In this concluding article of our series looking at Silk Road, a year after its closure, we examine the impact the Silk Road bust had on the dark markets and their most widely used digital currency, bitcoin.
The FBI may have taken down the Silk Road in spectacular fashion, slapping a seizure notice on the dark marketplace’s website and executing the high-profile public arrests of Ross Ulbricht, and later, bitcoin executive Charlie Shrem and digital currency trader Robert Faiella.
According to academics and researchers studying dark web markets – which transact almost exclusively in bitcoin – listings for illicit goods and services have actually grown in the aftermath of the Silk Road bust. The rising popularity of such markets among drug vendors and customers means that illicit trade is set to expand even more, one researcher believes.
Bitcoin’s creation and subsequent explosive popularity has been a crucial factor in the growth of global dark markets, according to James Martin, a senior lecturer and researcher at the Macquarie University Centre for Policing, Intelligence and Counter-Terrorism, who has written a new book about the subject.
“Bitcoin was absolutely critical to the development of Silk Road and cryptomarkets more generally. This was acknowledged by [Silk Road mastermind] Dread Pirate Roberts; he said it was one of the pillars of Silk Road.”
Bitcoin economy and dark markets
The non-profit group, which works on promoting Internet safety to ordinary web users, found that the number of drugs listings on the biggest dark markets had almost doubled by March to 32,029, compared to six months earlier when Silk Road was taken offline.
The DCA report looked at listings on 11 currently live dark markets, of which six were newly launched platforms. It compared the latest listings to the 18,174 for drugs on the four major dark markets that existed last October.
Among the current markets it examined are Silk Road 2.0, Agora and Evolution, plus new entrants White Rabbit Anonymous Marketplace, Outlaw Market and The Pirate Market. The dark markets operating last year also included now-defunct dark markets Silk Road, Black Market Reloaded, Sheep Marketplace and DeepBay.
Accessing websites with ADR domains usually requires a specific piece of software. For sites on the Tor network, the Tor Browser, a piece of software designed specifically for surfing that network, must be installed to access them.
The mainstreaming of dark markets?
There are signs that dark markets are evolving beyond the drugs-infatuated niche of Silk Road and its genre.
The creators of OpenBazaar, for example, want to bring their decentralised market to a wider swathe of Internet users who aren’t interested in buying drugs, but do want to preserve their autonomy and privacy.
OpenBazaar is a peer-to-peer marketplace that lets vendors hawk their wares anonymously and without relying on a central platform. Vendors host their product listings on their own computers. Trade is conducted in bitcoin.
Sam Patterson, who leads operations for the open-source project, says OpenBazaar is nothing like Silk Road or its successors.
“Silk Road was a centralised marketplace – directly controlled by an individual or small group – that catered almost exclusively to a subset of the population who wanted to trade in illicit substances.”
By contrast, Patterson, said, the platform he’s building is decentralised – no one owns the network – and it’s simply a platform for individuals to conduct business without an intermediary skimming off commissions and fees.
“It is a platform for people to manage their own trade online, directly with others,” he said.
The coming e-commerce boom… in drugs
Even as the dark web develops at a rapid clip – there is a now a trade publication reporting on market goings-on and a search engine to make dark market shopping easier – law enforcement agencies seem to be left trailing in the wake of decentralised, encrypted platforms.
Martin, the drugs trade researcher, said he has spoken to law enforcement agencies and they are struggling to police dark markets, despite US agencies’ spectacular takedown of Silk Road.
“With online drug trading, you have hidden financial transactions; the dealer and customer never meet in the same place; you have drugs arriving in the post […] all of this breaks the ‘business model’ of conventional law enforcement,” he said.
Anti-narcotics agencies need to come to grips with dark markets quickly because they are only set to grow, Martin added. Just as e-commerce was pooh-poohed by brick and mortar retailers 20 years before giving rise to retailing giants like Amazon and Alibaba today, law enforcement is now only dimly aware of the development of dark markets.
“We’re in a position now like the big department stores of the 90s, for example, who saw online retailing as a flash in the pan, thinking it would never take off. They thought people would want to come to a store to buy sunglasses or shoes. Clearly we know that isn’t the case now. There are compelling reasons to speculate that the online drugs trade is going to expand further in years to come.”
- ^ series (www.coindesk.com)
- ^ James Martin (www.mq.edu.au)
- ^ Digital Citizens Alliance (www.digitalcitizensalliance.org)
- ^ Agora (agorahooawayyfoe.onion)
- ^ 2012 paper (www.andrew.cmu.edu)
- ^ price (www.coindesk.com)
- ^ estimates (www.gfintegrity.org)
- ^ court records (publicsearch.ndcourts.gov)
- ^ Bright Planet (www.brightplanet.com)
- ^ credited (www.nytimes.com)
- ^ Namecoin domain names (www.coindesk.com)
- ^ Tor network (en.wikipedia.org)
- ^ OpenBazaar (www.coindesk.com)
- ^ trade publication (deepdotweb.com)
- ^ search engine (grams7enufi7jmdl.onion)
- ^ Image (www.shutterstock.com)
- ^ OpenBazaar (www.coindesk.com)
- ^ Silk Road (www.coindesk.com)
- ^ Silk Road 2.0 (www.coindesk.com)
- ^ Silk Road: One Year On (www.coindesk.com)