1 00:00:05,100 --> 00:00:08,200 Welcome back everyone. I am Caspian Sea. 2 00:00:08,200 --> 00:00:11,400 I am here as usual with my partner in crime Bennett Tomlin. 3 00:00:11,400 --> 00:00:13,100 How are you today doing well? Cass. 4 00:00:13,100 --> 00:00:14,600 How are you? I'm doing good. 5 00:00:14,700 --> 00:00:19,300 We are joined by Nick Weaver a lecturer at UC Berkeley and a 6 00:00:19,300 --> 00:00:22,000 researcher at the icsi. Yep. 7 00:00:22,100 --> 00:00:23,700 It's a pleasure to have you on today, Nick. 8 00:00:23,700 --> 00:00:25,200 How are you? Excellent. 9 00:00:25,200 --> 00:00:27,300 Longtime listener first-time caller. 10 00:00:28,200 --> 00:00:30,700 Well, it's a pleasure to have you on and I look forward. 11 00:00:30,900 --> 00:00:35,500 To today's topic, we're going to be talking about how Bitcoin and 12 00:00:35,500 --> 00:00:39,200 cryptocurrencies at least in their first iteration I guess 13 00:00:39,200 --> 00:00:43,500 we're mainly used as a payments Network for the dark web for 14 00:00:43,500 --> 00:00:49,300 Silk Road for stuff like that kind of how that has stopped and 15 00:00:49,300 --> 00:00:53,500 how it really doesn't seem like there's much of a like it's more 16 00:00:53,500 --> 00:00:56,100 of a speculative Market more than anything else now a 17 00:00:56,100 --> 00:00:58,000 gambling Market. Yes. 18 00:00:58,500 --> 00:01:00,700 So let's first talk about my background. 19 00:01:00,800 --> 00:01:04,800 Though, I started looking at the cryptocurrency space back in 20 00:01:04,800 --> 00:01:09,400 2012 because the research group I'm involved with focuses a lot 21 00:01:09,400 --> 00:01:12,800 on online criminality. And so like, one of the things 22 00:01:12,800 --> 00:01:15,600 we're looking at, is back in the day, you could break into 23 00:01:15,600 --> 00:01:18,900 computers and make money by the mining Bitcoin before the 24 00:01:18,900 --> 00:01:22,600 graphics cards and then the Asics ruined that for the bad 25 00:01:22,600 --> 00:01:26,900 guys and like, had colleagues Sarah Michael, John in 26 00:01:26,900 --> 00:01:30,700 particular, she was the one who first came up. 27 00:01:30,900 --> 00:01:33,100 The Bitcoin tracing infrastructure and the 28 00:01:33,100 --> 00:01:36,700 heuristics to do that. The thing is most people who 29 00:01:36,700 --> 00:01:40,000 looked at the space, in 2012, 2013. 30 00:01:40,000 --> 00:01:43,000 They looked at it go. This is bogus and ignore it or 31 00:01:43,000 --> 00:01:47,000 they become True Believers. But I had a business model, that 32 00:01:47,000 --> 00:01:50,700 allowed me to watch the space continuously that I can watch 33 00:01:50,700 --> 00:01:54,800 the space extract, the comedy gold, which is amusing for me 34 00:01:54,900 --> 00:01:59,100 and turn it into both academic papers and non academic writing. 35 00:01:59,100 --> 00:02:03,500 And so, I've been able to Watch the space as a professional 36 00:02:03,500 --> 00:02:06,300 critic, since basically, the very beginning. 37 00:02:06,300 --> 00:02:11,500 I remember when pirate at 41st exist it came on the scene and 38 00:02:11,900 --> 00:02:16,300 frankly calling your pyramid scheme Celsius network is just 39 00:02:16,300 --> 00:02:19,400 nowhere near as classy as calling it pirate saving some 40 00:02:19,400 --> 00:02:23,800 trust they just don't make them like Trend and Shavers anymore. 41 00:02:23,800 --> 00:02:27,800 Do they know they don't make them like the pirate look. 42 00:02:27,800 --> 00:02:29,600 Do you want to give our listeners? 43 00:02:29,600 --> 00:02:30,700 Just a little bit of an introduction. 44 00:02:30,800 --> 00:02:34,100 Tune in to what Silk Road and some of the similar dark web 45 00:02:34,100 --> 00:02:38,400 marketplaces. Where like in 2012 there was 46 00:02:38,400 --> 00:02:42,600 this guy Ross ulbricht to suffered from what it's best 47 00:02:42,600 --> 00:02:47,100 described as libertarian. Brain worms and Ross, ulbricht 48 00:02:47,100 --> 00:02:52,200 observed, a few things, the first was there were a new 49 00:02:52,200 --> 00:02:56,100 payment infrastructure on the field and that was Bitcoin and 50 00:02:56,100 --> 00:02:58,800 Bitcoin promised. No intermediaries. 51 00:02:58,800 --> 00:03:03,000 And at the time people He thought that it was Anonymous 52 00:03:03,100 --> 00:03:06,100 during this time, there was a criminal alternative out there, 53 00:03:06,100 --> 00:03:09,400 Liberty reserve. But this was a central service. 54 00:03:09,500 --> 00:03:12,900 You'd turn your dollars into Liberty reserve dollars and you 55 00:03:12,900 --> 00:03:17,300 could pass them around and turn them back and this was actually 56 00:03:17,300 --> 00:03:23,100 really useful for the criminals but it didn't in trance obrecht 57 00:03:23,100 --> 00:03:27,300 because it was a central service and also theoretically not 58 00:03:27,300 --> 00:03:30,000 necessarily Anonymous. If the feds ever took over 59 00:03:30,000 --> 00:03:35,000 Liberty reserve, If which they did but if you just put up a web 60 00:03:35,000 --> 00:03:43,700 page to sell drugs you would get got but tore the anonymity 61 00:03:43,700 --> 00:03:46,600 network has this feature that allows you to do, what are known 62 00:03:46,600 --> 00:03:50,000 as hidden Services. They've rebranded them as onion 63 00:03:50,000 --> 00:03:52,300 services but it's the same thing. 64 00:03:52,300 --> 00:03:59,000 You get a real long random name. It was at the time about 20 65 00:03:59,000 --> 00:04:01,700 characters of random garbage. Edge these days. 66 00:04:01,700 --> 00:04:04,100 It's 50 characters of random garbage. 67 00:04:04,100 --> 00:04:10,100 And with the Tor Browser, you could connect to those sites and 68 00:04:10,100 --> 00:04:13,500 your communication bounces around through six computer 69 00:04:13,500 --> 00:04:16,800 scattered all over the world. So the FBI can't discover where 70 00:04:16,800 --> 00:04:20,000 the server is. So Innovation number one, use 71 00:04:20,000 --> 00:04:24,600 Bitcoin Innovation number to do it as a Tor hidden service so 72 00:04:24,600 --> 00:04:28,400 that the FBI can't find where the server is but there was 73 00:04:28,400 --> 00:04:32,800 another innovation in Silk Road. The problem with being a good 74 00:04:32,800 --> 00:04:35,200 criminal is, you need a reputation for being 75 00:04:35,200 --> 00:04:39,100 trustworthy. Now, this is a real problem when 76 00:04:39,100 --> 00:04:43,600 dealing with non face-to-face transactions, how do I know 77 00:04:43,600 --> 00:04:45,700 Bennett that you're a trustworthy person? 78 00:04:45,900 --> 00:04:53,100 I don't, but you don't have to trust your drug dealer in silk 79 00:04:53,100 --> 00:04:55,900 wrote, you only have to trust Silk Road itself. 80 00:04:56,300 --> 00:05:00,500 So the idea with silk road is there were two other additions. 