A lot of times, people say Bitcoin is anonymous, but I know most transactions can be easily traced using IPs that used ewallets and by making connection with other bitcoin addresses. So with that in mind, I'm curious if someone had bought something on Silk Road (or any other place) - wouldn't they need to have that product delivered eventually to some address where they could pick it up? How did that affect anonymity? Or were drop off locations used or something? I'm just curious how that worked. Any ideas?
Regarding bitcoins, all the funds were mixed using various techniques to prevent coin tracking. It is propably better to not use a web wallet in this case. Using the Tor network allowed to prevent being tracked by IP. Although you might think bitcoin is not 100% anonymous, it is anonymous enough so that no scammer/hacker/thief has ever been caught using only the blockchain.
To my knowledge products were compressed and sent to the customers' home address in letters. Apparently that's not a problem for small orders.
It was all done behind TOR, where also Bitcoin core was running and therefore was unable to be traced, and the website itself was an .onion domain which also is hidden behind TOR. Sellers on the market then received Bitcoins for the sold items, which always was sent through the mail, both big and small (there was some journalists in France or Spain, who tried ordering a handgun to see how easy it would get through customs, and it was hidden quite well inside a stereo which just looked as if it was ordered from abroad). Other sellers on the market then specialized in turning Bitcoins into cash for a fee, and this was one way of getting the earned Bitcoins into cash anonymously.
But the owner made many mistakes, while always thinking he was safe an anonymous. But he ended up getting arrested because FBI were able to find his real name with the use of Google. They were even on to him already 1-1½ year before they made the arrest.
(There has been enormously many exciting articles and documentaries about this whole thing :)