Meet The Dread Pirate Roberts, The Man Behind Booming Black Market Drug Website Silk Road - Forbes

An entrepreneur as professionally careful as the Dread Pirate Roberts doesn’t trust instant messaging services. Forget phones or Skype. At one point during our eight-month preinterview courtship, I offer to meet him at an undisclosed location outside the United States. “Meeting in person is out of the question,” he says. “I don’t meet in person even with my closest advisors.” When I ask for his name and nationality, he’s so spooked that he refuses to answer any other questions and we lose contact for a month.

All my communications with Roberts are routed exclusively through the messaging system and forums of the website he owns and manages, the Silk Road. Accessing the site requires running the anonymity software Tor, which encrypts Web traffic and triple-bounces it among thousands of computers around the world. Like a long, blindfolded ride in the back of some guerrilla leader’s van, Tor is designed to prevent me–and anyone else–from tracking the location of Silk Road’s servers or the Dread Pirate Roberts himself. “The highest levels of government are hunting me,” says Roberts. “I can’t take any chances.”

If Roberts is paranoid, it’s because very powerful people really are out to get him. In the last two and a half years Silk Road has grown into the Web’s busiest bazaar for heroin, methamphetamines, crack, cocaine, LSD, ecstasy and enough strains of marijuana to put an Amsterdam coffee shop to shame. The Drug Enforcement Agency won’t comment on whether it’s investigating Silk Road but wrote in a statement that it’s aware of the site and is “very proactive in keeping abreast” of the digital underground’s “ever-evolving technological advancements.” Senator Chuck Schumer has demanded Silk Road be shut down and called it “the most brazen attempt to peddle drugs online that we have ever seen … by light-years.”

Anyone can download and run Tor, exchange some dollars or euros for the digital currency Bitcoin and go shopping on Silk Road for drugs that are vacuum-sealed and discreetly mailed via the U.S. Postal Service, right under the federal government’s nose. By the measure of Carnegie Mellon researcher Nicolas Christin, Roberts’ eBay-like service was grossing $1.2 million a month in the first half of 2012. Since then the site has doubled its product listings, and revenue now hits an annual run-rate of $30 million to $45 million by FORBES’ estimate. One analysis of the Tor network performed by a student at Dublin’s Trinity College found that Silk Road received around 60,000 visits a day, mostly users seeking to buy or sell drugs, along with other illicit items including unregulated cigarettes and forged documents. Silk Road takes a commission on all of its sales, starting at 10% and scaling down for larger transactions. Given that those commissions are collected in Bitcoins, which have appreciated close to 200-fold against the dollar since Silk Road launched in 2011, the Dread Pirate Roberts and any other stakeholders in Silk Road have likely amassed millions in profits.

Despite the giant DEA crosshairs painted on his back and growing signs that the feds are probing the so-called “dark Web” that Silk Road and other black market sites inhabit, Roberts spoke with FORBES in his first-ever extended public interview for a reason: As with physical drug dealing, a turf war has emerged. Competitors, namely a newly launched site called Atlantis with a real marketing budget and a CEO with far less regard for his privacy, are stealing Roberts’ spotlight.

“Up until now I’ve done my best to keep Silk Road as low profile as possible … letting people discover [it] through word of mouth,” Roberts says. “At the same time, Silk Road has been around two and a half years. We’ve withstood a lot, and it’s not like our enemies are unaware any longer.”

Roberts also has a political agenda: He sees himself not just as an enabler of street-corner pushers but also as a radical libertarian revolutionary carving out an anarchic digital space beyond the reach of the taxation and regulatory powers of the state–Julian Assange with a hypodermic needle. “We can’t stay silent forever. We have an important message, and the time is ripe for the world to hear it,” says Roberts. “What we’re doing isn’t about scoring drugs or ‘sticking it to the man.’ It’s about standing up for our rights as human beings and refusing to submit when we’ve done no wrong.”

“Silk Road is a vehicle for that message,” he writes to me from somewhere in the Internet’s encrypted void. “All else is secondary.”

While Roberts waxes philosophical, his competitors are finding motivation enough in grabbing some of Silk Road’s lucrative drug trade. On June 26 a video ad for Atlantis appeared on YouTube telling the story of “Charlie,” a friendly-looking cartoon hipster. Charlie, according to text that popped up around the video’s frame as jingly music played, is a “stoner” who moves to a new city for work and can’t find any marijuana. That is, until he discovers Atlantis’ “virtual black market,” orders some pot and gets “high as a damn kite.”

YouTube removed the video within days for violating its terms of service but not before it had received close to 100,000 views and pulled the new Bitcoin-based black market into the public Internet’s awareness. Atlantis’ ad took a direct shot at Silk Road, calling itself “the world’s best anonymous online drug marketplace.”

The next day, an employee of Atlantis named “Heisenberg” held a group chat with reporters where he described the site as the “Facebook to [Silk Road's] Myspace.” In comments now deleted from an ask-me-anything session on the social news site Reddit, Atlantis’ chief executive, who goes by the name “Vladimir,” listed advantages over Silk Road like less downtime and smaller fees for sellers. “The road has more users,” he wrote, “but our site is better (to put it bluntly).”

The battle for the Web’s drug corner is on.

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THE DREAD PIRATE ROBERTS isn’t shy about naming Silk Road’s active ingredient: The cryptographic digital currency known as Bitcoin. “We’ve won the State’s War on Drugs because of Bitcoin,” he writes.

Bitcoin, which came into widespread use around the same time as Silk Road’s creation, isn’t exactly the financial-privacy panacea some believe it to be–its transactions can be traced using the same mechanisms that prevent fraud and counterfeiting within the Bitcoin economy. But unlike with dollars, euros or yen, the integrity of the nearly $1 billion worth of Bitcoins floating around the Internet is maintained by the distributed computing power of thousands of users who run the crypto-currency’s software, not by any bank or government. That means careful users never have to tie their accounts to their real-world identity. As a result Bitcoin-funded services deep within the dark Web, masked by anonymity tools like Tor, claim to offer everything from cyberattacks to weapons and explosives to stolen credit cards.

Mix up your coins in one of many available laundering services–Silk Road runs one automatically for all transactions on the site–and it becomes very difficult to follow the money. Even the FBI, according to one of the bureau’s leaked internal reports, worries that Bitcoin’s complexity and lack of a central authority “present distinct challenges” for tracking criminal funds. The result is a currency as convenient as PayPal and theoretically as anonymous as cash.

“We’re talking about the potential for a monumental shift in the power structure of the world,” Roberts writes. “The people now can control the flow and distribution of information and the flow of money. Sector by sector the State is being cut out of the equation and power is being returned to the individual.”

Of course, Roberts’ lofty words on individual liberties provide a convenient veneer to justify his profitable business selling illegal, dangerous and addictive substances. But Roberts argues that if his users want heroin and crack, they should have the freedom to buy it and deal with the consequences. Unlike other Bitcoin-based underground sites, Silk Road bans all but what Roberts defines as victimless contraband. He won’t permit the sale of child pornography, stolen goods or weapons, though the latter is a gray area. The site has experimented with selling guns and may yet reintroduce them, Roberts says.