81 00:05:01,000 --> 00:05:06,900 Mandatory feedback ich lassic, 12 5 star rating and the market 82 00:05:06,900 --> 00:05:11,300 acted as escrow. So you trusted the market not 83 00:05:11,300 --> 00:05:15,300 the dealers. So if you wanted to buy drugs on 84 00:05:15,300 --> 00:05:19,500 Silk Road, you log into Mount cocks by some Bitcoin on Mount 85 00:05:19,500 --> 00:05:23,700 Cox transfer to Silk Road. Once you're at Silk Road, you 86 00:05:23,700 --> 00:05:27,300 log in through the Tor Browser and you browse through all the 87 00:05:27,300 --> 00:05:30,600 drugs, really the market, cling to be a libertarian. 88 00:05:30,800 --> 00:05:33,600 In market for everything but it was drugs, drugs, drugs, drugs, 89 00:05:33,600 --> 00:05:37,900 drugs, drugs drugs, drugs books, about drugs, drugs, drugs drugs 90 00:05:37,900 --> 00:05:41,800 and so on. And so you arranged to buy your 91 00:05:41,800 --> 00:05:47,700 pot, you transfer the Bitcoin to the seller except you don't you 92 00:05:47,700 --> 00:05:52,600 transfer it in your account to the seller's account on Silk 93 00:05:52,600 --> 00:05:55,600 Road. But Silk Road is an escrow 94 00:05:55,600 --> 00:05:58,300 service. So your money is held by Silk 95 00:05:58,300 --> 00:06:03,100 Road until you get the Drugs, click on the review button 96 00:06:03,100 --> 00:06:10,800 saying, oh this is some good Prime 0 grade-a because let's 97 00:06:10,800 --> 00:06:14,400 face it was actually mostly pot. That was being sold and Silk 98 00:06:14,400 --> 00:06:17,000 Road, then transfers the money to the seller. 99 00:06:17,200 --> 00:06:21,500 And so Silk Road was the intermediary on every drug deal 100 00:06:21,800 --> 00:06:26,000 because they were active participant, but this meant that 101 00:06:26,000 --> 00:06:28,200 they mediated out, the trust issues. 102 00:06:28,500 --> 00:06:33,600 The problem is, is you We need to trust somebody but with the 103 00:06:33,600 --> 00:06:38,500 dark Market concept, you don't trust the Dealer's, you just 104 00:06:38,500 --> 00:06:41,900 trust the marketplace because if the dealer rips you off, you 105 00:06:41,900 --> 00:06:45,400 just tell the marketplace the dealer ripped me off and you get 106 00:06:45,400 --> 00:06:47,400 your money back. That's really not. 107 00:06:47,500 --> 00:06:50,600 I mean, it's not a stupid idea. I know. 108 00:06:50,800 --> 00:06:52,200 Yeah. I mean I'm listening to you 109 00:06:52,200 --> 00:06:55,300 describe it and I'm like, seems pretty reasonable. 110 00:06:55,900 --> 00:06:58,000 Yes. Certainly interesting though in 111 00:06:58,000 --> 00:07:00,200 the context of Bitcoins history, right? 112 00:07:00,200 --> 00:07:03,300 And in the White paper where you have Satoshi talking about, 113 00:07:03,300 --> 00:07:07,000 trying to eliminate credit card, charge backs in the like. 114 00:07:07,000 --> 00:07:11,000 And so, instead of relying on censorship irreversible 115 00:07:11,000 --> 00:07:14,700 payments, you're holding me assets with this Escrow in order 116 00:07:14,700 --> 00:07:18,200 to do these kind of transactions that at first glance seem 117 00:07:18,800 --> 00:07:22,400 well-suited to Bitcoins censorship resistance, being 118 00:07:22,500 --> 00:07:25,400 purchasing, drugs and other illicit items. 119 00:07:25,900 --> 00:07:28,900 Yes. And it's quite obvious that once 120 00:07:28,900 --> 00:07:33,200 you start to look at real world, Times being able to articulate 121 00:07:33,200 --> 00:07:36,100 who you trust makes the systems work. 122 00:07:36,600 --> 00:07:39,900 So, since the time people have kept trying to build truly 123 00:07:39,900 --> 00:07:43,900 decentralized, dark markets, like open bizarre and stuff like 124 00:07:43,900 --> 00:07:47,400 that and those are just always fail because those you actually 125 00:07:47,400 --> 00:07:52,000 do have to trust the drug dealer, or trust a random escrow 126 00:07:52,000 --> 00:07:57,000 service that being gamed and being able to do centralized 127 00:07:57,000 --> 00:07:59,700 trust make system so much more cheaper and workable. 128 00:07:59,700 --> 00:08:03,000 And that was one of the The first lessons if silk road is, 129 00:08:03,400 --> 00:08:08,700 you need to trust somebody in the criminal and world and a 130 00:08:08,700 --> 00:08:12,300 central Marketplace is a much easier thing to trust. 131 00:08:12,700 --> 00:08:16,100 And the other thing is, is there's a lot of amusing stories 132 00:08:16,500 --> 00:08:19,700 from the time. One of the things that Silk Road 133 00:08:19,700 --> 00:08:22,900 did early on, is they wanted to be a Marketplace for everything. 134 00:08:23,200 --> 00:08:27,800 Now, everything has to include weapons, but there's this is 135 00:08:27,800 --> 00:08:32,400 where the marketplace end. Going up against libertarian 136 00:08:32,400 --> 00:08:37,299 ideals that your right to throw a punch stops at my nose. 137 00:08:37,600 --> 00:08:40,299 So what is the morality of selling weapons? 138 00:08:40,500 --> 00:08:43,100 You could either sell them, not sell them. 139 00:08:43,700 --> 00:08:45,500 But the problem is it's not selling them. 140 00:08:45,500 --> 00:08:49,500 You don't make the money because as the marketplace Silk Road got 141 00:08:49,500 --> 00:08:54,900 a 10% cut and yeah the guns are a small fraction of the business 142 00:08:54,900 --> 00:08:57,300 but you still don't want to leave money on the table. 143 00:08:57,700 --> 00:09:00,500 So what do you do if you're faced with this conundrum? 144 00:09:00,600 --> 00:09:05,100 Um, sell guns, don't sell guns. I presume they just decided to 145 00:09:05,100 --> 00:09:06,700 sell them. They did not on the table. 146 00:09:06,900 --> 00:09:10,100 They didn't they split the baby with the bathwater. 147 00:09:10,600 --> 00:09:15,500 So instead they created a spin-off site called The Armory 148 00:09:15,600 --> 00:09:18,800 moved, all the weapons sales on to the Armory. 149 00:09:19,300 --> 00:09:22,600 And so continued selling guns, just no longer under the Silk 150 00:09:22,600 --> 00:09:28,600 Road brand until the Armory collapsed because nobody wants 151 00:09:28,600 --> 00:09:30,400 to buy guns through a Tor hidden. 152 00:09:30,700 --> 00:09:34,100 Mrs. Because the markets were very u.s. 153 00:09:34,100 --> 00:09:38,500 Centric your person in the u.s. you want a gun. 154 00:09:39,200 --> 00:09:42,000 You're not a felon. You go in, you plunk down your 155 00:09:42,000 --> 00:09:44,500 money and you get a gun, you are a felon. 156 00:09:44,900 --> 00:09:48,300 You go to a state that doesn't have private party purchases, 157 00:09:48,300 --> 00:09:52,100 you buy one off of Craigslist, meet at the local Walmart, do 158 00:09:52,100 --> 00:09:56,200 the exchange in cash and then if your gun ever gets caught the 159 00:09:56,200 --> 00:10:00,400 seller, just goes how was I supposed to know, Jesse Pinkman. 160 00:10:00,600 --> 00:10:02,400 Was the meth king of Albuquerque. 