices more and stretched it out, but at least now I was all digital, no physical risk anymore.«
His reference to the materiality dilemma was quite right – after all, the absolute risk was shipping the drugs. Although sellers had fun labeling their parcels with stamps of imaginary organizations like StudentsFromAbroad, there was always the danger that a shipment could be tracked down at least to the post office from which it’d been sent. Overall, this fear was exaggerated – because postal secrecy proved to be a reliable protection when the CIA placed a few test orders. Only one drug shipment out of 51 was caught by the customs authorities. The main risk Ulbricht had to deal with was the human factor. A few months after the platform was launched, his programmer friend Bates threw a celebration party on November 11, 2011. Drunk and in a fit of panic, Ulbricht confessed to his confidant that his lover Julia had also become a danger zone, because she'd confided his secret to a friend who had left the following, extremely threatening comment on his Facebook wall: ›I'm sure the authorities are very interested in your drug page.‹ He immediately deleted this entry and left the world of social networks altogether.
Silk Road is launched in mid-January 2011. A few days later, a WordPress page is created, followed by sporadic mentions on the aforementioned shroomery website, then on Bitcoin Talk. Slowly but surely, word of mouth began to spread. While Ulbricht was initially the only seller, other sellers soon signed up. In addition to the double protection promised by Tor and Bitcoin, the secret of the site's success is how Ulbricht sees himself as an honest broker doing everything he can to prevent fraud attempts between buyers and sellers. If you compare Silk Road with its offshoots like Sheep Market, Atlantis, and Agora that have since populated the deep web – all more or less designed to fleece their customers; this aspect is perhaps the most astonishing: Ulbricht succeeds in appearing as a center of trust. The transactions are processed with the help of a trustee account. If a buyer orders a specific quantity of drugs, he transfers the amount to a trustee account, which is frozen until receipt is confirmed. Then, the amount is automatically assigned to the seller after a specified time. This procedure, which gives buyers the relative security of not being ripped off, leads to a large influx of customers – justifying the ten percent commission Silk Road charges sellers.
While hard drugs, counterfeit papers, or cracked computer programs can be sold here, the logic differs only slightly from any other Webstore’s logic, which has become second nature to every Internet user. You have a shopping basket; the goods are advertised with photos and their corresponding descriptions; users can also leave testimonials about the seller and their product – and a star system gives buyers an indication of the seller's reputation in the community. A PM function even allows users to send each other private messages. The communication is so consistent and self-explanatory that the user numbers proliferate. Constructive tips are particularly beneficial in describing how sellers package their goods so they’re not conspicuous and can be sent effortlessly by post. Because Ulbricht initially does all the work himself, from support and transfers to plugging the ever-gaping holes in the code, he’s virtually drowning in work. In fact, Dread Pirate Roberts is the incarnation of Silk Road itself – and so it’s not hubris that leads him to claim in early 2012:
›I am Silk Road, the market, the person, the company, everything.‹
Although it's psychologically understandable to a certain extent to identify with the representative, it's also imaginary. After all, Silk Road is a machine needing to be operated – and with the Bitcoin and Tor architecture, it contains foreign bodies that Ross Ulbricht struggles to assimilate as new security loopholes are constantly appearing. »At some point, a hacker found some major flaws in my code. I sent it to him for review and he came back with basically ›this is amateur shit‹.« Very soon, Ulbricht is forced to realize a platform serving thousands and thousands of users is a social form that a single person can't maintain – neither in terms of expertise nor in the moderation efforts required to manage the community. Merchants who try to undermine the trust system must be admonished, and questionable products – such as weapons, child pornography, and the like – must be removed from the platform. When Gawker magazine published a report on Silk Road in June 2011 entitled The Underground Website Where You Can Buy Any Drug Imaginable, users registered in droves. Although the report raises critical questions about the anonymity of Bitcoins, it doesn't use terms such as black market e-commerce revolution; and when it says: »It's Amazon if Amazon sold mind-altering chemicals« – this is advertising Ulbricht couldn't have imagined better. With success, profits explode – and Ulbricht realizes he can’t cope with the work alone. Because his friend Richard Bates has turned down a job offer, he’s forced to rely on help from strangers. Since plugging security holes is a priority, Ulbricht, in the guise of the altoid persona, posts a request in the Bitcoin Talk forum – and is foolish enough to reveal his Gmail address.
Translation Martin Burckhardt and Hopkins Stanley
To be continued
On June 9, a user named Teppy opened a thread of this kind on the Bitcoin forum, which Ross Ulbricht, under the pseudonym altoid, would later join and link to his newly launched store.
