Collective dynamics of dark web marketplaces

Abeer Elbahrawy,Alexander Teytelboym,Daniel Goldsmith,Leonid Rusnac,Andrea Baronchelli,Laura Alessandretti

doi:10.1038/s41598-020-74416-y

Abstract

Dark web marketplaces are websites that facilitate trade in illicit goods, mainly using Bitcoin. Since dark web marketplaces are unregulated, they do not offer any user protection, so police raids and scams regularly cause large losses to marketplace participants. However, the uncertainty has not prevented the proliferation of dark web marketplaces. Here, we investigate how the dark web marketplace ecosystem reorganises itself following marketplace closures. We analyse 24 separate episodes of unexpected marketplace closure by inspecting 133 million Bitcoin transactions among 38 million users. We focus on “migrating users” who move their trading activity to a different marketplace after a closure. We find that most migrating users continue their trading activity on a single coexisting marketplace, typically the one with the highest trading volume. User migration is swift and trading volumes of migrating users recover quickly. Thus, although individual marketplaces might appear fragile, coordinated user migration guarantees overall systemic resilience.

Highlights

Dark web marketplaces are websites that facilitate trade in illicit goods, mainly using Bitcoin
We show that the closure of a dark marketplace, due to a police raid or an exit scam, has only a temporary effect on trading volumes, suggesting that dark marketplace ecosystem is resilient
We investigate the characteristics of the top destination marketplace for migrant users, by ranking coexisting marketplaces according to the total trading volume in US dollars at the time of closure and the total number of common users between the closed and the coexisting marketplace before closure

Summary

Introduction

Dark web marketplaces are websites that facilitate trade in illicit goods, mainly using Bitcoin. Silk Road was shut down in 2013 by the F BI3 and in the same year Sheep Marketplace was closed by its administrator, who vanished with 100 million US dollars stolen from its users[4] Following these events, dark marketplaces have adopted better technologies to mitigate losses caused by closures and to reassure their customers[5,6,7]. The most comprehensive study on closures among 12 dark marketplaces concluded “that the effect of law enforcement takedowns is mixed as best”[10] Another recent analysis of a large 2014 police operation identified an impact of closures on the supply and demand of drugs (but not on their prices)[15].

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Conclusion