161 00:10:02,600 --> 00:10:08,500 But if you want to really get in legal trouble by a gun and ship 162 00:10:08,500 --> 00:10:12,000 it through the mail because the Department of Alcohol, Tobacco 163 00:10:12,000 --> 00:10:14,700 Firearms explosives and no you're not allowed to have any 164 00:10:14,700 --> 00:10:19,800 fun things at all whatsoever. Takes a really, really, really 165 00:10:19,800 --> 00:10:24,100 dim view on shipping guns through the mail, not to a 166 00:10:24,108 --> 00:10:27,100 licensed dealer. And so this was turning a 167 00:10:27,100 --> 00:10:32,200 business that's criminal but low risk, it You insanely criminal 168 00:10:32,200 --> 00:10:35,600 and insanely high risk and Incredibly blinking on the radar 169 00:10:35,600 --> 00:10:38,600 of the feds. And so, the gun sales actually 170 00:10:38,600 --> 00:10:42,600 ended up going away because when you split them off into your own 171 00:10:42,600 --> 00:10:46,000 site, you quickly realize it doesn't actually work for bad, 172 00:10:46,000 --> 00:10:47,900 dudes. That was at you. 173 00:10:47,908 --> 00:10:50,200 One of the interesting things about the history of Silk Road 174 00:10:50,200 --> 00:10:54,300 to me is the things they forbade because at least on the surface. 175 00:10:54,300 --> 00:10:57,600 The Silk Road terms of service, forbade child pornography 176 00:10:57,600 --> 00:11:00,700 stolen, credit cards assassinations, which Is 177 00:11:00,700 --> 00:11:02,500 humorous. Considering some things Ross 178 00:11:02,500 --> 00:11:06,100 would later try and weapons of any type which then caused these 179 00:11:06,100 --> 00:11:10,500 other black markets to pop up to try to offer the services that 180 00:11:10,500 --> 00:11:13,400 Silk Road refused to. So it's just this interesting 181 00:11:13,400 --> 00:11:16,700 Dynamic during this period of silk road trying to create this 182 00:11:17,000 --> 00:11:20,500 more Limited Marketplace which just then created nearly 183 00:11:20,500 --> 00:11:23,100 identical Market places with less rules. 184 00:11:23,200 --> 00:11:26,400 My immediate question about this is, I know, obviously, we 185 00:11:26,400 --> 00:11:29,300 haven't gotten there yet, but obviously, I think anyone is 186 00:11:29,300 --> 00:11:31,500 pretty gonna go. And out pretty quickly that the 187 00:11:31,500 --> 00:11:38,000 Silk Road got shut down by the FBI and that it came to a 188 00:11:38,000 --> 00:11:40,500 screeching halt. I know that there were briefly 189 00:11:40,500 --> 00:11:44,500 afterwards, some attempts to do, like, a Silk Road 2.0, kind of 190 00:11:44,500 --> 00:11:46,600 kind of thing. And, but I do find it. 191 00:11:46,600 --> 00:11:49,300 Kind of interesting that it doesn't seem like any of them 192 00:11:49,300 --> 00:11:52,600 have ever reached that level of popularity since then, well, 193 00:11:52,600 --> 00:11:57,700 they have but they haven't gotten the public view because 194 00:11:58,000 --> 00:12:03,100 the problem is is it's just not A very good business, but it's 195 00:12:03,100 --> 00:12:05,900 high profile enough that the feds take it seriously. 196 00:12:06,000 --> 00:12:11,400 So the marketplaces keep coming and going, but the feds go after 197 00:12:11,400 --> 00:12:14,400 them because well, let's face it, it fun. 198 00:12:14,400 --> 00:12:19,300 If you're FBI agent dealing with say Prime on the dark web, you 199 00:12:19,300 --> 00:12:23,900 can go after child exploitation and the officers who do that are 200 00:12:23,900 --> 00:12:29,200 real heroes, but if you go after the drug dealers, it's a lot 201 00:12:29,200 --> 00:12:32,900 more fun. So, They've basically gone after 202 00:12:32,900 --> 00:12:37,700 the market operators ever since so like after Silk Road got 203 00:12:37,700 --> 00:12:41,600 busted Silk Road to spun up that was run by a guy called Blake 204 00:12:41,600 --> 00:12:44,700 been Thal. He was arrested within about 205 00:12:44,800 --> 00:12:49,000 nine months and he had enough sense to plead out and a rat on 206 00:12:49,000 --> 00:12:52,000 all his fellows. And as far as I know, I think he 207 00:12:52,000 --> 00:12:56,100 might even be out of jail soon. And so the markets are still 208 00:12:56,100 --> 00:12:58,800 around there. Just also a lot harder to find 209 00:12:58,800 --> 00:13:02,800 because what has happened is Is the gateways to the markets. 210 00:13:02,800 --> 00:13:07,000 Have been busted by the feds. So there was this site called 211 00:13:07,000 --> 00:13:13,000 Deep dot web, which acted as an index to the dark markets and 212 00:13:13,000 --> 00:13:17,400 reviews. And the problem is is deep. 213 00:13:17,500 --> 00:13:20,500 Deep. Webs monetization strategy was 214 00:13:20,500 --> 00:13:24,100 taking money in the form of Bitcoin from the darknet 215 00:13:24,100 --> 00:13:26,800 operators. In order to basically advertise 216 00:13:26,800 --> 00:13:32,200 said, dark drug dealers and they Shut down by the FED center. 217 00:13:32,200 --> 00:13:35,900 Now gasps of the federal government read it for a while, 218 00:13:36,200 --> 00:13:39,900 had our Dark, Net markets and you could log in and read all 219 00:13:39,900 --> 00:13:44,000 the fun drama. What after deep top web got shut 220 00:13:44,000 --> 00:13:46,800 down, read it goes. Yeah, this is a little too 221 00:13:46,800 --> 00:13:49,100 radioactive for us and band that group. 222 00:13:49,100 --> 00:13:54,100 And so now basically the only way to find the current state of 223 00:13:54,100 --> 00:13:57,500 the darknet markets is, there's a Tor hidden service called 224 00:13:57,500 --> 00:14:00,300 dread, which is basically Redick. 225 00:14:00,600 --> 00:14:05,000 As a Tor hidden service, but that's really a pretty annoying 226 00:14:05,000 --> 00:14:08,900 barrier to entry. But also the thing is, is part 227 00:14:08,900 --> 00:14:13,000 of the reason why the darknet markets, never got that big is 228 00:14:13,300 --> 00:14:19,100 Bitcoin sucks for payments. We actually saw that right? 229 00:14:19,100 --> 00:14:22,700 From the start at cell crept. The problem is, is Bitcoins 230 00:14:22,700 --> 00:14:26,500 price bounces up and down and even if it bounced up and down, 231 00:14:26,500 --> 00:14:30,300 randomly 12 percent a day, this would be really annoying. 232 00:14:30,300 --> 00:14:34,200 But Frances, 110 percent a day on a bad day. 233 00:14:34,400 --> 00:14:37,500 And so the marketplace had to do escrow. 234 00:14:37,600 --> 00:14:43,000 So I buy 50 bucks worth of drugs on the dark Market. 235 00:14:43,000 --> 00:14:47,900 You receive the $50 it gets, put in escrow, and by the time 236 00:14:47,900 --> 00:14:50,200 escrow gets released, its now, $40. 237 00:14:50,400 --> 00:14:54,700 What's your reaction going to be alternative? 238 00:14:55,000 --> 00:14:59,400 It goes up. Oh, crap, I spent $60 for this. 239 00:14:59,400 --> 00:15:04,000 We did not fit. 50, so, volatility really hurts for 240 00:15:04,000 --> 00:15:06,900 payments and it is specially Hertz for payments. 241 00:15:06,900 --> 00:15:10,600 When there's an escrow process involved Silk Road was the only 242 00:15:10,600 --> 00:15:13,400 Dark Net Market that I know of, that was able to solve the 243 00:15:13,400 --> 00:15:16,800 problem. And that's because what they did 244 00:15:16,800 --> 00:15:24,800 is they had a optional Arbitrage service where if you as a seller 245 00:15:24,800 --> 00:15:30,400 wanted protection against volatility, the Silk Road bought 246 00:15:30,600 --> 00:15:34,800 Would sell the Bitcoin on Mount Goths and then buy it back to 247 00:15:34,800 --> 00:15:38,100 transfer it to you when you actually cleared escrow. 