A darknet market is a virtual marketplace that operates away from the open internet in the darknet.
Please read our first article on darknet market to know the basics.
The presentation and user interface of darknet marketplaces are generally professionally executed and similar to those of other virtual marketplaces such as eBay or Amazon. In principle, each account is provided with a coin wallet with one or more addresses, whereby new addresses can be generated at any time. Upon completion of a purchase, the sum to be paid will be transferred to the seller.
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There is almost always an escrow system, where the sum due is transferred to the market’s wallet and paid out to the seller only when the trade is completed. [An increasing number of markets also support multisig escrow, a type of cryptographic extension that makes it more difficult for the loss of payments or theft by parties involved. Purchased products can be rated and/or reviewed, which has a direct impact on the seller’s reputation and creates a basis of trust. Customer service is also always available, for example to report fraud.
Time and again, law enforcement agencies succeed in closing large and small markets on the darknet and obtaining users’ data. One of the largest in recent history was Operation Bayonet, a multinational covert operation in which authorities from the U.S., Europe, Thailand, and Canada managed to shut down the darknet markets of AlphaBay and Hansa, seizing data such as IP addresses, PGP-encrypted messages, bitcoins, passwords, and other “relevant” information.
It should be noted that despite concerted action by law enforcement agencies as well as increased fraud cases, the number of product listings has grown steadily and with double-digit annual percentage rates since the markets were founded. As a result, the drug trade on the darknet has proven to be remarkably resilient to outside interference, achieving a stable monthly sales volume of the equivalent of $12 million-$21 million, a threefold increase from 2013. Nevertheless, e-commerce accounts for only a tiny fraction of the total drug trade, which is estimated at €2 billion per month in Europe alone.
According to a study by the Universities of Montreal and Manchester, the markets, in their function as a virtual wholesale hub, may have led to a decrease in intimidation and violent crime related to drug trafficking. An investigation report by the European Monitoring Centre for Drugs and Drug Addiction comes to the same conclusion, which also attests to a generally higher purity of drugs obtained from the darknet compared to drugs available on the street.
According to a study by the University of Oslo, 80 percent of the clientele of the darknet markets is male, well-educated, tech-savvy, mid to late 20s, and occasional consumers. On the other hand, people with “problematic or dependent consumption behaviour” who cannot wait several days for the drug delivery – or who do not have the necessary technical and financial resources as well as digital skills – have little access.
A study on the former darknet marketplace Agora showed that drugs were the most commonly traded products, accounting for 85% of all transactions, followed by services (e.g. hacking and money) at 2.4% and counterfeits (e.g. watches) at 2.2%. Chemicals and jewelry were rarely traded on Agora.
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