The Dark Net (17 page)

Most vendors do not turn over quite the same volumes. I selected nine medium-sized vendors, in terms of numbers of sales. Here, the average monthly turnover is between $10,000 and $20,000 each. Assuming a 100 per cent mark-up on the wholesale price, this means an annual income of between $60,000 and $120,000. A very decent salary, but not exactly drug baron money. This suggests that most vendors are not large-scale international traders, but more likely middle-market and retail dealers. (Studies typically show that a street-level dealer earns around £15,000–£20,000 in the UK; while the larger dealers and bosses earn a lot more.) Some sellers are established middlemen who have been involved in the industry for years and have long-standing relationships with importers; they are simply transferring their operations online. But Silk Road has brought new people into the marketplace, ranging from Ace, a twenty-four-year-old who sold ‘home-grown weed’ on the Silk Road in 2012 – ‘I can take about ten to twenty orders a day, so anywhere from seventy to a hundred and forty a week’ – to pharmacologists who illegally sell prescription drugs from their surgeries. Angelina was running a medium-sized – legal – company when she read about Silk Road in the 2011
Gawker
article. She set up an operation with a few others, and between 2011 and 2012 completed 10,000 transactions, sourcing wholesale from the producers, and going direct to market. It’s lucrative work, but not glamorous, she explained. ‘We are an importer, manufacturer and pack-and-ship retailer: it runs like a small internet retailer/packing and shipping company,’ she told
Mashable
magazine in 2012.

When you buy drugs offline, your choice, to some extent, is limited by geography, and by who you know. On Silk Road 2.0 there is
too much
choice. Thousands of products and hundreds of vendors, operating over several sites. All online marketplaces face this problem. And they all solve it the same way. ‘Legal e-commerce wouldn’t work without user reviews,’ explains Luke Upchurch from the consumer rights umbrella group Consumers International. ‘They allow consumers to make more informed decisions about product choice – and allow producers to build up reputations.’ According to research published by Consumers International, 88 per cent of online shoppers in the UK rely on them when making purchasing decisions.

Encryption and the crypto-currency Bitcoin have created the technical conditions that allow Silk Road to exist, but it’s the user reviews that make it work. Every drugs site has review options, usually a score out of five plus written feedback, and reviewing your purchase accurately and carefully is an obligation for all buyers. ‘Others need to be able to read this information and predict what exactly the vendor is offering,’ writes one experienced user to newcomers in a Silk Road 2.0 discussion forum. ‘When you’re going to leave feedback make sure you talk about the shipping times, product quality, product quantity and the customer service that the vendor provided.’

I decided to buy a small amount of marijuana to understand fully how the system works. But this was no tiny corner of the website: there were around 3,000 different varieties advertised, by over two hundred different vendors. I began to scour through reviews of different sellers, trying to spot those that others had found to be reliable and trustworthy:

1/5: this seller is a fucking scammer, i payed for hashish and now i have 40 grams of fucking paraffin! DON’T BUY FROM THIS CUNT (20 gram of maroc hashish)

No good. After a bit of digging I found one that fitted the bill. Drugsheaven was based overseas, but his vendor page advertised ‘excellent and consistent top quality weed & hash for a fair price’. Better still, he had a refund policy and detailed terms and conditions. Drugsheaven sold a staggering array of products: Amnesia Haze, Cheese, White Widow, SoMango, Bubba Kush, Olympia, Messi, Marlboro Gold Stamp, Marlboro 15 Stamp, Gold Seal Afghani, Polo Polm, Lacoste Polm, Ferrari Polm. I carefully scrutinised his reviews. He had a dozen five-star reviews in the last twenty-four hours; and close to 2,000 pieces of feedback over the last four months, averaging around 4.8 out of 5.

First Order was Lost . . . i got a reship and now im very happy . . . Heaven is One of the best vendors on the road!! Very friendly and very good Communication too. i will be back Soon;) please Check this vendor . . . 5 Stars

And, importantly, the occasional negative review (a 100 per cent record would be unconvincing):

Product never arrived. Still a trusted vendor though, will order again. Things happen sometimes, but order at your own risk.

