BREAKING: Bitcoin User Silk Road Under Massive Attack

Is the government behind it? 

Willard Foxton at the Telegraph reports:

At 6am this morning, I got an email from one of my sleazier contacts. It simply said "looks like Silk Road has collapsed". I fired the Tor browser you need to connect to the site and, indeed, it wasn't there.

At the time of writing, it's still not back up. A look around on assorted forums linked to Silk Road finds lots of panic and not many hard facts. What's clear is that the site has been crippled by a series of denial of service (DDoS) attacks, which involve flooding the site with traffic.

The website posted on Saturday that it had received an email from someone, who goes by the handle "Lance G", threatening to crash the site unless it fronted the surprisingly small amount of $5000. An administrator of Silk Road confirmed on its forums that the attacks were the work of an individual who had been trying to blackmail the organisation.

Other theories have circulated, including a common one that "LEOs" (law enforcement officials) are behind the attacks. The other common theory is that the attacks are the work of someone looking to set up a similar website to Silk Road, and taking out the competition.

Silk Road is now offering $5000 to anyone with any "information that leads to the arrest and conviction of whoever is behind this extortion attempt". Although phoning up the cops and saying "some guy is blackmailing my giant drug-dealing operation!" probably won't elicit much sympathy.

Of course, it might also be the natural consequence of Silk Road users paying for goods using the encrypted digital currency Bitcoin.

As an economy where Bitcoin was the main currency, Silk Road recently went through a hyper-deflation almost unprecedented in economics. Following the recent surges in the value of Bitcoin, people have been selling less and less, initially because the value of the Bitcoins was going up so fast people were unwilling to part with them; then, once the Bitcoin price started crashing, dealers were unwilling to part with valuable drugs for Bitcoins worth who-knows-what.

As an economy where Bitcoin was the main currency, and as a marketplace that makes money on volume, the aftershocks of the Bitcoin crash has hit Silk Road hard. The sheer price of bitcoins and the amount of Bitcoin scams have put off buyers; the sudden uncertainty of the return is putting off sellers.

Of course, with Silk Road being one of the main drivers of liquidity in Bitcoins, and one of the main places people spend them, any hit on Silk Road is a hit on Bitcoin, which only makes the cycle spin faster.

It may not be a coincidence that this attack is coming just 48 hours after Forbes featured a column about Silk Road. The U.S. government will not hold back in its attempt to kill Bitcoin and Silk Road.