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This Decentralized Bitcoin Market Is for Legal Stuff Only, Promise

BitHalo's creator doesn't want to become the next Ross Ulbricht.
​Image: Flickr/​Emil .

BitHalo is the platform that could finally support the decentralized Silk Road that darknet drug dealers so badly want, and it's up and running in public beta testing mode as of Tuesday. But its creator doesn't want it turning into a destination for criminals.

Despite the fact that anyone can start a market to sell anything they want on the BitHalo, David Zimbeck, the platform's creator, says he plans on limiting the sale of illicit goods to reduce his own liability.


BitHalo is a peer-to-peer platform that lets anyone start a market and begin selling whatever goods they wish. The markets exist on a network comprised of numerous computers with the software client installed, similar to how torrents work. Like the internet itself, there's no central server for the site's administrators nor law enforcement to shut down; if one node gets taken out, the markets live on.

The BitHalo network is currently unencrypted, nor does it hide the IP addresses of users like the Tor network does, although Zimbeck told me he plans on encrypting the platform once it becomes fully operational. Messages on BitHalo are secured with Bitmessage, however, an open source messaging service that passes messages continually through the peer-to-peer network, even after they reach their intended target, to hide their origin and destination. It also has PGP functionality to boot.

Should the network become more anonymous, BitHalo appears ripe for darknet drug dealers to sell their wares, and it will only become more appealing.

"I'm not going to ruin my life just to make a couple people happy"

But Zimbeck doesn't want to become the next Ross Ulbricht, the unassuming darknet drug lord who was arrested and convicted of multiple charges related to running Silk Road. Even though he can't control what people decide to sell, he plans on moderating the markets and removing listings for illegal goods.


"One of the things that I'm trying to offer everybody is markets—not just drug people," Zimbeck said. "I want the world to be excited about decentralization. I support freedom, but as far as the solution that I'm proposing goes, I want people to know that I will do what I have to to make sure that it's clean. I'm not going to ruin my life just to make a couple people happy."

The key attraction to a decentralized market like BitHalo is the lack of a central authority mediating Bitcoin transactions between buyers and sellers, a set-up that's believed to have allowed the administrators of Evolution, what was once the darknet's most popular market, to disappear in an apparent scam that took users' Bitcoin with it last week.

BitHalo accomplishes this through smart contracts between buyers and sellers that automatically release funds only if both parties confirm that a purchased good and payment have been received. Contracts are enforced with a double deposit system that requires both parties to put money into a joint account that can only be unlocked if both buyer and seller sign off. The idea is that if a seller gets the bright idea to rip off a customer, they can't, because they'll lose money, too.

A screenshot of the moderator's view of the BitHalo markets. Most offers are still just to test the system. Image: David Zimbeck.

BitHalo supports alternative cryptocurrencies, as well—with the flip of a switch, BitHalo turns into BlackHalo, allowing users to trade in an altcoin called Blackcoin. A sister client called BitBay that trades in the BitBay cryptocurrency, which Zimbeck is personally backing, also entered public beta testing on Tuesday.


It all sounds like a perfect place for nefarious activities to go down—decentralized authority, minimal scamming, and high security. How will Zimbeck keep bad actors off his markets? It could mean exercising some administrative control.

"I do have a moderation key," Zimbeck said. "If I see a dark market, I can remove it. But I can't control the internet, it's not like I can stop somebody from starting a private market somewhere in there."

Indeed, you can never fully control a truly decentralized system. So, what is there to do? "What we could so is run it through a server—if the server goes down, it's still decentralized, because you can still access and use the markets to their full power," Zimbeck said.

This answer suggests that Zimbeck could effectively centralize his "decentralized" system, at least until his own server is taken offline. In a Reddit post made several hours after our conversation, however, he seemed to already be changing his mind on this point.

"I think I will augment the disclaimer to say in effect [that I am not responsible for the content of markets]," Zimbeck wrote. "I know it isn't my responsibility."

BitHalo, BlackHalo, and BitBay certainly aren't the first markets to attempt a decentralized approach, but they are the first to actually make it to public beta and do away with any transaction mediators in a single stroke. Shadow, another hyped decentralized market, is still closed for development. OpenBazaar, yet another, has been in beta testing for a year, but uses third party "arbiters" to mediate disputes between buyers and sellers, giving them the power to con users if they want.

The biggest difference between these projects and BitHalo is, of course, that Zimbeck wants to imbue the platform with some moral scruples. But, as Zimbeck himself said, you can't control the internet.​