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LGBT activists target brands including Stolichnaya and Russian Standard in response to ban on ‘gay propaganda’
There’s nothing more Russian than vodka, so when gay and lesbian activists decided to protest against the country’s persecution of homosexuals it made sense to target its most famous drink.
The US sex writer Dan Savage, famous for his online campaign against the homophobic senator Rick Santorum, called for a vodka boycott to draw attention to new laws allowing police officers to arrest tourists and foreign nationals they suspect of being homosexual or “pro-gay”.
“To show our solidarity with Russian queers and their allies and to help to draw international attention to the persecution of gay men, lesbians, bisexuals, trans people and straight allies in Vladimir Putin’s increasingly fascistic Russia: dump Russian vodka,” Savage wrote on his blog, He singled out the brands Stolichnaya and Russian Standard, coining the hashtag #DumpStoli for the campaign, which has been backed by Queer Nation and the Russian-American group Rusa LGBT.
Savage said attacks on LGBT people in Russia were escalating, and criticised the state for banning gay pride marches in Moscow and St Petersburg.
Six bars in Chicago announced they would stop selling Russian products, and a seventh bar said it had withdrawn Stolichnaya, according to Windy City Times, a Chicago LGBT newspaper.
The campaign seemed to have an instant success when the manufacturers of Stolichnaya criticised Russia’s record on lesbian and gay rights.
In an open letter published this week, Val Mendeleev, the head of the SPI group, condemned the Russian government for “limiting the rights of the LGBT community” and noted that the Russian state has no ownership or control of the brand, which is produced in Latvia.
On its Facebook page, the company posted a multicoloured banner reading: “Stolichnaya Premium Vodka stands strong and proud with the global LGBT community against the actions and beliefs of the Russian government.”
Stolichnaya, with its distinctive red-and-white label, was produced by the state in Soviet times and was reportedly the favourite vodka of Boris Yeltsin. After an attempt by the Russian state to regain the brand name in the 2000s, SPI Group, which is based in Luxembourg, has produced Stolichnaya in Latvia using Russian ingredients. Meanwhile, the state-owned Soyuzplodimport produces a nearly identical vodka in Russia.
Russia’s leading gay rights activist said the boycott was misguided.
“They mixed everything up. Stolichnaya isn’t Russian,” said the lawyer Nikolai Alekseev, head of the Moscow Pride organising committee.
“This is all good for attracting attention to the situation in Russia, like any other action, such as boycott of the Olympics, but it will not drastically change anything,” he added.
Unlike Stolichnaya, Russian Standard vodka is produced in Russia and is owned by the Russian oligarch Roustam Tariko. A spokesman for the company declined to comment.
In June Russia’s parliament unanimously passed a law banning the spreading of “propaganda of non-traditional sexual relations” among minors, prompting calls for other countries to boycott the 2014 Winter Olympics in Sochi.
The law in effect makes it illegal to equate straight and gay relationships, and to distribute material on gay rights. It introduces fines for individuals and media groups found guilty of breaking the law, as well as special fines for foreigners. Four Dutch activists were charged in Murmansk this week under the law.
This is not Savage’s first controversial LGBT campaign: in 2003, he held a contest to create a definition for “santorum” after Santorum made comments critical of gay marriage. The new word was defined as “the frothy mixture of lube and faecal matter that is sometimes the byproduct of anal sex”.
Reports this week claimed Snowden had applied for asylum in Russia because he feared torture if he was returned to US
The US has told the Russian government that it will not seek the death penalty for Edward Snowden should he be extradited, in an attempt to prevent Moscow from granting asylum to the former National Security Agency contractor.
In a letter sent this week, US attorney general Eric Holder told his Russian counterpart that the charges faced by Snowden do not carry the death penalty. Holder added that the US “would not seek the death penalty even if Mr Snowden were charged with additional, death penalty-eligible crimes”.
Holder said he had sent the letter, addressed to Alexander Vladimirovich, Russia’s minister of justice, in response to reports that Snowden had applied for temporary asylum in Russia “on the grounds that if he were returned to the United States, he would be tortured and would face the death penalty”.
