Introduction

In the past few months, Bitcoin, a decentralized, digital currency, has achieved celebrity status in media and political spheres across the world. This rise to fame can be most closely associated with the federal take down of online black market, Silk Road. While the currency had been in use years before the Silk Road shutdown, many lawmakers and individual investors had not taken notice until now. 

A Bitcoin user checks his virtual wallet on an iPhone. Copyright CNN.com

The risk and sex appeal of the online currency left the economy abuzz with eager anticipation of a new digital age in e-commerce; an age where payments were made through a peer-to-peer network based on cryptographic proof of transactions, rather than one relying on third-party, financial institutions to process electronic payments. Unfortunately, this new age also ushered in a new breed of cyber criminals. Criminals were now able to sit behind a computer screen and order illegal substances, child pornography, and even guns for hire with a simple click of the mouse. This illegal activity was all made possible by the anonymous nature of Bitcoin, in conjunction with “onion-routing” software, Tor. Together, these new technologies and their users were able to operate stealthily on the “deep web,” which is only accessible through select servers. This website examines the architecture of the Bitcoin currency system and how it made a multi-billion dollar black market possible. Furthermore, the analysis will offer policy suggestions for lawmakers going forward.