Research paper
The transparency paradox. Building trust, resolving disputes and optimising logistics on conventional and online drugs markets

https://doi.org/10.1016/j.drugpo.2015.12.010Get rights and content

Abstract

Background

In recent years, marketplaces in the darknet emerged where vendors and customers can exchange illicit drugs and other goods on digital platforms by using hidden internet services. The main thesis of this paper is that in an online environment, different practices for building trust and reputation emerge that stabilise market processes.

Methods

Qualitative and quantitative data from a recent German project on conventional (offline) small-scale drug dealing as well as qualitative case studies on four online vendors operating on Agora market are used to explore alternative practices for building trust and reputation. They also explore the use of violence and logistics established on cryptomarkets in comparison to traditional dealing. To analyse the data we applied qualitative content analyses.

Results

For conventional commercial illicit drug dealing on various kinds of markets, trust between buyer and seller is a crucial issue, often emphasized by restricting deals to well-known persons. While this typically includes face-to-face contact, the opposite is true with online drug trading. It is characteristic of cryptomarkets that the parties involved in a transaction know neither the personal identity nor the physical location of one another. This is realised by using aliases, anonymising software, and cryptocurrencies for payments. Violence typically only plays a role in traditional drug dealing, but mostly, if at all, just as a latent threat for potential rule-breakers. Processing a transaction anonymously includes escrow services for the buyers, which makes trading more reliable, although they cannot completely prevent scamming. Furthermore, online drug marketplaces usually offer a customer feedback system that allows customers to rate vendors and review products. A positive vendor feedback helps building reputation and trust in such an online environment. With regard to logistics, most conventional small-scale dealers restrict their acts of selling to private surroundings to avoid encounters with law enforcement. In cryptomarkets, the purchased drugs are delivered by traditional postal services, sometimes to false addresses or to someone else's name to conceal the identity and address of the buyer.

Conclusion

On virtual drug markets practices of building trust, conflict resolution and logistics is constantly evolving. They offer improved security solutions on the one hand while on the other hand scamming and fraud seem to be widely used on both online and conventional drug markets.

Introduction

The focus of this article is on comparing dealing on darknet marketplaces (DNMs) to conventional1 drug markets. DNMs, also known as ‘cryptomarkets’ (Barratt et al., 2014, Martin, 2014a), use anonymising software (e.g., TOR, I2P), encrypted communication (e.g., PGP). Therefore, the physical identities, locations of the users are concealed (Martin, 2014a). Vendors, customers can exchange (illicit) drugs, other goods or services on these platforms by using virtual currencies (i.e., Bitcoin) as a means of payment (Martin, 2014b). Although Bitcoin enables pseudonymous transactions, its embedded block chain can also be used for criminal investigation purposes (Tzanetakis, 2015a). Finally, ‘professional-looking’ shipments that contain drugs are delivered by traditional postal services without their knowledge (Christin, 2013, Van Hout and Bingham, 2013a).

Silk Road 1 (SR1), which started operating in February 2011 and was shut down by the FBI in October 2013, marked the beginning of innovative DNMs as outlined above with a wide range of psychoactive substances offered by vendors for selling (Chen, 2011, Van Buskirk et al., 2014). This was followed by increased media attention, disapproval by government authorities and law enforcement as well as increased interest of scholars publishing empirical research on different aspects of cryptomarkets (Aldridge and Décary-Hétu, 2014, Barratt, 2012, Barratt et al., 2014, Burns et al., 2014, Buxton and Bingham, 2015, Christin, 2013, Dolliver, 2015, Martin, 2014a, Martin, 2014b, Van Hout and Bingham, 2013a, Van Hout and Bingham, 2013b, Van Hout and Bingham, 2014). While quite a few studies on DNMs are based on monitoring publicly available listings for sale (Aldridge and Décary-Hétu, 2014, Burns et al., 2014, Christin, 2013, Dolliver, 2015), only a few papers concerning cryptomarkets are qualitative inquiries (Martin, 2014a, Martin, 2014b, Van Hout and Bingham, 2013a, Van Hout and Bingham, 2013b, Van Hout and Bingham, 2014). Christin (2013) found 24,400 unique listings being sold between February and July 2012. Aldridge and Décary-Hétu (2014) observed both a significant growth in the number of vendors and customers using SR1 as well as increased revenues.