“These claims are entirely without merit,” Holder said. In addition to his assurance that Snowden would not face capital punishment, the attorney general wrote: “Torture is unlawful in the United States.”
In the letter, released by the US Department of Justice on Friday, Holder added: “We believe that these assurances eliminate these asserted grounds for Mr Snowden’s claim that he should be treated as a refugee or granted asylum, temporary or otherwise.”
The US has been seeking Snowden’s extradition to face felony charges for leaking details of NSA surveillance programmes. There were authoritative reports on Wednesday that authorities in Moscow had granted Snowden permission to stay in Russia temporarily, but when Snowden’s lawyer, Anatoly Kucherena, arrived to meet his client at Sheremetyevo airport, he said the papers were not yet ready.
Kucherena, who has close links to the Kremlin, said Snowden would stay in the airport’s transit zone, where he has been in limbo since arriving from Hong Kong on 23 June, for the near future.
The letter from Holder, and the apparent glitch in Snowden’s asylum application, suggest that Snowden’s fate is far from secure.
But a spokesman for President Vladimir Putin insisted Russia has not budged from its refusal to extradite Snowden. Asked by a reporter on Friday whether the government’s position had changed, Dmitry Peskov told Russian news agencies that “Russia has never extradited anyone and never will.” Putin has previously insisted Russia will not extradite Snowden to the US. There is no US-Russia extradition treaty.
Putin’s statement still leaves the Russian authorities room for manoeuvre, however, as Snowden is not technically on Russian soil.
Peskov said that Putin is not involved in reviewing Snowden’s application or involved in discussions about the whistleblower’s future with the US, though he said the Russian security service, the FSB, had been in touch with the FBI.
Speaking on Wednesday, Snowden’s lawyer said he was hoped to settle in Russia. “[Snowden] wants to find work in Russia, travel and somehow create a life for himself,” Kucherena told the television station Rossiya 24. He said Snowden had already begun learning Russian.
There is support among some Russian politicians for Snowden to be allowed to stay in the country. The speaker of the Russian parliament, Sergei Naryshkin, has said Snowden should be granted asylum to protect him from the death penalty.
The letter from Holder was designed to allay those fears and negate the grounds for which Snowden as allegedly applied for asylum in Russia. The attorney general said that if Snowden returned to the US he would “promptly be brought before a civilian court” and would receive “all the protections that United States law provides”.
“Any questioning of Mr Snowden could be conducted only with his consent: his participation would be entirely voluntary, and his legal counsel would be present should he wish it,” Holder said.
He added that despite Snowden’s passport being revoked he “remains a US citizen” and said the US would facilitate a direct return to the country.
Germany’s president, who helped expose the workings of East Germany’s Stasi secret police, waded into the row on Friday. President Joachim Gauck, whose role is largely symbolic, said whistleblowers such as Snowden deserved respect for defending freedom.
“The fear that our telephones or mails are recorded and stored by foreign intelligence services is a constraint on the feeling of freedom and then the danger grows that freedom itself is damaged,” Gauck said.
In closing arguments, defence lawyer paints portrait of Wikileaks source as someone without ‘evil intent’
The lawyer representing the WikiLeaks source Bradley Manning has asked the judge presiding over the soldier’s court martial to decide between two stark portrayals of the accused – the prosecution’s depiction of him as a traitor and seeker of notoriety, and the defence’s account that he was motivated by a desire to make a difference in the world and save lives.
Over four hours of intense closing arguments at Fort Meade in Maryland, David Coombs set up a moral and legal clash of characterisations, between the Manning that he laid out for the court, and the callous and fame-obsessed Manning sketched on Thursday by the US government. “What is the truth?” the lawyer asked Colonel Denise Lind, the presiding judge who must now decide between the two accounts to reach her verdict.
“Is Manning somebody who is a traitor with no loyalty to this country or the flag, who wanted to download as much information as possible for his employer WikiLeaks? Or is he a young, naive, well-intentioned soldier who has his humanist belief central to his decisions and whose sole purpose was to make a difference.”
