All That Glisters

Jamie Martin · Bitcoin

Ross Ulbricht was arrested on 1 October, suspected of being the Dread Pirate Roberts, the mastermind behind the online illegal drug emporium Silk Road. Messages of support quickly spread across social media; funds are being raised for his legal defence. The Silk Road was shut down on 2 October. Allegedly run out of Ulbricht’s bedroom in a shared flat in San Francisco, the website boasted more than 950,000 registered users, and made getting drugs – apparently very good drugs – much easier and safer than ever before.

But its founder isn’t a folk hero only because of the quality of the junk he made available. It’s also because of his radical libertarian philosophy. The Dread Pirate Roberts intended the Silk Road as an experiment in using new cyber technologies, such as the anonymity network Tor and the digital currency Bitcoin, to create a free market beyond the reach of government intervention. He’s a devoted follower of Ludwig von Mises and his far-right American acolytes, and laid out a revolutionary anarcho-capitalist agenda for overturning the ‘tax eating, life sucking, violent, sadistic, war mongering, oppressive machine’ of the state, and replacing it with the ‘unforgiving furnace of the free market’. The Silk Road community, he said, was the vanguard of a global revolution: ‘Some day, we could be a shining beacon of hope for the oppressed.’

Ulbricht’s arrest has done little to dampen enthusiasm for the Silk Road revolution – or indeed the site itself, which reopened for business last week, run by someone calling themselves the Dread Pirate Roberts. (The name comes from a character in The Princess Bride, who explains to his successor: ‘I inherited the ship from the previous Dread Pirate Roberts, just as you will inherit it from me. The man I inherited it from was not the real Dread Pirate Roberts either. His name was Cummerbund.’) Even if Ulbricht was the previous Dread Pirate Roberts, and even if the new one is caught too, it will take more than one or two arrests to shut the site down permanently.

The FBI announced on 25 October that they had seized more than 144,000 Bitcoins (worth more than $34 million) from an online ‘wallet’ they claim to have traced to Ulbricht, but there may be at least another $22 million of Silk Road profits they haven't been able to get their hands on.

And Bitcoin is still wildly popular with people distrustful of the state and its banking systems: according to a recent study, almost half of Bitcoin’s users identify as libertarian or anarcho-capitalist. In their view, there’s little keeping national fiat currencies – which aren’t pegged to tangible things like gold or silver – from being inflated by greedy central bankers to the point of collapse, or from being seized by the state. So they’re calling for a return to a commodity-backed (mostly gold or silver) currency; Bitcoin is a fancy online version. Like gold, the supply of Bitcoins is finite: one Bitcoin (a string of code) is ‘mined’ when a computer successfully runs a complex algorithm, which requires a lot of time and electricity (like mining gold). The total number of Bitcoins that can be produced in this way is capped at 21 million, which means there’s an in-built limit to how much the currency can be inflated.

This is appealing to people who find it frightening that state institutions control monetary policy. Most of them are on the libertarian right, although distrust of the Federal Reserve System and fiat money also runs deep on the extreme, conspiratorial right in the United State: the alleged shooter of a security worker at Los Angeles airport on 2 November, cited the government’s use of fiat currency as one of his grievances. The Dread Pirate Roberts has described Murray Rothbard and Lew Rockwell as philosophical inspirations – both hardcore anarcho-capitalists and both suspected of forming links with white supremacist and neo-Confederate groups.

Ulbricht’s hero Mises might well have approved of the Silk Road; he said that ‘alcoholism, cocainism and morphinism’ were social ills that the state had no business in regulating. Not all libertarians have jumped on the cyber revolutionary bandwagon, though; for many, Bitcoin can’t compete with good old gold as an alternative to fiat money. But Bitcoin is making inroads in the tech world – it’s being touted in some quarters as the next big investment opportunity after social media – and as it continues to grow, it could prove the perfect crossover cause for the libertarian right and Silicon Valley tech enthusiasts, two communities that already have a lot in common.