The Silk Road’s Dark-Web Dream Is Dead

Posted by on Jan 18, 2016 in IT News | 0 comments

The Silk Road’s Dark-Web Dream Is Dead

Not so long ago, the Silk Road was not only a bustling black market for drugs but a living representation of every cryptoanarchist’s dream: a trusted trading ground on the Internet where neither the government’s laws nor the Drug War they’ve spawned could reach. Today, that illicit narco-utopia is long gone, its once-secret server in an evidence storage room and its creator Ross Ulbricht fighting a last ditch appeal to escape life in prison.

But more than two years since the FBI’s Silk Road takedown, the dark web markets Ulbricht inspired are suffering a less tangible but more fundamental kind of failure: the Silk Road’s dream has died, too.

Over the last year, buyers and sellers in the dark web’s underground economy have been shaken again and again when the cryptographically hidden marketplaces they use to trade contraband goods ranging from drugs to stolen credit cards to forgeries have suddenly disappeared. More often than not, those disappearances involve the sites’ administrators running off with a significant chunk of their customers’ money. The Silk Road’s purported ideology of enabling only victimless crime has vanished. Fears of law enforcement surveillance, and suspected vulnerabilities in tools like Tor meant to protect the anonymity of site administrators have eroded the incentive to create a longterm trusted business.

The result has been that the libertarian free-trade zone that the Silk Road once stood for has devolved into a more fragmented, less ethical, and far less trusted collection of scam-ridden black market bazaars. Instead of the Silk Road’s principled—if still very illegal—alternative to the violence and unpredictable products of street dealers, the dark web’s economy has become nearly as shady as the Internet back alley politicians and moralizing TV pundits have long compared it to.

Dark web market admins are learning that “if you’re trustworthy, you stay up for a while, the heat increases, and eventually you get nailed by the feds,” says Nick Weaver, a Berkeley computer science researcher who has studied the Silk Road and other dark web markets. Instead, more and more markets are opting to “exit scam,” stealing the bitcoins users have stored in escrow and in their on-site accounts and going offline without warning. “The most viable exit strategy,” Weaver says, “is to rip and run.”

The latest series of black market disruptions began with the vanishing of the most popular Silk Road descendant, Evolution, in March of last year with as much as $12 million worth of its users’ bitcoins. No sooner had its competitor Agora adopted the site’s refugee merchants than it announced it would return users’ funds and go offline too, citing a need to revamp its security; it had likely been spooked by new details about an attack on Tor hidden services, as well as the FBI’s mass takedown of dark web markets in late 2014. In the chaos of those two sites going offline, buyers and sellers scrambled to lesser-known markets like Abraxas, Amazon Dark, Blackbank and Middle Earth. All of them subsequently disappeared, too, likely having pulled their own exit scams.

Now it looks as if Alphabay, the latest reigning top market with over 50,000 listings of “drugs and chemicals” for sale and 12,000 “fraud” products like stolen online accounts and credit cards, may be cashing in on users’ misplaced trust, too. An endless stream of complaints on Reddit’s “darknetmarkets” page and Alphabay’s own Tor-protected user forum accuse the site of intermittently stealing users’ bitcoins and deflecting the blame to weak password or a phishing schemes. (Alphabay’s moderators didn’t respond to WIRED’s request for comment on the string of thefts.)

“There are numerous reports of AlphaBay funds going missing and shady behavior from AlphaBay administration,” writes one popular online drug vendor known by the name GrandWizardsLair, explaining his decision to no longer sell on the site. “Should have listened when people said AlphaBay is a scam site,” wrote another user whose bitcoins disappeared. “An expensive lesson learned.”

All of that online turmoil hasn’t necessarily sent the dark web’s buyers back to street dealers, says Nicolas Christin, a computer science researcher at Carnegie Mellon who’s published some of the most thorough measurements of the dark net markets. He says that the overall revenue of the anonymous online drug trade has hovered around $100 million a year regardless of repeated scams or law enforcement takedowns. But that sales figure has plateaued after years of fast growth, he says, perhaps in part because dark web drug buyers aren’t as happy or confident as they once were. “We’re starting to find the limits of these anonymous marketplaces,” Christin says. “Economically, it’s stable: it seems like whenever a marketplace goes down, another one picks up the pieces. Ideologically, it’s very different now. There’s no longer much of a sense of camaraderie.”