248 00:15:38,200 --> 00:15:41,600 And so it turns out, one of the biggest craters on Mount gawks. 249 00:15:41,900 --> 00:15:45,900 That wasn't a bot run by karpeles. 250 00:15:46,200 --> 00:15:50,400 Was a bot run by Ross ulbricht to protect his customers from 251 00:15:50,400 --> 00:15:54,900 the variations on bitcoin price. I didn't know about Silk Roads 252 00:15:54,900 --> 00:15:59,700 Arbitrage, but that's funny, that's actually kind of how the 253 00:15:59,700 --> 00:16:02,300 light strikes. Like lightning networks 254 00:16:02,300 --> 00:16:06,500 implementation for remittances work, is its selling and buying 255 00:16:06,500 --> 00:16:11,000 Bitcoin at both ends to deal with the volatility to because 256 00:16:11,000 --> 00:16:14,100 you're trying to transfer a certain amount in dollars of 257 00:16:15,200 --> 00:16:19,300 another, classic example of how Bitcoin is a pain. 258 00:16:19,500 --> 00:16:23,400 That's just kind of like, and of course, knocks proved to be not 259 00:16:23,400 --> 00:16:27,500 the most reliable counterparty either, but so silk robe did a 260 00:16:27,500 --> 00:16:31,600 wonderful Bitcoin, though. Because Silk Road, Is what got 261 00:16:31,600 --> 00:16:35,300 Bitcoin on the map because before that time you ask 262 00:16:35,300 --> 00:16:37,200 anybody, what Bitcoin is that Go. 263 00:16:37,200 --> 00:16:41,700 Whoo, but the big expose on the Silk Road, got a lot of 264 00:16:41,700 --> 00:16:45,200 attention going it. But even at the time, as I said, 265 00:16:45,200 --> 00:16:50,200 you never saw a huge amount of transactions because it turns 266 00:16:50,200 --> 00:16:53,800 out it's not the most reliable way to buy drugs. 267 00:16:54,200 --> 00:16:57,600 And you're, depending on the mail which means you often have 268 00:16:57,600 --> 00:17:03,300 records of who goes to wear, And also, well, the marketplace has 269 00:17:03,300 --> 00:17:07,000 got taken down. Let's jump forward about a year 270 00:17:07,000 --> 00:17:12,800 to the fall of Ross, ulbricht. The FBI had a miracle low down 271 00:17:12,800 --> 00:17:15,300 from heaven. Comes the IP address of the 272 00:17:15,300 --> 00:17:17,700 server and Iceland. That was running Silk Road and 273 00:17:17,700 --> 00:17:21,400 low down from heaven. The FBI flies out to Silk Road 274 00:17:21,400 --> 00:17:25,400 copies. The server comes home and gets 275 00:17:25,400 --> 00:17:28,900 basically all the information they need to show that Ross 276 00:17:28,900 --> 00:17:31,100 ulbricht was the dread pirate. Roberts. 277 00:17:31,400 --> 00:17:36,300 So they then go into San Francisco and when Ross ulbricht 278 00:17:36,300 --> 00:17:40,200 is logged into the Silk Road Administration console on his 279 00:17:40,200 --> 00:17:43,900 computer in the public library, chatting with an undercover 280 00:17:43,900 --> 00:17:49,300 agent, who's playing a Silk Road admin on said, undercover 281 00:17:49,300 --> 00:17:51,700 Council. There was a fight in the 282 00:17:51,700 --> 00:17:55,600 library, just behind him, he turns around. 283 00:17:55,600 --> 00:17:59,800 And the FBI tackles in, with the forensics tool kit, there are 284 00:17:59,800 --> 00:18:04,400 literally screenshots where the FBI took cell phone, photos of 285 00:18:04,400 --> 00:18:08,500 that laptop open on the Silk Road admin, interface logged in 286 00:18:08,500 --> 00:18:12,700 as dread, pirate Roberts in the live chat, just to have that 287 00:18:12,700 --> 00:18:15,400 record and then they found out that Ross. 288 00:18:15,400 --> 00:18:19,900 Ulbricht made the Stringer Bell, mistake Stringer Bell's. 289 00:18:19,900 --> 00:18:25,300 Maximum, don't take notes on a criminal conspiracy. 290 00:18:25,500 --> 00:18:28,700 He took notes. Oh boy, did he take notes? 291 00:18:28,800 --> 00:18:31,200 It was literally, hey. Prosecutors. 292 00:18:31,200 --> 00:18:35,100 Here's how you prove who I am and so the evidence was just 293 00:18:35,100 --> 00:18:39,900 huge things, like there was a heat in Russell bricks trash 294 00:18:39,900 --> 00:18:43,800 discussing notes on how to improve the Silk Road rating 295 00:18:43,800 --> 00:18:47,300 system and the phone number of his most recent date. 296 00:18:47,300 --> 00:18:51,600 And so the feds called the date just to be able to authenticate 297 00:18:51,600 --> 00:18:54,500 the phone number. But here's a question. 298 00:18:54,500 --> 00:18:57,400 How did that Miracle occur? You can guess? 299 00:18:57,400 --> 00:19:01,100 Yes, remember the official story was that it was Was a Miss 300 00:19:01,100 --> 00:19:05,200 configuration that ended up leaking the IP address related 301 00:19:05,200 --> 00:19:08,400 to I want to say it was like the image server something. 302 00:19:08,900 --> 00:19:11,300 Yes. And guess what? 303 00:19:11,300 --> 00:19:14,500 That was a lie. It was the FBI. 304 00:19:14,700 --> 00:19:19,400 Got caught lying about how they discovered the surfer in the 305 00:19:19,400 --> 00:19:22,100 evidence is a nice set of server logs. 306 00:19:22,400 --> 00:19:26,600 That showed that that was not what they saw on the net. 307 00:19:26,600 --> 00:19:30,200 They did not see the cops on the net, the captured does not leak 308 00:19:30,200 --> 00:19:34,500 on That I confirmed with a colleague who is crawling Silk 309 00:19:34,500 --> 00:19:38,500 Road at the time that the captcha never left the net or 310 00:19:38,500 --> 00:19:42,200 never escaped onto the net. Because if it did he would have 311 00:19:42,200 --> 00:19:46,800 told the FBI because he's a good little researcher and there was 312 00:19:46,800 --> 00:19:50,800 a public-facing web service that was a admin console. 313 00:19:50,800 --> 00:19:55,400 That if you Google for there's 20,000 copies scattered over the 314 00:19:55,400 --> 00:19:58,200 internet. Now the thing is that the time 315 00:19:58,400 --> 00:20:01,700 there was no way to write a warrant not saying I want to 316 00:20:01,700 --> 00:20:04,700 hack a unknown service. That's located. 317 00:20:04,700 --> 00:20:07,200 Who knows? Where in the world to find its 318 00:20:07,200 --> 00:20:10,500 IP address and so they didn't get a warrant. 319 00:20:10,500 --> 00:20:14,300 They just went and hack the server and found its IP address 320 00:20:14,600 --> 00:20:18,400 and the defense caught them. So the defense in the court 321 00:20:18,400 --> 00:20:24,900 filings actually caught, the FBI agent, literally lying to the 322 00:20:24,900 --> 00:20:29,900 court in his testimony. In his written testimony that 323 00:20:29,900 --> 00:20:31,100 headache. Yeah, agent. 324 00:20:31,100 --> 00:20:35,800 Incidentally, never testified in the case because if he did, he 325 00:20:35,800 --> 00:20:39,600 would have gotten torn apart on the stand for previously, lying 326 00:20:39,600 --> 00:20:42,300 to the court. So why is Ross ulbricht in jail? 327 00:20:42,400 --> 00:20:46,500 It's just because of the selling drugs and stuff on and they got 328 00:20:46,500 --> 00:20:51,200 your note. It's because his attorney was a 329 00:20:51,200 --> 00:20:56,200 Flippin idiot. So you catch the FBI literally 330 00:20:56,200 --> 00:21:00,000 lying about how they found evidence like this, you get it 331 00:21:00,000 --> 00:21:02,400 to pray. Rest, if you get the surfer 332 00:21:02,400 --> 00:21:05,000 suppressed, you get everything suppressed. 