The Rise of the CryptoMarket: How Illicit Drugs Are Sold Online

Source: Thinkstock

If you were concerned about the company your children are keeping and that they might be gaining access to illegal drugs through social networks in the neighborhood or at school, you may need to refocus your efforts to your own home. The online drug trade is exploding, and it’s largely flying under the radar. Although it’s long been assumed that shady dealings in outlawed substances are taking place on the “dark net,” the trade is entering the mainstream as more people become privy to how to track down what they want.

The rise of cryptocurrency and “cryptomarkets” are not completely unrelated. As mediums like Bitcoin and others have gained popularity, they’ve also been a driving force behind the online drug trade. Bitcoin can be used much in the same way that cash can on the street: anonymously. It’s that reason that many people are finding it a suitable currency to pay for illegal items or services.

This has also been one of the major criticisms of Bitcoin: that it can be used to purchase drugs. But if cash can be used to do the same thing, the logic seems to fall apart.

The bust of the “Silk Road” — a large illicit goods and services market that existed online for several years — fetched the FBI around $28 million in Bitcoin when it was finally shut down, and its operator was arrested. This was largely hailed as a big hit against the online drug trade.

But according to a number of reports, the bust seems to only have inspired others to start up their own markets, leading to illicit online trading grounds that are flourishing. As a piece at The Conversation discusses, these markets are as advanced as anyone could hope for. There are “seller” pages, with feedback and reviews, ratings systems, and even terms and conditions that sellers and buyers abide by.

It’s as if someone took Amazon or eBay, flipped those platforms into one that only sells illegal drugs, and put it online. These sites are actually that intricate.

Source: Thinkstock

The Conversation goes even deeper in its investigation of the online drug trade, with explanations about discounts, holiday specials, and refund policies.

That’s right: You can be refunded if your package of cocaine is found by authorities and you don’t receive it. If that doesn’t strike fear into the hearts of suburban helicopter moms, what will?

And the number of these markets is rapidly growing. According to report from BBC News, the total number of drugs listed across four separate markets in October 2013 was a shocking 18,174. When reporters went back recently, in July, they found that the numbers had skyrocketed. A total of 43,175 total drug listings across 23 markets were revealed.

It seems that whatever enforcement measures are being taken to slow these markets or even shut them down is failing. But what does it say about society as a whole? And from an economics standpoint, is this an exciting experiment in free-market capitalism?

Much in the same way that medical and legal marijuana markets have largely grown organically in states across the country, so has the illicit drug trade. In fact, the real reason many drugs, particularly marijuana, have much value at all is because they are illegal and therefore scarce. Illegality is giving many of these drugs their value, which also fuels much of the crime and violence usually associated with them.

On these online markets, however, illegal drug dealers are having to compete against each other seemingly without all the violence that can occur on the streets. There’s a perceived added layer of security for both buyer and seller, and nobody even has to leave the comfort of his or her own home.

In addition, we get to sit back and see how sellers dealing in illicit substances actually compete with each other. It turns out that it’s not all that different from regular retail, judging by the discounts, refunds, and ratings systems.

It goes to prove that business is business, no matter what’s being bought and sold. It just took the Internet to allow a true free-market system to come to fruition.

More From Business Cheat Sheet: