Blockchain's decentralized nature creates intricate and fascinating graph structures. Among these, Silk Road stands out as one of the most iconic cases in blockchain history.
Wikipedia provides an informative overview:
Silk Road as an online black market and the first modern darknet market. As part of the dark web, it was operated as a Tor hidden service, such that online users were able to browse it anonymously and securely without potential traffic monitoring.
Buyers and sellers conducted all transactions with bitcoins (BTC). Silk Road held buyers’ bitcoins in escrow until the order had been received and a hedging mechanism allowed sellers to opt for the value of bitcoins held in escrow to be fixed to their value in US$ at the time of the sale to mitigate against Bitcoin’s volatility.
The website was launched in February 2011. In October 2013, the Federal Bureau of Investigation (FBI) shut down the website and arrested Ross Ulbricht who was alleged to be the founder and owner of Silk Road.
The FBI initially seized 26,000 bitcoins from accounts on Silk Road. In October 2013, the FBI reported that it had seized 144,000 bitcoins. On 27 June 2014, the U.S. Marshals Service sold 29,657 bitcoins in 10 blocks in an online auction. Tim Draper bought the bitcoins at the auction with an estimated worth of $17 million. In November 2020, the United States government seized more than $1 billion worth of bitcoin connected to Silk Road.
To probe Silk Road's intricate network, we used OXT, a blockchain explorer, to identify specific bitcoin addresses associated with the platform. We then harvested transaction data from these addresses via the blockchain.info API and designed network graphs for in-depth analysis. With Cosmograph, we intensively scrutinized the graph linked to the address 184R7cFGqAZaZBuj2rsuExDAJ6iCEs3hXi.
We anticipated discovering structures correlating to exchanges, Silk Road buyer accounts, and vendor cashout patterns. Ross Ulbricht’s trial provided a comprehensive exhibit which demonstrates Silk Road's payment system.
Figure 1: Ross Ulbricht’s trial exhibit depicting the Silk Road payment system.
Analyzing the Data
Figure 2 presents a graph mapping all transactions linked to the address 184R7c*, including connected addresses up to the 4th depth level. Each node signifies an address while the edges depict BTC transfers.
Figure 2: Graph of 184R7c address extending to depth level 4.
Our graph showcased intriguing structures, the nature of which we aimed to discern. The identified structures included Silk Road addresses, FBI seizures from 2013, potential coin mixers, exchanges/wallets (e.g., BitPay and Bitstamp), and other dark markets like Sheep Marketplace.
Figure 3: Highlighted structures on the 184R7 address graph.
The Central Structure
Central to the graph is address 1BRz3S*, which had 2479 connections, handling 7,187 BTC. This address likely represents a cryptocurrency exchange woven into Silk Road's payment mechanism. Transaction patterns involving this address pointed towards its role as a mediator between exchanges and buyers.
Figure 4: Schematic view of typical transactions involving the central structure (source: Cosmograph)
Other compelling signs suggest we were viewing Silk Road's actual payment system:
- Addresses surrounding the central structure were linked to Silk Road.
- Outflows directed towards Bitstamp, suggesting BTC purchases.
- Some addresses processed transactions exceeding 40,000 BTC.
The FBI's Intervention
Figure 5 likely showcases the FBI's inaugural sanctioned seizure post-Ross Ulbricht’s arrest. This operation confiscated over 29,000 BTC from Silk Road user wallets—a colossal sum by today's valuation.
1F1tAa* — the address which is believed to be tied to the FBI and where Silk Road funds were transferred to.
Figure 5: Structures around address 1F1tAa*, suspected to be FBI-linked.*
Graph visualization has proven instrumental in unveiling intricate networks and associations. It offers vital clues for hypotheses and paves the way for future research. Beyond Silk Road, this method illuminates diverse transaction patterns throughout the blockchain universe. As we deepen our exploration, Cosmograph persists as the benchmark in visual analytics, shedding light on millions of transactions in real-time.