Buyers have reputations to protect too: they are judged according to how much money they have spent on the site and how many
refunds they’ve asked for. A good reputation still matters as a buyer, but for the vendor, your digital reputation is everything. Your name, your size, your promises – all are worthless.

The idea of anonymous marketplaces and reputation systems – how to foster trust in an anonymous world – goes back to the early days of the cypherpunks. But they knew that if everyone was anonymous, then there would be no one to trust. A user could rip someone off under one pseudonym one day, and register another the next. The cypherpunks imagined that people would create long-standing digital pseudonyms: online personas that wouldn’t be linked to the ‘real’ you, but would have their own identity and reputation that developed over time. In his 1988 ‘Crypto-Anarchist Manifesto’, cypherpunk co-founder Tim May explained that, in the anarchic digital future, ‘reputations will be of central importance. Far more important in dealings than even the credit ratings of today.’ One of the main reasons for the success of Dread Pirate Roberts’ Silk Road was the trust he had built up over two years of successful transactions. It didn’t matter that no one knew who was behind the mask.

Just like on Amazon or eBay, a positive reputation can take a lot of time to establish. When the original Silk Road was taken down, the vendors lost their old digital profiles, and with them their reputations. ‘Many of us have spent a lot of time and money just increasing our buyer and/or seller statistics on our respective accounts,’ complained one seller to the Silk Road 2.0 admins in October 2013. ‘Is there any chance that any of that data was backed up anywhere and that it can be transferred to the new marketplace?’ ‘No there is no backup,’ came the flat response. All
the old data had gone down with site. ‘We are all newbies again, I’m afraid.’ Another administrator added: ‘It’s your job to re-build that reputation and remind your customers why they chose you in the first place, through exceptional customer service and high-quality products.’

With so much money flowing through these sites – and a good reputation the key to getting a slice of it – some vendors try to game the review system. Common tricks include creating fake accounts from which to post positive reviews; writing bad reviews of competitors; paying others to give favourable write-ups; even offering free products in exchange for good feedback. But there is an impressive amount of self-policing here; a genuine drive to identify and remove scammers. The Rumour Mill is the most popular forum on Silk Road 2.0. It is dedicated solely to discussion of vendors and products. In the Rumour Mill threads, reputations and products are aggressively fought over, and scammers are regularly named and shamed. ‘CapnJack is a scam artist known as KingJoey,’ writes one disappointed buyer. ‘He has been ripping people off badly for a long time and he is using this vendor profile to make people think he has really good #4 Heroin left and needs to get rid of it for $170/gram . . . Everyone needs to stay vigilant and avoid this mother fucker.’ The community will often come together to expose a scam vendor. On one occasion, a group of buyers outed theDrugKing as a vendor writing his own feedback. ‘I was looking at this vendor a few hours ago, and they had zero feedback. Now they have a bunch, and it’s *all* from users with 6–10 deals,’ wrote one user. Others forensically analysed all his posts. ‘Feedback also has some other things that stick out,’ said
one, ‘despite a fairly decent job at making the writing look like different people. E.g., “nice stealth”, “great stealth”, “insane stealth”, “brilliant stealth”.’ He was reported to the admins, who banned him. ‘Well done’, wrote one grateful buyer, ‘for exposing this scammer.’

Reputation-based trading produces a powerful but informal consumer-led system of self-regulation, which allows users to make more informed decisions on the products they purchase. When you purchase a drug on the street, you have no reliable way of judging what you’re buying, and no recourse if things go wrong. That’s why on the streets drug purity is wildly variable: the average purity of street cocaine is 25 per cent, but has been found as low as 2 per cent – typically cut with mixing substances such as benzocaine by middlemen and pushers. Analysis of seized ecstasy tablets in 2009 found that approximately half had no ecstasy in them at all – rather caffeine and 1-benzylpiperazine. Not knowing what you’re putting in your body can have tragic consequences. In 2009–10, for example, a contaminated product led to forty-seven heroin users in Scotland being infected with anthrax. Fourteen died.

