On January 3, 2009, Satoshi Nakomoto officially created a new currency. He would call it bitcoin. No dead presidents, silver, or gold—just thirty-one thousand lines of code. In an online profile, he said he lived in Japan. His email address was from a free German service. Google searches for his name turned up no relevant information. Nakamoto was a cipher, intentionally remaining anonymous at the time of bitcoin’s creation–and still–at the writing of this post. So what of the hacker version of the Dos Equis Guy, “Most Interesting Man in the World 2.0?”
Motivated in part by frustration over the financial crisis, Nakamoto sought to create a currency impervious to monetary policy or the whims of bankers and politicians. Nakamoto is not the first to try his hand at digital money. Cypherpunks—the 1990s movement of libertarian cryptographers—dedicated themselves to this very effort unsuccessfully. Others like cryptographer David Chaum tried in the early 1990s, finding their Sisyphean efforts foundering because of their dependence on the existing infrastructures of government and credit card companies. Bit gold, RPOW, and b-money—all attempts at digital currency—all failed for this very reason.
Fortunately, bitcoin did away with the third party by publicly distributing the ledger, or what Nakamoto calls the “block chain.” Amidst concerns about the ability of governments and banks to manage the economy and money supply, bitcoin had found a way to both preserve the anonymity of bitcoin buyers and sellers, but also to prevent fraud. The bitcoin software encrypts each transaction—the sender and receiver are identified only by a string of numbers—but a public record of every coin’s movement is published across the entire network. It should come as no surprise to readers that the code for bitcoin was built with the same peer-to-peer technology that facilitates the exchange of pirated movies and music. In each case, users connect with each other rather than with a central server. As such, decentralized models continue to offer avenues for those looking to circumvent traditional power brokers such as banks, corporations, and the nation-state.
At this point, you’ve probably asked yourself more than once: What does any of this have to do with drugs? Fair question. Quietly, in February of 2011 a website was launched called Silk Road on the so-called secret Internet. In short, the site allows users to buy and sell heroin, LSD, marijuana, and even Fentanyl lollipops using bitcoin only. Here’s how it works: