Established in 2011, Ross Ulbricht developed an underground business named “SilkRoad” where buyers and sellers of illegal drugs could make anonymous transactions.  Applying a program called “Tor” originally created for the U.S. Navy to keep messages undisclosed, SilkRoad allowed customers to buy off other users in which the affairs would be untraceable. Here’s the catch. Transactions were paid in the currency of “Bitcoins” (retail value of $130 and was growing due to high market demand).  How Ulbricht kept his business running was due to the fact that he made 10% commission from transactions and when threatened to expose this business, he would simply pay thousands of dollars for hitmen to execute the opposing threat.

This brings us to question whether government mediation will effectively stop activity or encourage the development of an underground business, similar to the 1920 alcohol prohibition.  Rather than decreasing illegal activity, has restrictions only caused a prohibited business to sky rocket into success?  As shown in the past, occasionally restrictions only cause businesses to succeed through underground means such as the black market, which appears to still exist today.  So how exactly should the government intervene appropriately so that both parties benefit?

http://www.viceland.com/viceblog/500866Bitcoin_Silkroad4.jpg

Source:

http://topinfopost.com/2013/10/03/fbi-arrests-29-year-old-mastermind-of-billion-dollar-internet-drug-blackmarket