The millions of users who rushed toward Silk Road 2.0, the re-creation of the Silk Road drug marketplace, are now finding out that a group of users have run off with millions in bitcoin. A moderator on the marketplace, who goes by the name Defcon, announced that hackers discovered a vulnerability in the site’s transaction system that allowed them to steal about 4,440 bitcoins.
At the time of the attack, a full bitcoin was valued at a little more than $600 -- it now stands at $674 -- so the digital currency that was stolen from the marketplace has a real-world value of about $2.7 million. Defcon is now taking some of the blame for the theft stating that he had known about the possible vulnerability for a while but had been skeptical about its potential harm.
What Is Bitcoin?
Silk Road 2.0, and the other online drug marketplaces like it, operate using a relatively new digital currency called bitcoin. For the first time in the history of the Internet, an online currency has made its way into physical stores and has also attained a remarkably high valuation.
The peer-to-peer currency was put online in 2009 as open-source software by a still unnamed individual who called himself Satoshi Nakamoto. Given its mysterious origins, bitcoin enthusiasts and cryptocurrency experts have continued to update certain aspects of the currency, while also ensuring that it is a safe way for businesses and people to transfer money.
Compared to traditional payment methods like credit cards, bitcoin has very low fees and is not controlled by a central organization that can influence how people use the currency. This has made bitcoin very attractive to legitimate businesses as well as Web sites like Silk Road 2.0, which use bitcoin to evade law enforcement.
An Old Story
The problems that the revived Silk Road has now run into are nothing new. Stolen bitcoins and Web site take-downs have become common in the realm of illegal online marketplaces. At the same time, ;aw enforcement agencies have had a hard time shutting down black markets that use bitcoin due to the difficulty tracing buyers and sellers. Since the shutdown of the original Silk Road marketplace, officials have yet to find a way to eliminate other markets. However, the Web sites end up shuttering their doors as a result of theft and instability.
Even though the marketplaces originated as sites where people could buy and sell illegal substances, they have since grown into places for criminals to purchase guns, hacking software, and fake IDs. Since the original Silk Road became an immensely popular service, many people have asserted that the value of bitcoin hinges on illegal businesses. While that does seem to be changing, illegal purchases continue to account for a large portion of bitcoin transactions.
Many other Web sites, like Sheep Marketplace and TORMarket have also vanished with owners or others stealing thousands of bitcoins. The only real difference between those scams and the newfound issue with the new Silk Road is that the creators of Silk Road apparently did not intend to scam their users.