Digital currency makes cocaine and heroin deliveries as easy as Domino's

Senators target narcotics-supply website and the Bitcoins used to pay for drug deliveries

Lazy junkies don't need to even leave the comforts of their home to score their next hit, and a couple of senators want to dismantle the digital currency network and website that make such transactions possible.

Sens. Joe Manchin (D-W.Va.) and Charles Schumer (D-N.Y.) sent a letter to Attorney General Eric Holder and Drug Enforcement Administration Administrator Michele Leonhart urging them to shut down Silk Road, an underground website that links anonymous drug users with anonymous drug sellers.

The only form of payment Silk Road accepts is Bitcoins, a form of digital currency that users can purchase with real money, such as U.S. dollars, according to the Wall Street Journal's Ben Rooney.

Silk Road's goods include cocaine, heroin, ecstasy and marijuana, the senators' letter states. Wired's Adrian Chen interviewed a pleased Silk Road customer who received 100 micrograms of LSD through the U.S. Postal Service after placing an order on the website. Chen writes that the LSD buyer scored the drugs for 50 Bitcoins, or about $150.

However, Rooney writes in the Wall Street Journal that a Bitcoin is worth $15, which would make that sale worth $750. Much like the exchange rate for U.S. dollars and foreign currency, the value of the Bitcoin is subject to change -- at a far more volatile rate than most currency.

Although Silk Road exacerbates law enforcement efforts to combat drugs, don't accuse the site of selling anything harmful. Chen writes that the site's terms of service state that sellers cannot push “anything who's purpose is to harm or defraud, such as stolen credit cards, assassinations, and weapons of mass destruction.” That makes sense, you know, because cocaine and heroin aren't harmful.

The senators' letter focuses less on Bitcoins, though Manchin and Schumer might have the digital currency in mind when writing that the attorney general could “shut down such entities involved in the delivery and distribution of controlled substances.”

As Rooney writes for the Wall Street Journal, Bitcoins have a powerful cryptographic DNA that allows people to spend Bitcoins once and only once. That's a common problem with digital currency, Rooney adds. With Bitcoins, the money trail disappears into binary code, allowing users to spend the digital currency on anything they want – from donations for hacker groups to drugs from Silk Road, writes CNET's Don Reisinger.

Reisinger writes that hacker group LulzSec, via its Twitter account, has requested donations in the form of Bitcoins to continue its work. In recent weeks, the group hacked PBS and Sony.

The presence of drug trafficking on the Web is not new, but the increasing sophistication of a digital infrastructure to support legitimate and illegal activities makes the job of the Justice Department and DEA even more challenging.

About the Author

Michael Protos is a web content editor with 1105 Government Information Group.

Reader Comments

Mon, Jun 13, 2011 bartleby

The Gutless Wonders, Schumer and Manchin, waving this red herring are angry at the thought of a currency they cannot debase at will, to run the Wall Street casino and stick the cost on the taxpayers, who earn increasingly worthless dollars.

Sun, Jun 12, 2011 jostmey

The bitcoin economy is so much bigger than silk road. To see how many LEGITIMATE items and services are for sale in the bitcoin economy, check out one of the many sites that aggregate bitcoin from multiple sources. For example, check out tiptopgem, bitcoinbulletin, or searchbitcoin

Sun, Jun 12, 2011

So, I guess it's now up to who wants to take this "money"? I can just see it now....

Sat, Jun 11, 2011 Ben US

My friends, the real patriots, the US Senators Manchin and Schumer have just informed me that Bitcoins have been used in enormous amounts in the child pornography market and that Al-Qaeda switched completely their financing by Bitcoins. The case against Bitcoins is building up and this threat to our national currency will be eliminated. Please publish my comment!

Sat, Jun 11, 2011 Ben US

People that criticize our intention to shut down this new source of money in the world simply do not understand the threats that it brings against our national currency "the dollar" and against our national security. Recall the appearance of the Euro, and compare its rate against our dollar. 11 years the rate was 0.87, now is 1.45 (in favor of Euro). Senators Manchin and Schumer as real American patriots just found intelligent way (mentioning the distribution of illegal drugs) how to initiate more serious actions to shut down this threat to our dollar. Please publish my comment!

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