333 00:21:05,500 --> 00:21:10,600 Because there's this notion in court that evidence that follows 334 00:21:10,600 --> 00:21:13,000 on from the suppressed, evidence gets suppressed. 335 00:21:13,000 --> 00:21:16,900 Unless the prosecutor can show, oh, we would have found it some 336 00:21:16,900 --> 00:21:19,600 other way. The problem is, is the 337 00:21:19,600 --> 00:21:23,500 prosecutor actually had the evidence showing that was not 338 00:21:23,500 --> 00:21:26,800 sufficient. So rasul bricks name actually 339 00:21:26,800 --> 00:21:31,600 popped up on the FBI's radar. For they found the server 340 00:21:32,200 --> 00:21:37,600 because of one or two wacky. Little post early on Advertising 341 00:21:37,600 --> 00:21:40,700 Silk Road. That was not sufficient to get a 342 00:21:40,708 --> 00:21:44,700 warrant for his Gmail account because if it was, they would 343 00:21:44,700 --> 00:21:47,000 have gotten them before. They got the server. 344 00:21:47,200 --> 00:21:52,000 Therefore there's actually evidence in court that the 345 00:21:52,000 --> 00:21:55,000 counterfactual of, if we didn't get the server we would have 346 00:21:55,000 --> 00:21:57,100 found Ross, ulbricht anyway showing. 347 00:21:58,100 --> 00:22:00,300 Yeah, you didn't have enough to get a warrant then. 348 00:22:00,400 --> 00:22:02,500 Then you wouldn't have ever been able to find him. 349 00:22:02,700 --> 00:22:04,900 Why don't they bring this to court now? 350 00:22:04,900 --> 00:22:07,100 Why don't they try to get this this done? 351 00:22:07,200 --> 00:22:11,200 Because it's too late on a peel, you can only bring up issues 352 00:22:11,200 --> 00:22:15,600 that you brought before. And so what happened in court is 353 00:22:15,600 --> 00:22:23,200 the defense goes, oh, I see this FB, I lied suppress the server 354 00:22:23,400 --> 00:22:24,900 and then it suppresses everything. 355 00:22:25,400 --> 00:22:29,700 And then the prosecution goes, oh wait a minute, you see under 356 00:22:29,700 --> 00:22:32,100 fourth Laughter suppressing stuff. 357 00:22:32,100 --> 00:22:36,000 You have to claim it as yours. You have to have some privacy 358 00:22:36,000 --> 00:22:38,700 interest. So what would have to happen is 359 00:22:38,700 --> 00:22:41,900 Ross, ulbricht would have to write a statement saying, yes, 360 00:22:41,900 --> 00:22:46,300 that is my server K. Thank you very much AKA admit, 361 00:22:46,300 --> 00:22:49,000 that he's the dread. Pirate Roberts, there's an 362 00:22:49,000 --> 00:22:53,200 asterisk on this admission if he did this, that admission only 363 00:22:53,200 --> 00:22:58,100 appears in court. If he ever testifies and he was 364 00:22:58,100 --> 00:23:01,800 never going to testify because he was Sitting on the dread. 365 00:23:01,800 --> 00:23:05,300 Pirate Roberts. Stash of Bitcoin on his laptop. 366 00:23:05,300 --> 00:23:08,700 So why didn't the defense claimed the server? 367 00:23:08,700 --> 00:23:11,600 As being over X, there's three possibilities. 368 00:23:11,600 --> 00:23:16,600 All brick was insisted on. I'm going to testify and the 369 00:23:16,600 --> 00:23:18,100 attorney wasn't able to convince them. 370 00:23:18,100 --> 00:23:22,800 Otherwise or what I think is most likely is that would be an 371 00:23:22,800 --> 00:23:24,700 admission in the court of public opinion. 372 00:23:24,900 --> 00:23:29,300 And the lawyer wanted to get paid because the lawyer although 373 00:23:29,300 --> 00:23:34,500 he was milking Being Ross, all Brookes mom for a huge amount. 374 00:23:34,600 --> 00:23:38,400 Another large amount was just donations, there was a lot of 375 00:23:38,400 --> 00:23:42,700 donations paying for the defense hey I donated my one Bitcoin 376 00:23:42,700 --> 00:23:45,400 after he was convicted just to pay off some debts. 377 00:23:45,800 --> 00:23:49,500 I don't think the lawyer wanted to affect the donation stream 378 00:23:49,700 --> 00:23:55,300 but in any case as soon as the judge basically who literally 379 00:23:55,300 --> 00:23:59,900 did a written order that was handwritten basically dude. 380 00:24:00,000 --> 00:24:03,800 You You sure about this, are you sure you want to throw with the 381 00:24:03,800 --> 00:24:08,500 case right now and the defense threw away the kiss and that 382 00:24:08,500 --> 00:24:14,800 made the prosecution very, very amusing fast forward to opening 383 00:24:14,800 --> 00:24:18,000 arguments opening arguments. Prosecution was. 384 00:24:18,000 --> 00:24:20,400 Oh this is Silk Road blah blah. Blah. 385 00:24:20,400 --> 00:24:22,600 Defense opening arguments were amusing. 386 00:24:22,800 --> 00:24:25,600 First was. Yeah he may have started Silk 387 00:24:25,600 --> 00:24:30,700 Road but he left and then he came back and that You know, 388 00:24:30,700 --> 00:24:34,000 good against all the conspiracy charges because if you leave a 389 00:24:34,008 --> 00:24:38,800 conspiracy and come back to the conspiracy, you're responsible 390 00:24:38,800 --> 00:24:42,000 for crimes committed by could the conspiracy in the meantime 391 00:24:42,200 --> 00:24:47,600 and also owe all that Bitcoin Ross, Albrecht had because he 392 00:24:47,600 --> 00:24:51,000 was sitting on a million multimillion-dollar Fortune back 393 00:24:51,000 --> 00:24:54,800 when Bitcoin, which worth bleep, all he was just a good Bitcoin 394 00:24:54,800 --> 00:25:00,100 Trader or minor something at the time the prosecution. 395 00:25:00,300 --> 00:25:02,900 Didn't realize just how stupid this was. 396 00:25:03,600 --> 00:25:09,500 I did, I spent half our coding up some code and showed that 20% 397 00:25:09,500 --> 00:25:13,300 of the Bitcoin went directly from the Silk Road wallet to 398 00:25:13,300 --> 00:25:15,600 Ross. All Brooks wallets because we 399 00:25:15,600 --> 00:25:18,400 knew them because they were seized by the FBI. 400 00:25:18,400 --> 00:25:25,800 Here's 70% or so that almost certainly from Silk Road to Ross 401 00:25:25,800 --> 00:25:27,800 ulbricht because it just goes through a couple little 402 00:25:27,800 --> 00:25:32,700 intermediate steps and cold. Male prosecutors oh you do 403 00:25:32,700 --> 00:25:36,700 realize, this is total bull, you have the private wallet files 404 00:25:37,000 --> 00:25:41,300 which means you have all the Bitcoin addresses ever used and 405 00:25:41,300 --> 00:25:46,200 can therefore traits all the old Bitcoin to at which point the 406 00:25:46,200 --> 00:25:49,100 prosecution quickly got their own expert. 407 00:25:49,100 --> 00:25:53,000 Who did the analysis with the private wallet files that 408 00:25:53,000 --> 00:25:55,600 showed. Hey, basically every Satoshi 409 00:25:55,600 --> 00:26:01,200 that Roswell brick had came from Silk Road and oh Oh, this lovely 410 00:26:01,200 --> 00:26:03,800 little payment to this dude called red and white. 