Coombs answered his own rhetorical question by arguing that all the evidence presented to the trial over the past seven weeks pointed in one direction. “All the forensics prove that he had a good motive: to spark reforms, to spark change, to make a difference. He did not have a general evil intent.”
Coombs ridiculed the prosecution case as a “diatribe” and said that its account of his client as someone who only cared about himself as the opposite of the truth. “He is concerned about everybody, he is concerned to save lives.”
The lawyer continued: “He felt were were all connected to everybody, we had a duty to our fellow human beings. It may have been a little naive, but that is not anti-American, it is really what America is about.”
The closing arguments presented over two days in the courtroom at Fort Meade have emerged into a clash of visions about the nature of leaking of official secrets in the digital age. At the centre of the battle is Manning himself, a diminutive figure in military fatigues, who has sat silently throughout.
With the end of the evidential stage of the trial, it now falls to the Lind to make sense of these two starkly conflicting pictures and reach a verdict that could come within days. Sitting without a jury at Manning’s own request she must now decide whether the soldier is guilty of 21 counts that could see him detained in military custody for life without any chance of parole, plus a total of 154 years for itemised offences.
The soldier has already admitted to transmitting hundreds of thousands of documents to WikiLeaks, and to a lesser version of the charges that carry a maximum sentence of 20 years in jail.
The most serious charge against Manning, carrying a possible life sentence, is that he “aided the enemy”, specifically al-Qaida, by passing intelligence to WikiLeaks which then made it accessible on the internet. In prosecution closing arguments, the government alleged that because of Manning sensitive US state secrets had been found in the possession of Osama bin Laden the day the al-Qaida leader was killed.
Countering that view, Coombs argued that WikiLeaks was a legitimate news organisation on a par with the international alliance of news outlets that had worked with the anti-secrecy websites to release edited versions of Manning’s disclosures. “WikiLeaks is no different from the New York Times, no different from the Guardian, no different from Der Spiegel.”
He cited the US government’s own counter-intelligence report on WikiLeaks that described the organisation as being motivated by a desire to hold governments accountable to their people. “That is the watchdog function of the press – that is what the press is designed to do,” Coombs said.
The “aiding the enemy” charge is the most contentious aspect of the Manning trial. It has provoked a wide debate about its possible impact on press freedom in the US, with first amendment advocates warning it could spread a chill across investigative reporting.
Coombs made his comments within that context, implying that to hold Manning guilty of helping al-Qaida by dint of having leaked to a news organisation would set a dangerous precedent. “Giving something to a legitimate news organisation is the way we hold our government accountable. Giving information to the world, to inform the public does not give intelligence to the enemy,” he said.
Contrary to the prosecution’s claim that he was indiscriminate in his leaking, Coombs said that Manning was careful to be selective in his choice of documents, weeding out “humint” reports that gave specific details on human sources on the ground and focusing instead on civilian loss of life such as the Apache video. “If he was a traitor who wanted to hurt the US, you would have seen a lot more indiscreet disclosures,” he said.
The defence attorney also tried to undercut prosecution allegations that the more than 700,000 documents Manning leaked were damaging to the US. The soldier faces several counts under the 1917 Espionage Act accusing him of leaking intelligence “with reason to believe such information could be used to the injury of the United States or the advantage of any foreign nation”.
Coombs attempted to counter those charges by arguing that in fact the WikiLeaks disclosures had very limited impact on US interests. The more than 750 files on Guantanamo detainees were “not worth the paper they were written on”, the lawyer said, adding they were intended for background information and were riddled with inaccuracies.
The war logs from Afghanistan and Iraq were historical documents that recorded past battlefield events that could not provide useful intelligence to the enemy given how rapidly tactics on both sides changed in a military conflict. “The harm that could have been done is like Chicken Little yelling the sky is falling down,” Coombs said.
In the most emotive scenes of his closing arguments, Coombs played to the court three clips from the video Manning uploaded to WikiLeaks of a 2007 Apache helicopter attack in Baghdad. The clips showed a group of civilians, that included two Reuters correspondents, being mowed down from aerial bullet fire.