However, Van Hout and Bingham (2013a) explored an active user's purchasing mechanisms, experience and motives within SR1; the relationship between vendors and customers was described as being shaped by trust and professionalism. In another visual and narrative analysis of users’ motives, Van Hout and Bingham (2013b) concluded that the majority of SR1 users were male and in professional employment or tertiary education. A qualitative study also explored vendor accounts of SR1 as online trading infrastructure (Van Hout & Bingham, 2014). Van Hout and Bingham (2014) concluded that vendors have a professional approach to running their businesses on SR1 by providing a quality service to maximise their profits, professional advertising of quality products, professional communication and regular forum activity, competitive pricing, good stealth techniques, speedy dispatch of slightly overweight products and efforts to avoid customer disputes. Moreover, Barratt et al. (2014) analysed data from an anonymous online questionnaire with a sample of 9470 participants based in the UK, Australia and the USA. Barratt et al. (2014) found that drug purchases were made on SR1 because the DNM offered a wider range of drugs, better quality, greater convenience when ordering online and reliance on vendors with high ratings. These findings are consistent with Van Hout and Bingham's (2013b) outcomes on users’ reasons for accessing and using SR1. Although having different research approaches, Christin (2013), Van Hout and Bingham (2013b) and Barratt et al. (2014) all come to the conclusion that MDMA, cannabis, and benzodiazepines were among the most popular drugs purchased on SR1.

While research on darknet markets is a relatively new phenomenon (as are the markets themselves), a lot of research exists for the area of conventional drug distribution. There is evidence about the general structures of the global trade (e.g., Reuter & Trautmann, 2009), mid-range dealing (e.g., Pearson & Hobbs, 2001), retail sales in hard drugs markets (e.g., Coomber & Maher, 2006) as well as among networks of recreational users (e.g., Jacques & Allen, 2014), including the phenomenon of non-profit-driven “social supply” (e.g., Coomber & Turnbull, 2007), to name just a few. In addition, conventional drug markets can be differentiated into “open” and “closed” markets (Coomber, 2015, Hough and Natarajan, 2000). “Open” markets (e.g., heroin street markets and ecstasy club markets) allow access to everyone and therefore it is likely that buyers and sellers don’t know each other, while “closed” markets are only accessible for those who are already trusted (Hough & Natarajan, 2000, 4). Within “open” markets, dealers are more visible to potential customers as well as more exposed to violence. Due to the higher visibility, sellers are at greater risk of being arrested by law enforcement agencies (Coomber, 2015, Coomber and Moyle, 2013). DNMs for drugs can also be regarded as “open” markets, especially because this is defined by the “technical organisation” (Hough & Natarajan, 2000, 4) of the market, although not all characteristics can be applied to DNMs, e.g. a higher exposure of violence. Moreover, conventional drug markets are highly differentiated in terms of time, space, and populations and show varying degrees of violence and trust as, for example, Coomber, 2006, Coomber, 2015, Reuter (2009), Hough and Natarajan (2000) point out. In sum, law enforcement agencies may have at least an idea of the identities of some types of dealers and their customers (Coomber, 2006, Skolnick et al., 1990). At the same time, data on supply and demand are generally rare, bureaucratic and most often based on estimations or seizures (e.g., for the German-speaking area: BKA, 2014, BK, 2014), whereas the opposite is true for DNMs. On the one hand, by using anonymising and encryption software, market administrators, vendors, and customers operate relatively anonymously on the Internet. On the other hand, the infrastructure of DNMs allows the parties involved to publish quite detailed data on the various types of drugs, their price and perceived qualities, quantities sold, dates, shipping information and satisfaction of the customers. Having different information on supply and demand available on these two type of drug markets (conventional and DNM) is referred to as a transparency paradox (see conclusion).2

In this article, we explore differences and similarities between conventional drug dealing and online vending on DNMs. By using a qualitative approach (interviews and case study analysis), we describe practice and strategies regarding the use of violence, building trust, and logistics used for online and offline drug distribution. Finally, criminological implications for drug policies will be discussed.

Section snippets

Methodology and data

For the purpose of this analysis, data on conventional drug dealing come from the German mixed-methods (qualitative and quantitative) research project ‘The Distribution of Illicit Drugs’ (DDID, HE 852/16-1; Bernard & Werse, 2013). The main objective of this project was to explore the profit-driven and non-profit-driven distribution of illicit drugs in socially inconspicuous settings. Socially inconspicuous means that respondents had to meet criteria for not being a marginalised problem drug

Practice of building trust and reputation

While in this article, we discuss how types of trust and reputation are established differently online and offline, there is also a ‘trust continuum’ addressing the quality of trust and reputation. In a first stage, we analysed the material described above according to how trust and reputation are built within conventional drug dealing (Adler, 1993, Denton and O’Malley, 1999, Taylor and Potter, 2013) as well as on darknet markets. Hence, similarities and differences of practice for building

Conclusion

According to our data there are three significant differences between traditional drug dealing and online vending. Firstly, trust has a different meaning: on traditional drug markets, it is a sine qua non for interpersonal relationships, but not as a means of increasing sales and income in the first place. On the DNMs, however, trust is proactively promoted by administrators (via the market structure) as well as by vendors (via ‘good conduct’) in order to attract new customers and increase

Acknowledgments

This paper is based on research emanating from the Austrian-German DROK project (Organisierte Kriminalität zwischen virtuellem und realem Drogenhandel). The project is jointly funded by the German Research Programme for Civil Security of the Federal Ministry of Education and Research and the Austrian Security Research Programme KIRAS of the Federal Ministry for Transport, Innovation and Technology (845497). The views in this paper are those of the authors and are in no way intended to reflect

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