411 00:26:04,200 --> 00:26:08,800 This came from Ross, all bricks personal stash because you see, 412 00:26:09,000 --> 00:26:12,100 Ross ulbricht was a Libertarian, and there's this great 413 00:26:12,100 --> 00:26:17,400 libertarian ideal of self-help. So what do you do? 414 00:26:17,700 --> 00:26:21,200 If somebody rips you off worse, what happens? 415 00:26:21,200 --> 00:26:23,600 If somebody rips off your customers. 416 00:26:23,900 --> 00:26:28,300 So one of the early scams on Silk Road was this guy called 417 00:26:28,300 --> 00:26:32,200 Tony, 76 did a bunch Desales got a good reputation. 418 00:26:32,300 --> 00:26:35,400 Oh, big 420 sale. Oh my competition is going to 419 00:26:35,400 --> 00:26:37,100 disrupt it. So you're going to have to click 420 00:26:37,100 --> 00:26:41,700 the finalize early and not put the money through escrow and of 421 00:26:41,700 --> 00:26:44,100 course, Tony 76 took the money and ran. 422 00:26:44,800 --> 00:26:47,200 So good. Libertarian ideals is you should 423 00:26:47,200 --> 00:26:49,900 hire a hit man to take out Tony 76. 424 00:26:50,600 --> 00:26:52,100 But then again, good libertarian. 425 00:26:52,100 --> 00:26:56,000 Ideals are if some idiot thinks you're a hit, man, you might as 426 00:26:56,000 --> 00:26:59,200 well lose them for every penny you get and not actually do the 427 00:26:59,200 --> 00:27:03,600 hit. So Ross ulbricht tried over the 428 00:27:03,600 --> 00:27:06,600 course of his career at Silk Road to have six. 429 00:27:06,600 --> 00:27:10,000 People murdered all of them catastrophically fail. 430 00:27:10,200 --> 00:27:14,800 There were five through red and white that were brought up in 431 00:27:14,800 --> 00:27:18,000 the Silk Road trial. So they had the chat logs 432 00:27:18,000 --> 00:27:21,400 between DPR and red and white. They had the Bitcoin being 433 00:27:21,400 --> 00:27:25,300 transferred to red and white. And they had a stipulation in 434 00:27:25,300 --> 00:27:27,900 the trial that he proved incompetent. 435 00:27:28,000 --> 00:27:30,100 There's no evidence he actually got anybody. 436 00:27:30,300 --> 00:27:33,200 Old. But he tried and that made him 437 00:27:33,200 --> 00:27:37,900 at difference for the drug. Kingpin charges that trying to 438 00:27:37,900 --> 00:27:41,500 protect your criminal Enterprise by having people assassinated 439 00:27:41,800 --> 00:27:45,100 does kind of lend Credence to you being a drug kingpin. 440 00:27:45,300 --> 00:27:48,000 And so that was actually brought up in the trial. 441 00:27:48,300 --> 00:27:53,100 It's just not charged as a separate element because, well, 442 00:27:53,400 --> 00:27:56,000 he didn't actually succeed in killing anybody. 443 00:27:56,100 --> 00:28:01,200 The defense though was just shambolic, they they They at the 444 00:28:01,200 --> 00:28:05,500 last minute, try to get two expert Witnesses, one of which 445 00:28:05,500 --> 00:28:09,100 is the one I'd hire in New York to turn into a prosecution 446 00:28:09,100 --> 00:28:11,800 witness for computer forensic stuff. 447 00:28:11,800 --> 00:28:16,000 And the other was the Bitcoin hammer and innopolis or 448 00:28:16,000 --> 00:28:19,100 whatever. What his name was one of the big 449 00:28:19,100 --> 00:28:25,500 Bitcoin guys in 2013 or so very famous for a photo of him, 450 00:28:25,500 --> 00:28:29,800 licking a mining Hammer that was his first hit on Google Images. 451 00:28:30,500 --> 00:28:34,600 At the time of the trial. And so basically what happened 452 00:28:34,600 --> 00:28:38,400 is is by that point, the defense was lost, he was guilty on all 453 00:28:38,400 --> 00:28:44,200 charges and basically sentence too much life in prison plus, 50 454 00:28:44,200 --> 00:28:48,100 sort of thing showing the travesty of the sentencing that 455 00:28:48,100 --> 00:28:50,900 we do. And I lay it at the fault of the 456 00:28:50,900 --> 00:28:54,700 attorney that what the attorney should have done is claimed the 457 00:28:54,700 --> 00:29:00,100 server when the motion to suppress fails because the FBI 458 00:29:00,200 --> 00:29:02,000 Guy tries some blah blah, blah of. 459 00:29:02,000 --> 00:29:03,700 We didn't know where the warrant was. 460 00:29:04,200 --> 00:29:10,000 You plead guilty contingent that you are allowed to appeal, the 461 00:29:10,000 --> 00:29:14,900 motion to suppress and you plead out to 30 years but that's not 462 00:29:14,900 --> 00:29:18,100 what happened. Yeah, I agree the end result of. 463 00:29:18,100 --> 00:29:24,000 That is a travesty to Justice and it's nice to hear you speak 464 00:29:24,000 --> 00:29:27,600 to that. But let's get back to the point 465 00:29:27,600 --> 00:29:32,300 of this being being that bit. Point now has failed as a 466 00:29:32,300 --> 00:29:35,200 payment mechanism, at least, and even back then, as you were 467 00:29:35,200 --> 00:29:39,000 saying, it's, it was volatile, but it sounds like the Silk 468 00:29:39,000 --> 00:29:42,100 Road. Arbitrage bot was able to fix 469 00:29:42,100 --> 00:29:44,900 that to some degree, right? Yeah. 470 00:29:44,900 --> 00:29:48,800 The Arbitrage fought could fix the volatility to some degree, 471 00:29:48,800 --> 00:29:52,200 but at a cost, this is now makes the market traceable. 472 00:29:52,300 --> 00:29:55,700 If you run a market, you're going to have to do either one 473 00:29:55,700 --> 00:29:59,500 of two things, either you're going to be eating the risk of 474 00:29:59,500 --> 00:30:02,400 Bitcoins. Price jumping up and down and if 475 00:30:02,400 --> 00:30:04,900 you're going to want to eat that risk, you're going to want to 476 00:30:04,900 --> 00:30:09,000 charge a lot more for it, or you're going to have to go on a 477 00:30:09,000 --> 00:30:12,700 Marketplace and that's going to be traceable. 478 00:30:12,700 --> 00:30:15,800 And the other thing is, is Bitcoin by its nature. 479 00:30:15,800 --> 00:30:20,000 Is prosecution Futures there have been cases where like five 480 00:30:20,000 --> 00:30:23,700 years out, mount gox. Data is used in prosecution of 481 00:30:23,700 --> 00:30:28,000 early Silk Road drug dealers because it can be Bitcoin 482 00:30:28,000 --> 00:30:31,600 tumblers. There's A lot of Bitcoin 483 00:30:31,600 --> 00:30:34,300 tumblers out there. The biggest one thing they 484 00:30:34,300 --> 00:30:38,100 arrested the guy behind Bitcoin fog, a lot of the other ones 485 00:30:38,100 --> 00:30:43,400 have been arrested and that in a traceability is actually a real 486 00:30:43,400 --> 00:30:51,300 pain for the bad guys because you can be anonymous now, but 487 00:30:51,300 --> 00:30:54,700 the feds get more information and you cease to be anonymous. 488 00:30:55,400 --> 00:30:59,400 What are people relying on in these dark dark web marketplaces 489 00:30:59,400 --> 00:31:01,900 than if they're not? Not using Bitcoin anymore. 490 00:31:01,900 --> 00:31:06,500 I mean, are they using mineiro or they using, you know, some 491 00:31:06,500 --> 00:31:10,200 are using mineiro which sucks even more than Bitcoin or 492 00:31:10,200 --> 00:31:12,800 they're just using Bitcoin tumblers and hoping they don't 493 00:31:12,800 --> 00:31:16,900 get caught? I think the success against the 494 00:31:16,900 --> 00:31:22,300 Tumblers and against the dark, net Market Associated tumblers 495 00:31:22,300 --> 00:31:27,400 like the G Helix search engine and Tumblr service. 