Coombs asked the judge to watch the video “from the standpoint of a young man looking at eight people and what we know now to be the truth – there are two reporters there – standing on a street corner and being shot like fish in a barrel … You have to view that through the eyes of a young man who cared about human life.”
Media Matters for America study follows blog by former agency reporter about appointment of Paul Ingrassia
Reuters’ climate-change coverage fell by nearly 50% after a climate sceptic joined the news agency as a senior editor, a study has found.
The sharp decline in coverage since 2011, recorded by the Media Matters for America advocacy group, reinforces charges from a former staffer that Reuters cut back on climate stories under the influence of Paul Ingrassia, who is now the agency’s managing editor.
Media Matters found a 48% decline in climate-change coverage over a six-month period, after Ingrassia joined the agency in 2011.
The New York Times and other news organisations have cut back on climate coverage, closing down blogs and redeploying correspondents, at times citing financial constraints. However, Bloomberg, Reuters’ main competitor, has deepened its investment in climate change and sustainability coverage. The agency’s founder, New York mayor Michael Bloomberg, has been a strong advocate for action on climate change.
Charges of an ideological component to Reuters’ declining coverage – related to Ingrassia’s personal doubts about established climate science – have sharpened concern in media and environmental as well as business circles, because of the agency’s focus on financial news.
“It is just not responsible in our opinion to be cutting back on an issue that is having such a profound impact on every sector of the economy,” said Mindy Lubbers, who heads the Ceres sustainable business network, which represents companies and investors controlling some $11tn in assets. “This is a financial risk that needs to be looked at and addressed.”
The Climate Progress blog has since criticised Reuters for injecting references in stories to fringe groups that reject established climate science, and represent barely 3% of scientists publishing on climate change.
The news agency did not respond specifically to the findings of a deep cut in climate-change coverage. But in an emailed statement, a spokesperson wrote:
“Reuters covers climate change closely both as a scientific and public-safety issue, as well as the impact of climate change on businesses, the economy and the markets. We have a dedicated staff, including a team of specialist reporters at Point Carbon and a columnist, who all generate significant coverage on the topic across our various platforms. We remain committed to providing fair and independent coverage of climate change that complies fully with our Trust Principles.”
The scrutiny of Reuters’ climate-change coverage began earlier this month when David Fogarty, the former Asia Climate Change Correspondent , wrote in a blog post that climate-change coverage had been dramatically cut back after Ingrassia’s hire. Fogarty, a 20-year veteran at Reuters, covered climate change for four and a half years. But early last year it became increasingly difficult to get climate-change stories published. Editors suggested he pursue other stories. Then Fogarty described a conversation with Ingrassia, then deputy editor, at a social event.
“In April last year, Paul Ingrassia [then deputy editor-in-chief] and I met and had a chat at a company function. He told me he was a climate-change sceptic. Not a rabid sceptic, just someone who wanted to see more evidence mankind was changing the global climate.
“Progressively, getting any climate change-themed story published got harder. It was a lottery. Some desk editors happily subbed and pushed the button. Others agonised and asked a million questions. Debate on some story ideas generated endless bureaucracy by editors frightened to take a decision, reflecting a different type of climate within Reuters – the climate of fear.
“By mid-October, I was informed that climate change just wasn’t a big story for the present, but that it would be if there was a significant shift in global policy, such as the US introducing an emissions cap-and-trade system. Very soon after that conversation I was told my climate change role was abolished.”
Fogarty left the agency soon after.
Disclosure: the Guardian is a Reuters client.
Bill extends protection to gays, lesbians, transgender people, undocumented workers and Native Americans
House Republicans made a surprise about-turn on a bill to renew and expand the Violence Against Women Act on Thursday.
The move amounted to a tacit admission by the GOP that it had suffered in the November White House and Congressional elections from its perceived image as being hostile on women’s issues and gay rights.
The act, a landmark piece of legislation first passed in 1994, provides financial support for a host of provisions such as refuges for battered women, violence hotlines, rape education programmes and new methods for dealing with abusers and stalkers.
The bill passed by the House on Thursday extends the protections to gays, lesbians, transgender people, undocumented workers and Native Americans.
House Republicans blocked renewal of the act last year, expressing opposition to extending coverage. But on Thursday, 87 Republicans joined Democrats to vote for renewal by 286 to 138.
The act was pushed through in 1994 by then-senator Joe Biden. The vice-president on Thursday welcomed its passage: “Today Congress put politics aside and voted to reauthorise the Violence Against Women Act … Since VAWA first passed in 1994, we have seen a 64% reduction in domestic violence.”
“The urgent need for this bill cannot be more obvious,” Biden said. “Consider just one fact – that 40% of all mass shootings started with the murderer targeting their girlfriend, or their wife, or their ex-wife.”
The Senate voted earlier for renewal by 78 to 22. It now goes to the White House for signature.
Barack Obama fought his campaign for re-election partly on portraying the Democrats as champions of women’s rights and those of gays, and accusing the Republicans of waging war against women.
The Democratic leader in the House, Nancy Pelosi, expressed concern that even though renewal of the act has gone through, it might end up a victim of budget cuts under sequestration, with programmes tackling abuse of women facing a $20 million reduction.
Abuse of women is a serious and widespread problem in tribal areas. House Republicans last year cited constitutional rights that give a high degree of autonomy on the reservations, as one of their reasons for opposing the renewal of the act extending its reach into the tribal areas.
Energy adviser Heather Zichal – like others before her – fails to deliver any concrete details of the president’s plans for action
It’s been 114 days since Barack Obama promised on the night of his re-election to protect future generations from – in his words – “the destructive power of a warming planet”. It’s been 38 days since he renewed and expanded on that promise on inauguration day, 16 days since he told Congress straight up in his State of the Union address: act on climate change or I will.
But when it comes to spelling out the actions Obama intends to take on climate change, exactly how he intends to use his executive power, it’s been a very slow reveal.
The White House energy and climate change adviser, Heather Zichal, failed during a talk at a Washington thinktank this week to provide specifics on the kinds of actions – or the time frame – Obama has in mind for dealing with what he has repeatedly described as an urgent problem.
If anything, Zichal, like other White House officials pressed for details of the president’s climate strategy, moved to squash expectations raised by those very same speeches that Obama would indeed take ambitious action to reduce the carbon pollution that causes climate change.
Zichal, when pressed on the time line of Obama’s State of the Union ultimatum, seemed to suggest the president might be willing to sit out the two years of this newly elected Congress before making good on his threat to use his executive powers.
Environmental groups have been urging Obama to draft new rules limiting carbon dioxide emissions from power plants. Electric power plants produce about 40% of America’s carbon dioxide emissions; they are the leading driver of climate change in the country.
Campaigners say Obama could cut those power plant emissions by 25% by the end of the decade without big price spikes for consumers, by directing the Environmental Protection Agency to limit those emissions under the provisions of the Clean Air Act. That would go a long way to fulfilling Obama’s first term promise to cut emissions 17% from 2005 levels by the end of the decade.
The environmental groups point out Obama also has a legal obligation to act. The supreme court ruled six years ago that the Environmental Protection Agency had a duty to regulate carbon dioxide under the Clean Air Act. The EPA proposed new rules last year for new power plants.
But Zichal in her talk to the Center for Strategic and International Studies, damped down anticipation the EPA would move on existing coal-fired power plants any time soon. “We can’t put the cart before the horse,” she said.
“The EPA is finalising the standards of new coal-fired power plants. We received more than 2 million comments on that proposal and the agency is in the process of assessing those comments.”
It’s possible, as some suggested, that this was a very clever feint by Zichal to reassure the electricity industry and Republicans in Congress before the administration fills out its second term cabinet.
The White House would naturally want to avoid an all-out fight to defeat Obama’s nominee to be the next administrator of the EPA. The current favourite appears to be Gina McCarthy, an assistant administrator.
And there have been reports that the White House has been consulting widely with environmental groups since Obama’s re-election to come up with a clear climate strategy.
But Zichal seemed intent on downplaying the possibility Obama would use the most powerful instrument at his disposal: the EPA.
“It would be wrong to fall into the trap that one tool is going to get us to the 17% target or get us all the way where we need to be,” she said.
“In these days in Washington it is thought that the EPA and its authority is a bright shining object, but it is also important that we continue to address and move forward many of the initiatives that we already started in the first term,” Zichal said. These included the new fuel efficiency standards for cars, and funding for renewable sources of energy, she went on.
“This administration as a whole has demonstrated time and time again its ability to think creatively about our existing authorities and use them. We have done some very big bold things with the Clean Air Act, a lot of things people didn’t think would be possible,” Zichal said.
What’s not clear however is what Obama will do next – or whether he will expand the bold rhetoric of his recent speeches on climate change into bold action.
A transformation of America’s electricity generation is already under way, with coal-fired power plants shutting down or replaced by cheaper, and relatively cleaner natural gas. As the New York City mayor, Michael Bloomberg, put it in a speech to an energy summit near Washington this week: “Coal is a dead man walking.”
With the natural gas boom, with rising public concern about drought and extreme storms, this could be Obama’s moment to act on climate change. But only if the White House is ready to take advantage of it.
Senate minority leader Mitch McConnell adamant that al-Qaida suspect Suleiman Abu Ghaith be interrogated at Gu ntanamo
The White House clashed with Republicans on Friday over the decision to prosecute Osama bin Laden’s son-in-law in a civil court in New York rather than holding him at Guant namo.
The Republican leader in the Senate, Mitch McConnell, accused Barack Obama of putting his desire to close Guant namo ahead of the country’s security needs. The decision denied the intelligence community the opportunity to interrogate Suleiman Abu Ghaith to obtain information about possible harm to the US, McConnell claimed.
But the White House spokesman Josh Earnest brushed aside McConnell’s claim. “With all due respect, that’s not the assessment of the intelligence community,” Earnest said.
The row came as Abu Ghaith appeared in a US federal court on Friday to plead not guilty to a charge of conspiring to kill Americans. During a 15-minute arraignment hearing at the southern district court in lower Manhattan, close to where the September 11 attacks took place in 2001, Abu Ghaith spoke only to confirm that he understood his rights.
In a statement on Friday, McConnell said: “The decision of the president to import Suleiman Abu Ghaith into the United States solely for civilian prosecution makes little sense, and reveals, yet again, a stubborn refusal to avoid holding additional terrorists at the secure facility at Guant namo Bay despite the circumstances.
“At Guant namo, he could be held as a detainee and fulsomely and continuously interrogated without having to overcome the objections of his civilian lawyers.”
McConnell added: “From public reports it is clear that Abu Ghaith possesses valuable knowledge of al-Qaida’s activities within Iran. Abu Ghaith has sworn to kill Americans, and he likely possesses information that could prevent harm to America and its allies. He is an enemy combatant and should be held in military custody.”
Other Republicans, including senators Lindsey Graham and Kelly Ayotte, expressed similar sentiments to McConnell. Graham and Ayotte put out a joint statement on Thursday saying they were disturbed by the decision to try him in New York rather than Guant namo and claimed it made the country less safe.
Asked about McConnell’s statement, Earnest, the White House deputy press secretary, said the Pentagon, the Justice Department and the Department of Homeland Security agreed that Abu Ghaith be tried in a civilian court.
These courts “have shown that there are, in many ways, a more efficient way for us to deliver justice to those who seek to harm the United States of America. That is the consensus view of the president’s national security team and of agencies all across the federal government,” he said.
Earnest, speaking at the White House daily briefing, added: “The crimes he has committed are terrible. From at least May 2001 up to and around 2002 Abu Ghaith served alongside Osama bin Laden … This is somebody who is going to be held accountable for his crimes and it will be done in accordance with the laws and values of this country.”