Dark net markets provide a radical yet familiar solution to this problem. The user-ranking system provides a safer, systematic and reliable way of determining the quality and purity of products: trusting the feedback of people who have used them. True, price here is more variable. (In some cases, it is extremely competitive: as of October 2013, cocaine on Silk Road cost an average of $92.20/g compared to an average global street price of $174.20/g – a saving of 47 per cent. On the other hand, its average marijuana
price – $12.10/g – was higher than the global average of $9.50/g, and its heroin is particularly expensive, at over twice the US street price.) But according to Steve Rolles of the Transform Drugs Policy Foundation, drug users tend to be willing to pay a slightly higher price if they can be more confident in the product quality.

I had a market and a vendor. But I didn’t have a product. So I accessed the site’s internal email system to ask for some advice.

Me:
I’m new. Do you think I could just buy a tiny amount of marijuana?

Twelve hours later, I received a response:

Vendor:
Hi there! My advice is that starting small is the smart thing to do, so no problem if you want to start with 1 gram. I would too if I were you. I hope we can do some business! Kind regards.

How polite! I follow his advice and opt for the smallest amount: 1 gram of marijuana. It costs 0.03 Bitcoins, which comes to around £8 (plus free shipping and delivery). I click ‘add to cart’. Now all that’s left to do is pay.

Markets adapt to problems. Every crisis is swiftly followed by innovation. The dark net markets are getting smarter all the time.

The most important conundrum here is how to make sure buyers don’t get ripped off. When you buy something from reputable websites you part with your money before you receive the product, even though you don’t know the seller. This is because you trust that the system works. Sites like Amazon have tried-and-tested mechanisms to assess products and deal with disputes, and are governed by legislation to cover consumer rights and uphold trading standards.

Upfront payment was also the preferred method on early drugs markets like the Farmer’s Market. Buyers would place an order, hand over their money and wait, hopefully, for a package to arrive. But it is a model that is too unreliable in drugs markets. Silk Road solved this problem by adopting something called an ‘escrow’.

Every dark net market operates its own internal wallet system. On the original Silk Road, a buyer would create a site-specific wallet, into which they transferred Bitcoins from another wallet – typically one held on their own computer. Once the order was placed, the buyer would transfer the correct amount of Bitcoins from their Silk Road wallet to an escrow – a wallet controlled by a Silk Road administrator. The vendor would be notified that the money had been placed in the escrow and send the order. When the buyer received the product, they notified the site, who released the money to the vendor’s own Silk Road wallet. On arrival to the original Silk Road, a message from DPR advised all newcomers: ‘Always use the escrow system! This
can’t be stressed enough. 99 per cent of scams are from people who set up fake vendor accounts and ask buyers to pay them directly or release payment before their order arrives’ (this is called the Finalise Early (FE) scam). Escrow systems go back centuries. The word escrow derives from the Old French word ‘escroue’, meaning a scrap of paper or a roll of parchment. EBay has an optional fee-based escrow system. But it was unheard of in the drugs market, where the concept of consumer protection was non-existent.

But escrow is flawed, because you still have to trust a drugs website with your Bitcoins. As the six months of mayhem following the fall of Silk Road showed, sites are liable to theft by site admins, attacks by hackers or confiscation by the police. In all cases, you have little recourse. When in February 2014 Silk Road 2.0’s entire cache – $2.5 million worth of Bitcoin in buyers’ and vendors’ Silk Road wallets – was stolen, Defcon took to the forum to announce the bad news. Apologising profusely, he added that ‘Silk Road will never again be a centralised escrow storage . . . I am now fully convinced that no hosted escrow service is safe.’ Defcon proposed a new, even more secure, payment method called multi-signature escrow. This way, after a purchase is accepted by a vendor, a new Bitcoin storage wallet is made. The vendor approves on order, the buyer approves on receipt, then the site approves (or declines if there is a problem). But the money is released only when two of the three sign off on it with their PGP keys. No one party can disappear with the money. It’s like a safe where all the key holders must be present to unlock it. Any problems, and the buyer gets his money back.