Posted by: Cipher December 22, 2014
As a researcher by trader I am often asked primarily about the implications of specific forms of emerging technology. For many years this meant Bitcoin and more recently Tor. Both were and remain now inextricably linked with darknet drug markets. At a recent conference, rather awkwardly speaking to a group of intelligence professionals, I found myself defend these (and PGP encryption) on the strict basis of individual privacy. The technology is neutral after all. That PGP, Bitcoin and Tor combine to result in an unprecedented digitised drug market is hardly something many could have predicted – even if, in some of the more libertarian strains of the cypherpunk movement, it may have been ideologically desired. Nonetheless such markets exist and they show no sign of abating. The numbers of sales rise and the drug war tells us that so long as it is feasible to profit in this manner someone will aim to do so no matter the risks associated. Which is to say dark net markets are here to stay.
In reflecting upon this development I tend to find myself split. On one hand I am strict believer that no adult citizen should be faced with a litany of arbitrary choices between what is considered a controlled substance. The irrationality of the war on drugs can be surmised, as it often is, by simply looking at the legality of alcohol over numerous, more harmless narcotics. There is movement on this score but whereas one might expect to grow old with complete legalisation of weed this is hardly going to be the case with cocaine or heroin (and yes, I believe both should be legal). To this end there is something almost noble about the operators of such markets. Of course, in reality most are in it to make money and that’s fine. And more to the point what they are doing is intensely risky; operating, in the eyes of the law, drug rings. King-pins laden down with Bitcoin rather than dollars.
Ethically then what case can be made for all this? There are a few points one can make. The first is that the blunt virtuality of the transactions limits the exposure of the client to the riskiness of street interactions with drug dealers. This does not negate the inherent trail of violence associated with how the drugs made their way to them at all, but this is an issue directly tied to legislation (the drug market is the primary means of income for criminals, which barely needs mentioning). Less violence is good, no matter how lop-sided it might be. Certainly in weighing up client and dealer I believe the former being protected is plus for the markets. The second point we can add is that by breaking up the relationship between the ‘only dealer in town’ and the client the latter can not only gain far more choice in terms of products, but also gains a rare degree of leverage in the drug market wherein entire worldwide supply routes are accessible. Even more fascinating in terms of the manner in which these markets are maturing is that escrow is introduced into the picture. This gives the client a chance to file disputes, ask for refunds or refuse to finalise until delivery (in turn the vendor can make their own case, of course).
All this is, at least to the presumed audience of this article, rather positive, but alongside the drug trade on many darknet markets we also find murkier goings-on. Although not every site allows such activity, or simply do not have the volume, one cannot help but be irked by the sight of stolen credit card details, PayPal accounts, and the many other ways hackers capitalise off the ‘grandmother’ class of internet users who form, to put it bluntly, one giant botnet that the rest of us are looking in on. Leaving aside the direct negative problems here let me just focus on one oddity relating to the broader privacy-centred ethos of dark net marketplace users. What does the cryptographic technology underpinning these markets generate? Anonymity, certainly, and this is useless for trading anything sensitive. But also privacy and it is very strange in a world that is so strongly principled on the matter that identity is so openly traded. And sure, there is not always a huge amount of honour when everyone in the room has a mask, but anyone intelligent enough to successfully operate a dark net marketplace knows precisely the tradition that is allowing them to proliferate. Considering, from even a cursory scan of the markets via Grams, that most of these details are ‘dumps’ (i.e. useless) or cheap (i.e. likely a scam and why expect a scammer not to scam you?) there is, at the very least, a pragmatic incentive to reconsider their presence.
I turn finally to the issue of privacy since this is central to a world hinging on hidden services. Bitcoin remains the currency of the deep web and it seems it will take some time before this shifts. However, it seems an increasingly odd choice for those in that world to remain bound to a cryptocoin that has a public ledger. Whilst it is certainly true that coin-mixing would presumably help cover some tracks it is also clear, at least from Silk Road, that this is harder in practise than theory. Therefore it is perhaps time that at least some of the administrators entertained the possibility of accepting alternative cryptocurrencies with anonymity features. Going by marketcap Darkcoin fits the bill as the most obvious choice. In contradistinction to Bitcoin we find Darkcoin now has an in-built Darksend feature, with a giant button such that even the laziest user will surely apply it. Enterprising vendors might even save up and buy a masternode which would allow them to make even more Darkcoins for contributing to this anonymizing network. Whether administrators will see past their current income to consider whether adopting stronger anonymity technology that will surely prove sensible in the long run…well I cannot tell. We will have to wait and see.