The White House-Republican clash echoes one in 2009 over the Obama administration’s decision to try the alleged 9/11 mastermind Khalid Sheikh Mohammed in New York. The administration, faced with an outcry and warnings that it would pose a security threat to the city, backed off and opted instead for Guant namo.
Obama, unable to fulfill a 2008 election pledge to close Guant namo within a year of becoming president, has gradually been reducing the number of prisoners held at the Cuban detention centre.
In court on Friday, US district judge Lewis Kaplan said that Abu Ghaith faces accusations that “in or about May 2001 to 2002 you conspired with others to kill US nationals”.
Ghaith is accused of being summoned by Bin Laden on the evening of 9/11 and asked to assist in the al-Qaida chief’s campaign.
The following morning, Abu Ghaith, along with Bin Laden and then al-Qaida deputy Ayman al-Zawahiri, released a video in which he warned the US that “a great army is gathering against you” and calling on “the nation of Islam” to fight “the Jews, the Christians and the Americans”.
He later gave a speech in which he warned Muslims “not to board any aircraft and not to live in high rises”. Friday’s court session took place on the ninth floor of a building just a few blocks from the site of the World Trade Center, where nearly 3,000 people died in the worst terrorist atrocity to have been carried out on US soil.
Bitcoin, the digital coin with a questionable past, is gaining ground as a legitimate currency, trading at $32 a share last week
Dale doesn’t exactly look like an international crypto-criminal. He’s soft-spoken, baby-faced, and a senior at an Ivy League college. But every couple of weeks the political science major logs onto the Silk Road, an online black market that has been described as an “amazon.com of drugs” to buy wholesale quantities of “molly” (also known as MDMA, a particularly “pure” form of ecstasy), LSD and magic mushrooms. Some of these will be for his personal use, and the rest he’ll flog to less tech-savvy classmates at a mark-up of up to 300%. On a good weekend, he can net a profit of around $2,500. It’s a more lucrative sideline than waiting tables.
While Dale prices his party favours in dollars, he pays for them the only way you can pay for anything on the Silk Road: by using Bitcoins, an untraceable digital currency founded in 2008 by the pseudonymous “Satoshi Nakomoto”. Despite persistent efforts to uncover his identity, little is known about Nakamoto: he’s the Banksy of the internet. Or, rather, he was. Nakomoto disappeared without a trace in 2011, after telling a developer “he’d moved on to other things”. Bitcoin itself, however, shows no signs of vanishing: in the past two months it more than doubled its value against the dollar and after reaching an all-time high last Wednesday, it has been trading at above $32 a share.
Unless you’re a major tech geek or a regular patron of the shadowy computer underworld known as the dark web, you’ve probably never heard of – let alone used – Bitcoins. But below the “real” economy of legal tender and federal reserves, Bitcoins fuel a shadow economy that connects students, drug dealers, gamblers, dictators and anyone else who wants to pay for something without being traced. It has found a niche as the currency of internet vice, digital “pieces of eight” for modern-day pirates.
Despite these unsavoury associations, Bitcoin is increasingly winning a place on the internet as a legitimate currency, albeit one that will probably never quite shake off its dodgy past. Bitcoin is part of a gradual, technological shift in the way we think about money. It poses a tangible threat to centralised banking and the guardians of fiat money. Bitcoin won’t knock off the dollar any time soon; the euro can sleep easy. But it is clearly a force to be reckoned with. Bitcoin has become the world’s best performing currency, with its value spiking 130% just this year.
Bitcoins, unlike the cash you have in your pocket, are finite. There are currently 10.8m Bitcoins in the system, and this will cap out at 21m coins by the year 2140, according to market research firm ConvergEx. Limiting supply has been a major plus for Bitcoins, and a major reason why prices have gone up.
If you want to buy Bitcoins you simply go to an online exchange service such as Bitinstant and convert your local currency into the virtual money. These are then stored in a “wallet”, which functions as a sort of online bank account. You can then go and spend these anywhere that takes Bitcoins to buy anything from socks to drugs.