496 00:31:27,900 --> 00:31:30,100 The guy behind that was arrested a couple of years. 497 00:31:30,200 --> 00:31:35,300 Back that the feds have just basically made the darknet 498 00:31:35,300 --> 00:31:41,900 markets unusable because it's hard to find them mineiro is, 499 00:31:42,300 --> 00:31:47,200 yeah, mineiro is hard to trace, but it's very easy to go to the 500 00:31:47,200 --> 00:31:51,000 exchanges and say, who's buying mineiro and transferring it 501 00:31:51,000 --> 00:31:55,700 away, and who's selling Monaro? And go after them that way, 502 00:31:55,800 --> 00:31:58,600 because, well, you don't want to hold on to this stuff. 503 00:31:58,600 --> 00:32:01,400 And so, the net result is the A payment system. 504 00:32:01,800 --> 00:32:06,100 This is the one case for payment censorship resistant payments 505 00:32:06,200 --> 00:32:11,500 but it's it's hard and that has acted as the bandwidth 506 00:32:11,500 --> 00:32:16,200 bottleneck for these guys. It does seem really challenging 507 00:32:16,200 --> 00:32:21,300 to maintain anonymity indefinitely into the future on 508 00:32:21,300 --> 00:32:24,000 a public Ledger. Where every single transaction 509 00:32:24,200 --> 00:32:28,900 is logged in known to every participant and worse where 510 00:32:28,900 --> 00:32:32,800 you're located in the Ask for shipping reasons, where Bitcoin 511 00:32:32,800 --> 00:32:36,300 still works for criminal activity is ransomware. 512 00:32:36,300 --> 00:32:39,700 And that's not because the feds can't find out who the 513 00:32:39,700 --> 00:32:43,100 ransomware purveyors are it's that you can't extradite 514 00:32:43,100 --> 00:32:45,800 somebody from the beaches of Sochi that makes sense. 515 00:32:45,800 --> 00:32:50,400 I mean on that note, do you think the preferred currency of 516 00:32:50,700 --> 00:32:55,200 criminals would be US Dollars? And and on that note, we had, we 517 00:32:55,200 --> 00:32:59,800 had a chat with Rohan gray on here and he's keen on seeing a 518 00:33:00,100 --> 00:33:06,100 Some sort of CBD, see that retains privacy for the users 519 00:33:06,400 --> 00:33:11,400 and I don't hear much about that from anyone in terms of the the 520 00:33:11,400 --> 00:33:17,300 hope that some sort of digital dollar will maintain the Privacy 521 00:33:17,300 --> 00:33:21,400 that cash affords users. How are you? 522 00:33:21,600 --> 00:33:23,100 How are you, what are your thoughts about this? 523 00:33:23,100 --> 00:33:27,300 And what do you think is the future for the US dollar and for 524 00:33:27,300 --> 00:33:30,000 Bitcoin and stuff like that? So Bitcoin. 525 00:33:30,200 --> 00:33:32,500 Committed a crime against me personally. 526 00:33:32,700 --> 00:33:36,500 It is made somebody with Silicon Valley libertarian leadings 527 00:33:36,500 --> 00:33:38,500 believe in the Stark fist of money. 528 00:33:38,500 --> 00:33:42,900 Laundering laws cash is anonymous, but cash requires, 529 00:33:42,900 --> 00:33:47,000 physical, proximity, and mass 5 million dollars in cash is a 530 00:33:47,008 --> 00:33:50,500 couple of huge roller cases. It's going to be your weight 531 00:33:50,500 --> 00:33:54,400 allowance on an InterContinental flight and you can't transfer 532 00:33:54,400 --> 00:33:56,900 it. Remotely privacy. 533 00:33:57,000 --> 00:33:59,500 If you want privacy, you get cash. 534 00:33:59,500 --> 00:34:04,400 But cash has these physical limits that limit the total 535 00:34:04,400 --> 00:34:09,100 amount of criminality that works because you just got a drag the 536 00:34:09,100 --> 00:34:12,500 stuff around. I don't see any electronic 537 00:34:12,500 --> 00:34:16,900 payment system that supports privacy at scale and the reason 538 00:34:16,900 --> 00:34:22,000 why is because when you do you get the ransomware problem that 539 00:34:22,000 --> 00:34:25,600 the ransomware problem is specifically because we 540 00:34:25,600 --> 00:34:30,000 currently have a economically viable not very good. 541 00:34:30,199 --> 00:34:33,500 But economically viable payment system, where you can transfer 542 00:34:33,500 --> 00:34:36,300 five million dollars to some Rando and Russia. 543 00:34:36,500 --> 00:34:41,199 Any Central Bank, digital currency is going to have to 544 00:34:41,199 --> 00:34:43,699 have anti-money laundering and protections. 545 00:34:44,000 --> 00:34:48,699 It's not going to allow pseudonymous accounts because 546 00:34:48,699 --> 00:34:52,100 the pseudonymous accounts with public Ledger's or still 547 00:34:52,100 --> 00:34:55,600 pseudonymous accounts, it's every account is a numbered 548 00:34:55,600 --> 00:35:01,600 Swiss account that doesn't work and even The notion of limiting 549 00:35:01,600 --> 00:35:07,000 it to say, 500 dollar accounts that does you no good when you 550 00:35:07,000 --> 00:35:10,200 can spin up as many pseudonymous accounts as you want? 551 00:35:10,400 --> 00:35:16,100 So any viable electronic payment system that doesn't want to get 552 00:35:16,100 --> 00:35:19,700 overrun by criminality has to have strong, Notions of identity 553 00:35:19,700 --> 00:35:25,100 and lack of privacy because otherwise we have the proof of 554 00:35:25,100 --> 00:35:27,500 what happens. And that's Colonial Pipeline and 555 00:35:27,500 --> 00:35:30,100 hospitals ransomware and stuff like that. 556 00:35:30,200 --> 00:35:33,900 That I have an aside thought that's going back a little bit 557 00:35:33,900 --> 00:35:37,500 and is unrelated to this, but I did not previously know about 558 00:35:37,500 --> 00:35:39,600 Silk Roads. Arbitrage bought that relied on 559 00:35:39,600 --> 00:35:42,900 macaques, but when you mentioned it, it flagged in my mind 560 00:35:42,900 --> 00:35:47,900 because I remember at one point, Ross is lawyers, argued that the 561 00:35:47,900 --> 00:35:52,700 actual dread pirate Roberts was not Ross, but was karpeles of 562 00:35:52,700 --> 00:35:56,600 mountain, Ox Fame. And so, that's in an interesting 563 00:35:56,600 --> 00:35:59,400 claim. Now, with the knowledge that 564 00:35:59,400 --> 00:36:01,800 they were, they like actively trading on Mount cocks. 565 00:36:01,800 --> 00:36:06,400 Do you have any thoughts on the probable involvement of karpeles 566 00:36:06,400 --> 00:36:08,100 in? So I don't think it was involved 567 00:36:08,100 --> 00:36:11,400 at all. I think he just viewed it as 568 00:36:11,700 --> 00:36:15,500 good for business. And at the time, the feds 569 00:36:15,500 --> 00:36:19,700 weren't serious at all about money, laundering regulations on 570 00:36:19,700 --> 00:36:23,200 bitcoin exchanges. So he was like, yeah, whatever 571 00:36:23,500 --> 00:36:26,000 people are buying Bitcoins, people are selling Bitcoin. 572 00:36:26,000 --> 00:36:29,800 It's all good for me. I'm going to keep awake. 573 00:36:30,100 --> 00:36:32,300 I can't actually run a system, right? 