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FEATURES/Cross Border | Sep 26, 2013 | 8461 views

The Dread Pirate Roberts: Internet's Multimillionaire Druglord

Increasingly sophisticated anonymity tools have created a bustling online narcotics market and everything that goes with it: Turf wars, illegal guns, attacks on competitors—and one philosophy-spewing, multimillionaire drug lord: The Dread Pirate Roberts

Bitcoin did more than enable the modern online black market, Roberts says. It also brought him and Silk Road together.
 
Roberts isn’t actually the site’s founder; he credits Silk Road’s creation to another, even more secretive entrepreneur, who may have used the “Dread Pirate Roberts” nom de guerre before it was assumed by the person I interviewed. The current Roberts discovered the site shortly after its creation in early 2011. Around that time, he says, he found a security flaw in the “wallet” software that stored Silk Road’s funds. The bug could have allowed a hacker to identify the site’s hardware and steal its Bitcoins. Instead of exploiting the weakness, he helped the site’s founder fix it, gained his trust and became an active partner in the business. Eventually, the current Roberts says, he bought out Silk Road’s creator and assumed full control. “It was his idea to pass the torch, in fact,” says Roberts. “He was well compensated.”

In February 2012, a post appeared on Silk Road’s forums proclaiming that the site’s administrator would henceforth be known as the Dread Pirate Roberts, a name taken from the dashing, masked protagonist in the fantasy film The Princess Bride—tellingly, a persona that is passed down in the film from one generation of pirate to another. He soon began to live up to his colourful alter ego, posting lofty manifestos about Silk Road’s libertarian political ideals and love letters to his faithful users and vendors. Commenters on the site describe Roberts as a “hero”, a “job creator”, “our own Che Guevara” and a “name [that] will live [on] among the greatest men and women in history as a soldier of justice and freedom”.

When I ask Roberts how he defines his role at Silk Road—CEO? Owner?—he tells me that he considers himself “a centre of trust” between the site’s buyers and sellers, a tricky task given that all parties want to remain anonymous. Silk Road has slowly demonstrated to users that it isn’t a typical counterfeit-drug scam site or a law enforcement trap. It’s made wise use of the trust mechanisms companies like eBay and Airbnb have popularised, including seller ratings and an escrow that releases payment to sellers only after customers receive their merchandise.

“Silk Road doesn’t really sell drugs. It sells insurance and financial products,” says Carnegie Mellon economics professor Nicolas Christin. “It doesn’t really matter whether you’re selling T-shirts or cocaine. The business model is to commoditise security.”

With millions flowing into Silk Road, the “vast majority” of which Roberts says is reinvested back in its booming black market, the Dread Pirate brushes off questions about his wealth and lifestyle. He says he carefully limits his spending to keep a low profile but admitted in one forum post to partaking in a few “first-world pleasures”. The only such pleasure he would describe to me is smoking “a bowl of sticky indica buds at the end of a long day”.

“As far as my monetary net worth is concerned, the future value of Silk Road as an organisation dwarfs its and my liquid assets.… I wouldn’t sell out for less than 10 figures, maybe 11,” he writes with a dash of vainglory. “At some point, you’re going to have to put Dread Pirate Roberts on that list you all keep over at Forbes. ;)”

it’s a rule as timeless as black markets: Where illegal money goes, violence follows. In a digital market that violence is virtual, but it’s as financially real as torching your competitor’s warehouse.

In late April, Silk Road went offline for nearly a week, straining under a sustained cyberattack that left its sensitive data untouched but overwhelmed its servers. The attack, according to Roberts, was the most sophisticated in Silk Road’s history, taking advantage of previously unknown vulnerabilities in Tor.

The sabotage occurred within weeks of rival site Atlantis’ launch. Commenters on the Reddit forum devoted to Silk Road suggested that Roberts’ customers and vendors switch to Atlantis during the downtime, leading to gossip that the newcomer had engineered the attack.

This article appeared in the Forbes India magazine issue of 04 October, 2013
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Comments (1)
Shawn Sep 26, 2013
It's ironic that Atlantis shut down before this article could even come out.
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