The Bitcoin network is structured like a guerilla movement: it is decentralised, controlled by its users rather than governments. This means it is (theoretically, at least) anonymous, and that, unlike credit cards and PayPal, which block payments from a number of countries, it enables instant payments to anyone, from anywhere in the world. That’s why criminals love it and why some online retailers do, too. It’s money without any kind of safety net below it. There’s no legislation to protect your investment and you can’t protest fraud.
It’s worth bearing in mind that while Bitcoin operates outside the parameters of governmental control and is often used to dubious ends, so too is a lot of the money we see around us. The US Treasury printed 3bn $100 bills in the 2012 fiscal year and, 80% of them go overseas, according to Federal Reserve estimates. As Nicholas Colas, ConvergEx Group chief market strategist, notes, “many of them simply facilitate the global drug and arms trade, not to mention tax evasion and human trafficking”. Bitcoins fit into the world of real currency more than anyone would like to think.
While governments and legislators have long been waging wars on traditional funny money, they are only just starting to wake up to the effects alternative currencies may have on the financial landscape. In 2011, two Democratic senators, alerted to the thrills of the Silk Road by a Gawker article, wrote to the US attorney general demanding that something be done about Bitcoin. And in October last year, the European Central Bank published a paper that recommended that developments in virtual currencies be regularly examined to reassess the risks.
The association between Bitcoins and drugs is clearest on Silk Road, where the currency is the only method of payment that is accepted. But Dale, the Ivy League student, uses the currency with care – not least because of its volatility. “I try to purchase only as many as I will need for a specific transaction, because they have historically had pretty wild inflation and deflation.”
Dale sees Bitcoins as the glue that binds a certain type of digital trade: “It seems to me like Bitcoins are essential for the currently thriving digital underground economy, but they also represent the beginning of an extra-governmenta, international digital economy.”
Bitcoin isn’t just for petty criminals, however: it has also made its debut in geopolitics. Last year, Iran was cut off from the European and US currency systems. High inflation caused the native currency, the rial, to plummet in value. With no dollars or euros available, Iranians used Bitcoin as a way to gain access to the international currency markets: they bought Bitcoins and later swapped them for dollars through an exchange site like Mt.Gox.
While Bitcoin has so far operated at the margins of the economy, there is some evidence that it is slowly entering the mainstream. WordPress, Reddit, and Megaupload have just started to accept Bitcoins and you can now even buy pizza with them. In December, the currency took its biggest step towards legitimacy yet, after partnering with a payments service provider in France. They also had a booth at this year’s Consumer Electronics Show (CES), which featured a picture of a wholesome looking woman holding an iPhone running a Bitcoin app.
Edward Castronova, a professor of telecommunications at Indiana University Bloomington, who has who pioneered the economic study of virtual worlds, doubts that Bitcoins will ever become a mainstream currency, however. Castronova’s scepticism stems from the way that Bitcoin is structured as a currency with a fixed size. “It just isn’t very fun. We’ve learned from game currencies that people like a little inflation in their economies. But Bitcoin is built to deflate. And we’ve just seen, culturally, people don’t like deflation.”
While it seems unlikely that Bitcoins will ever represent a full-scale challenge to regular money, they point to the rise of virtual currencies and changing definition of currency. Alternative currencies continue to slowly creep in around the edges of the economy: in February, Amazon announced that it is introducing its own custom currency called, rather imaginatively, Coins.
Starting in May, US customers will be able to use Coins to buy apps, games and in-app items on the Kindle Fire, with Amazon giving out “tens of millions of dollars worth of Coins” as a preliminary stimulus package.
And calculations by the Economist in January 2005 suggested that the total stock of unredeemed frequent flyer miles was worth more than all the dollar bills in circulation.
Castronova notes that among young people, the mental accounting on different sorts of “money” is already very fuzzy. “Twenty-year-olds don’t see any difference at all between dollars, gold coins, GPAs,” said Castronova. “They’re all just digital score sheets”.
The future of money may or may not include a Federal Reserve Bank of Amazon, but it probably does involve the gradual decentralisation and democratisation of currency. Virtual currencies aren’t just a new-fangled sort of Monopoly money. Rather, they may just be the thing that ends the monopoly on money.