The Federal Bureau of Investigation’s indictment and arrest of Ross Ulbricht, the libertarian proprietor of a digital business called Silk Road, confirm that, though there can be such a thing as a libertarian, digital currency not backed by any nation-state – in this instance, the Bitcoin – it cannot have liberty from some of the most powerful manifestations of the state: criminal prohibitions and prosecutions.
If the charges are true, Silk Road dealt in a variety of goods, but mostly illegal drugs; “forgeries” was one of the other shopping categories on the site. The FBI indictment says that Silk Road had revenue of about $1.2-billion, from its launch in January, 2011 to its end – which suggests a large proportion of the total quantity of Bitcoin, though the FBI seized only $3.6-million worth.
Freakishly, Internet pseudonymity may have led Mr. Ulbricht to be defrauded into thinking he had successfully hired a hit man to kill a Canadian.
Even the most technologically adept anarchist is not free of the international state system. The FBI got through Silk Road’s encryption and obtained access to its server “in a certain country,” thanks to a mutual legal assistance treaty. In the wake of Edward Snowden’s disclosures about the U.S. National Security Agency, that invites questions about whether there were any search warrants or any other form of lawful access.
It remains to be seen whether the taming of the Bitcoin and other digital currencies will make them respectable or merely superfluous.