According to the researchers studying online black markets, the number of listings for illegal products and services has actually gone up following the original Silk Road takedown (Silk road 2.0 is up and bigger than the original). At least one researcher believes this means the illegal trade will grow even more.
Almost all of these markets use Bitcoin. James Martin, author of a new book on the subject, suggests that Bitcoin was utterly critical to Silkroad’s development and the developments of cryptomarkets in general. Silkroad mastermind, Dread Pirate Roberts, acknowledged this, calling it one of the “pillars of Silk Road.”
Changes in the Market after the Bust
In the 6-month period following the original Silk Road closure, new “dark markets” appeared and illegal goods listings grew considerably, according to researchers from the Digital Citizens Alliance.
The non-profit group found the number of drug listings on the largest dark markets nearly doubled in that 6 month period to 32,029, versus six months earlier when the original Silk Road was taken offline. The group’s report looked at listings from 11 of the currently operational black market sites, six of which had been newly launched: Silk Road 2.0, Agora, Evolution, White Rabbit Anonymous Marketplace, Outlaw Market, The Pirate Market, and more.
On the other hand, a 2012 paper from Carnegie Mellon University computer engineering professor, Nicolas Christin, suggests that around 1.35 million BTC passed through Silk Road from 2011 until 2012, meaning the market’s transactions made up about 4.5% of all BTC transactions. It is still not clear, according to Christin, what the impact of the market’s closure had on the Bitcoin economy as a whole.
Nevertheless, it seems fairly clear that online black markets are popular among drug dealers for a simple reason: despite the risk of an FBI raid, they’re still safer than doing business the conventional way. For those who sell drugs, law enforcement is only part of the risk — a much bigger risk is someone trying to kill them and steal their stash of drugs.
For these dealers, online black markets help remove the “systemic violence” inherent to the narcotics business. Dark market vendors do not need assistance from the organized criminal gangs which usually take care of security and distribution in exchange for protection money. Consumers similarly don’t have to deal with potentially violent gang members either.