Welcome to the CoinDesk Weekly Review 4th October 2013 – a regular look at the hottest, most controversial and thought-provoking events in the world of digital currency through the eyes of skepticism and wonder. Your host … John Law.

Silk Road in a fix

About six months ago, John Law went exploring on the Silk Road.

It was an interesting exercise, not least for the experience of loading and running the hyper-anonymous Tor network. It’s an odd feeling, knowing you’re completely untraceable and probably attracting the attention of the spooks.

But the Silk Road itself was exactly as advertised: a combined online forum and shop for a wide variety of things that the law does not want you to have.

Moreover, it was clearly working: a large community of users expressed satisfaction with the service provided – and the authorities, who were clearly taking a close interest, reporting that the goods were of high quality.

Law got the same feeling, as he checked the price of LSD, heroin and mescaline, as he’d had when walking into his office more than a decade ago to see every computer in ops showing the same text-based screen.

“What’s that?” he asked, expecting the new Quake. “Napster…” said a glazed-eyed code monkey before crawling back between his headphones. “Can’t last…” mused Law.

Of course, he was right – and wrong. Two years after it started, Napster was shut down in a hail of legal bullets, to be reborn in a lawful, neutered form of no interest to anyone.

But – whisper it – it’s no harder to share files now than it was then: there are plenty of alternatives, and the world is gradually shifting to the realisation that you can’t have the Internet without file sharing. And it’s not worth closing the Internet down over that.

While it’s not impossible to run an online drugs supermarket without cryptocurrency, it’s certainly the preferred method.

But is it worth shutting down bitcoin over that? Even assuming that it’s possible, a very difficult point in its own right, you know the answer to that.

Assuming Dread Pirate Roberts really did see $1.2bn worth of transactions go through the Silk Road during its lifetime – curiously, also around two years – that’s a tiny fraction of the existing retail trade in illicit drugs (and a good thing too: if he had managed to make any sort of dent in the cartels’ markets, he’d be five fathoms down by now. Better Fed than dead).

In the grand scheme of things, outfits like the Silk Road make good copy and are mildly embarrassing for the drug warriors, but don’t change the big picture. They even have their benefits; consumer feedback improves quality and thus the health of customers, and they provide tons of useful data to officialdom, who probably made up a decent percentage of the user-base.

Like bitcoin itself, Silk Road’s place in history will probably go down as not the final word but as a fascinating proof of concept.

As far as is currently known, the basic security, payment and anonymity mechanisms weren’t broken. Dread Pirate Roberts – or Ross, as his mother calls him – seems to have made a few serious slip-ups in who he talked to and how, through which the FBI tracked him down (although expect a very great deal of analysis over whether the NSA and others were working, stealthily, behind the scenes). The tools used proved workable, and others will follow.

The court case will be fascinating, as there are plenty of unanswered questions. The FBI says it got an image of a Silk Road server in the summer, but seems to have had its information in spring. There is a very peculiar hitman-hiring and the commissioning – perhaps – of a murder.

The media coverage will be considerable. But regardless of what happens to the hapless Pirate, you can confidently expect two things to be true in a year’s time: you will still have bitcoin, and you will still be able to buy illegal drugs just as you can now. That hasn’t changed since King Charles II tried to outlaw the trifecta of killers tea, coffee and sherbet.

And, most likely, you’ll be able to buy the one with the other. World not ending, no pictures at 11.

Do have a cow, man

honest beef1Image source: honestbeef

Silk Road may only have taken payment in bitcoin – and one good question is, what will the FBI do with the 26,000 they seized during the arrest? – but most retailers who take the cryptocurrency do so in addition to other, more established payment methods. As a result, the percentage of turnover in BTC is usually down below five percent, if that.

One exception is honestbeef, an Australian beef merchant who takes bitcoin and makes up to twenty percent of revenue that way (calm down, FBI – it only delivers within Australia. That massive, massive BBQ at 935 Pennsylvania Avenue will have to wait).

Admittedly, it doesn’t take any other form of payment except direct bank transfer. And David Maloney, who with his wife Peta runs the concern, is no normal farmer, choosing to describe the ordering system to customers through a diagram of nested loops that looks more like one describing a nuclear power station’s cooling system than a way to get tasty cow to your plate.

The one aspect of the operation that stands out is its transparency, with who gets what cut of the asking price clearly described.

This sort of radical openness, John Law suspects, would do more to reform commerce and politics than any number of scandals and elections: imagine if you could see all the books in Google, HSBC, or our own dear Government.

Perhaps that attitude makes honestbeef an attractive place for the more reform-minded to buy their sausages: after all, in a capitalist society, every time you spend your pennies you’re making a political statement.

Or perhaps honestbeef is doing well out of BTC because it’s an early adopter and thus getting written about far more widely than most small meat-based businesses. Whatever works.

But if you get buttonholed by someone claiming that bitcoin is only good for buying grass, point out that sometimes it’s the cows that get the grass and the bitcoin that gets the organic, ethically-farmed, lean and toothsome end result.

Is that your wallet in your pocket, or are you just pleased to see me?

king of bitcoinImage source: smashwords

Drugs. Gambling. Booze. Sirloin. Yes, bitcoin is there. But what about the other great vice – sex? John Law has long been convinced it was only a matter of time.

We are almost there, humankind. Almost, but not quite. For while you can’t actually use the cryptocurrency to buy King of Bitcoin – an e-book, m’lud – the subject of that work is sex and bitcoin. It is, in short, a Satoshi-scented smutfest.

It is somewhat painful to relate the details: at 10,000 words, it’s less a novel than what John Law would consider a short chapter.

Although, chances are, that may be a mercy. For the plot does not promise a peak literary experience: the protagonist is called Atlas Fawkes, and if you think that’s a heavy-handed allusion to Atlas Shrugged, the libertarian’s favourite pot-boiler, and Guy Fawkes, the anarchist’s favourite fire-kindling, you’d be right.

In short: Atlas is picked on at school, becomes a bitcoin miner, survives a global economic collapse and becomes immensely wealthy, powerful and irresistible to women through his savvy pre-meltdown collection of the (never previously thought desperately erotic) non-fiat currency.

And that seems to be that. The author, Kayleen Knight, may try and pretend it’s satire, but reader, it isn’t.

John Law has no intention of parting with four dollars to actually read this. In fact, he barely made it four pages into the free preview. He is content to steal the details above from a chap who also hasn’t bothered to shell out.

However, Patrick Howell O’Neill, you are the better man for so fearlessly reading all of the free extract of what is almost certainly grotesque, thudding, libertarian fantasy fodder throughout. Of which there is no shortage, entirely without charge, on the Internet.

Is there really a market for bitcoin, boobs and bum books? John Law has no idea. But he has been known to write 10,000 words of fiction on a good day, so if that’s the barrier to entry he may well devote a couple of weekends to a quartet that may yet define this new genre: Mt. My Gox, Baby; Let’s Play Miners and Servers; Public Key, Private Parts; and Fifty Shades Of Pay.

Literary agents, form an orderly queue. You can make contact through CoinDesk.

John Law is an 18th century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took three hundred years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency. 

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