574 00:36:32,300 --> 00:36:36,700 And my Bitcoin is draining out. It just always seemed like such 575 00:36:36,700 --> 00:36:40,800 a strange claim to make to me after Ross, had been arrested 576 00:36:40,800 --> 00:36:46,100 with his laptop open and logged in, but I remember them trying 577 00:36:46,100 --> 00:36:49,500 to make it and it was always just a curious little factoid to 578 00:36:49,500 --> 00:36:52,700 me. Well, it's because basically the 579 00:36:52,700 --> 00:36:57,300 defense was throw everything at the wall and hope something 580 00:36:57,300 --> 00:36:59,600 sticks. Like one of the things they try 581 00:36:59,600 --> 00:37:04,800 to do and failed is there was the fifth hit that Ross ulbricht 582 00:37:04,800 --> 00:37:08,600 attempted and that was with a corrupt undercover DEA agent. 583 00:37:08,600 --> 00:37:13,100 Who is trying to Blackmail Ross. It's also why he thought hits 584 00:37:13,100 --> 00:37:17,000 were less expensive is because the feds for a fake, it don't 585 00:37:17,000 --> 00:37:19,800 charge nearly as much as a scammer for a fake. 586 00:37:19,800 --> 00:37:26,000 It and said, undercover, agent was trying to Blackmail, Ross, 587 00:37:26,300 --> 00:37:28,100 going. I know who you are. 588 00:37:28,100 --> 00:37:32,200 You're an athlete as bad. Oh, and the defense actually 589 00:37:32,200 --> 00:37:36,200 tried to get that chat introduced as evidence without 590 00:37:36,200 --> 00:37:39,700 the addition of. Oh, hot, Ross going. 591 00:37:39,700 --> 00:37:44,600 Oh, ha ha. Ha you and without the notion 592 00:37:44,600 --> 00:37:49,400 that, oh, this was a corrupt DEA agent who was known to be 593 00:37:49,800 --> 00:37:55,000 corrupt and blackmailing Ross. So, hey, the defense was creepy. 594 00:37:55,100 --> 00:37:59,900 It was not an effective defense, but for those of us watching and 595 00:38:00,000 --> 00:38:03,500 Reading the transcripts. And with our popcorn machine up, 596 00:38:03,500 --> 00:38:07,200 it was an amusing defense. Guess you have anything else? 597 00:38:07,500 --> 00:38:10,700 The only other addition that I'd like to comment on is that it 598 00:38:10,700 --> 00:38:13,400 sounds like you're saying Bitcoin is failed because it's 599 00:38:13,400 --> 00:38:18,600 not or that Bitcoin has is has failed as a payments mechanism 600 00:38:18,600 --> 00:38:21,500 because it's not been widely adopted for that use. 601 00:38:21,800 --> 00:38:24,400 But in reality, it hasn't completely failed, right? 602 00:38:24,400 --> 00:38:27,400 We're still saying that there's dark markets, where they're 603 00:38:27,400 --> 00:38:29,500 using Bitcoin, where they're using Monera where they're 604 00:38:29,500 --> 00:38:31,400 using. Cryptocurrencies. 605 00:38:31,400 --> 00:38:36,000 And as you said, yeah, like, the primary way to utilize that 606 00:38:36,000 --> 00:38:41,500 effectively is, as a ransom ransomware hacker, getting a 607 00:38:41,500 --> 00:38:46,100 payout in Russia, or the Ukraine, but I guess I'm 608 00:38:46,100 --> 00:38:48,100 wondering. It sounds like they're still, it 609 00:38:48,100 --> 00:38:50,700 still is being used for payment sometimes. 610 00:38:50,800 --> 00:38:54,600 Yes, but it's not being used very much and it hasn't gotten 611 00:38:54,600 --> 00:38:57,600 very big. It's like the quip of you do 612 00:38:57,600 --> 00:39:00,800 know this poker game is crooked. Yeah, but it's the only game in 613 00:39:00,800 --> 00:39:04,700 town. There's No alternative available 614 00:39:04,800 --> 00:39:08,500 for the bad guys. So if you want to sell drugs 615 00:39:08,500 --> 00:39:12,400 online, it's cryptocurrency or nothing. 616 00:39:12,600 --> 00:39:15,400 Yeah. It's value is, as the mechanism 617 00:39:15,400 --> 00:39:18,600 of Last Resort, right? When you've when nothing else 618 00:39:18,700 --> 00:39:24,600 can work, then, perhaps Bitcoin is the remaining choice and it's 619 00:39:24,600 --> 00:39:29,400 kind of telling that for all the talk of Bitcoin as payment 620 00:39:29,400 --> 00:39:34,300 system. The one case where you have a 621 00:39:34,300 --> 00:39:38,200 potential huge Market because let's face it, the drug markets, 622 00:39:38,200 --> 00:39:41,900 pretty darn big. You have proven successful ish 623 00:39:41,900 --> 00:39:44,800 business models. It still hasn't taken over. 624 00:39:44,800 --> 00:39:49,300 It's just so hard to use. Volatile it. 625 00:39:49,300 --> 00:39:52,500 Just on that note, I think, unless there's anything else. 626 00:39:52,500 --> 00:39:55,300 You'd like to add Nick? I think that'll probably do it. 627 00:39:55,300 --> 00:39:57,700 Nope, sounds good to me. Okay, perfect. 628 00:39:57,700 --> 00:39:59,200 We'll is wonderful to have you on. 629 00:39:59,300 --> 00:40:03,800 Thank you for Cussing the assorted Tales of Silk Road. 630 00:40:03,800 --> 00:40:08,700 It was a fun trip down memory lane there and please Celsius, 631 00:40:08,700 --> 00:40:14,400 rename yourself psmt. It's such a better traditional 632 00:40:14,400 --> 00:40:21,200 name for a Ponzi scheme. And that's going to do it for 633 00:40:21,200 --> 00:40:23,200 season 1 of crypto critics Corner. 634 00:40:23,500 --> 00:40:26,300 First off, I want to thank all of our listeners people have 635 00:40:26,300 --> 00:40:29,700 reached out wanting to support us and everyone willing to have 636 00:40:29,700 --> 00:40:33,200 a discussion. Instead of an argument, I 637 00:40:33,200 --> 00:40:34,900 appreciate you. Thanks again. 638 00:40:35,100 --> 00:40:40,100 Second of all, I want to thank my co-host my rock mr. 639 00:40:40,100 --> 00:40:45,400 Bennett Tomlin, I never imagined doing a podcast would get almost 640 00:40:45,400 --> 00:40:47,700 100,000 listens in less than a year. 641 00:40:47,800 --> 00:40:52,200 I never imagined that Podcast with one of my best friends 642 00:40:52,500 --> 00:40:57,400 would get 100,000 lessons in less than a year, but it has and 643 00:40:57,400 --> 00:41:01,900 I am lucky and happy to have the opportunity to work with you. 644 00:41:02,300 --> 00:41:04,000 Third. Thanks to all our guests. 645 00:41:04,700 --> 00:41:08,300 We had an array of individuals from people, I never expected to 646 00:41:08,300 --> 00:41:12,400 speak with two people who shared incredibly personal business 647 00:41:12,400 --> 00:41:15,800 stories with us. It's amazing to get the chance 648 00:41:15,800 --> 00:41:20,300 to listen to you. Lastly, and I know this is, A 649 00:41:20,300 --> 00:41:25,700 little personal, but just over a year ago I lost my mom and to 650 00:41:25,700 --> 00:41:32,700 say that I expected 2021 to be show is a euphemism. 651 00:41:33,600 --> 00:41:38,800 I was wrong. I'm glad I was wrong and that 652 00:41:38,800 --> 00:41:42,400 there were many people around me to lift me up. 653 00:41:42,500 --> 00:41:46,100 I can thank my God. Mom my girlfriend, my podcast 654 00:41:46,100 --> 00:41:49,500 co-host my editor at protoss. My best friends. 655 00:41:50,200 --> 00:41:54,700 And more don't know what I'd do without you but everyone I can't 656 00:41:54,700 --> 00:41:59,100 wait to see what 2022 brings and as the old Chinese blessing and 657 00:41:59,100 --> 00:42:04,600 curse goes may we all lead interesting lives happy New Year 658 00:42:04,900 --> 00:42:07,200 and remember stay skeptical friends.