The novel opens when Marcus Yallow is sitting in class and is called to the office by Vice Principal Fred Benson. Benson tries to pin Marcus with several school related electronic crimes, however, Marcus evades him. Marcus returns to class and coerces his best friend Darryl to skip class with him and meet up with their Alternate Reality Gaming group so they can look for clues in the city.
The two sneak out at lunch time by putting pebbles in their shoes to avoid the school’s gait-recognition cameras and by getting their tattle-tale classmate Charles Walker into trouble.
They then meet up with their team-mates and friends Vanessa and Jolu and begin to look for clues in the tenderloin district. A rival ARG group takes a picture of them and threatens to send it to the school unless they back off from the clue. At that moment, the Bay Bridge is bombed and the group try to make their way to the subway station so as to escape the huge mob of people, but Darryl gets stabbed and the crew is captured and placed in a huge 18 wheeler with other prisoners.
Marcus finds out when he is interrogated that he has been detained by the DHS, and he refuses to cooperate. By this time, he is on an unknown island prison facility, and is thrown back into his cell. The next day he is asked to relinquish his phone password and other private data and he gives in. The next day he is asked to give information about the bombing, and when he insists he was not involved in the terrorist attacks he is thrown back into his cell.
Finally, the DHS allows him to sign release papers and ferry him back to San Francisco with Vanessa and Jolu. Darryl is still presumed to be with the DHS. The trio then discuss their plight and decide not to tell their parents about the DHS as they were threatened with recapture if they ever disclosed what happened on the island.
Marcus is welcomed home and tells his parents he was trapped in East Bay instead of interrogated. He goes to his bedroom and realises his laptop has been bugged. He then sets up his Xbox Universal and uses its Paranoid Linux internet browser to surf the internet in complete privacy.
The next day he inadvertently creates the Xnet by handing out copies of Paranoid Xbox to his friends at school who then burn copies for their friends. He is later interviewed by two cops who ask him about his subway usage, but then let him go. He then asks Jolu to help him further encrypt the Xnet.
After talking to Vanessa, he gets the idea of getting the Xnetters to jam peoples arphids so as to delay the DHS’s intrusive checkpoints. He tries the idea the next day and succeeds in slowing down the city. At first the DHS is criticized but the government then sends in more personnel to combat the “hackers”.
Marcus then realizes that the Xnet has been compromised and talks to Jolu about creating a web of trust. Jolu comes up with the idea of a key exchange party (see circle of trust section) and they hold the party with their friends. They all exchange public and private keys and Marcus meets Ange, his future girlfriend.
The two agree to meet at the upcoming Don’t Trust Anyone Over 25 concert as their first date. The concert is jam packed and fun until the DHS arrives and gasses the crowd- Marcus and Ange manage to escape by pretending to be bystanders. Later, Marcus is suspended from school for several weeks after talking back to his new DHS placed Social Studies teacher about the Constitution. He begins to spend more time at Ange’s house.
Several reporters begin to ask M1K3Y for interviews, and so with the help of Ange he sets up an Xnet press conference. However, the reporters blow what he is saying out of proportion and the Xnet continues to have a bad image.
Marcus decides not to jam because he wants to stay free, and this causes a rift between him and Ange. His suspension ends, and on his way back home, he bumps into Zeb, who slips him a letter. Marcus finds out from the letter that Darryl is still being held captive,and decides to tell his parents the truth about the DHS.
His parents support him and take him to see Darryl’s father and then reporter Barbara Stratford, who convinces Marcus to come out with his story. Marcus and Ange make up and then go to see Barbara together to tell her the whole story.
At Ange’s house, Marcus is emailed by someone in his circle of trust named Masha who offers to help him escape the country as she works for the DHS. He is skeptical, and so she sends him a video of a secret meeting between DHS operatives. Marcus tells her he and Ange will both go, and she tells him to organize an Xnet event to create a cover.
Ange and Marcus pack for their fugitive mission and then plan their large-scale Xnet vampire game at the civic center. The game has a huge turnout and starts off well, but the DHS gasses the crowd again. Masha manages to find Marcus, but they don’t have time to go back for Ange. On their way to the delivery van, Masha shows Marcus a photo that can prove Darryl was captured by the DHS. Realising he must stay and fight, Marcus steals Masha’s phone and escapes to the streets of San Francisco with Zeb. He sees that Barbara has printed his article, and before long, the DHS capture him.
Now back on Treasure Island, the true location of “Gitmo-by-the-Bay”, Marcus is about to receive gag-reflex torture when Barbara and a team of state troopers busts in and arrests the DHS. Barbara releases Marcus and they find Ange and Darryl.
Marcus and the rest of the DHS’s detainees are given fair court cases. Marcus is allowed bail in addition to a charge for stealing Masha’s phone. He is also sentenced to live in a halfway house for three months. Barbara Stratford creates an agency with the purpose of bringing justice to the DHS, which Marcus and his friends are a part of.