The role of the ‘dark web’ in the trade of illicit drugs

The Internet has fundamentally changed ways of doing business, including the operations and activities of illegal markets. There are now around 50 online marketplaces on the ‘dark web’ that trade illegal drugs, novel psychoactive substances (NPS), prescription drugs and other – often illegal – goods and services. These so-called cryptomarkets are accessible with a normal Internet connection, but require special anonymising software to access.

The study considered the trade of illicit drugs online, via both cryptomarkets and normal websites that can be found through search engines like Google, otherwise known as the 'clear net'. The overall aims of the study were to:

Revenues and transactions
• The number of transactions of illicit drugs on the cryptomarkets has tripled, with revenues doubling, since Silk Road was shut down in 2013. This is despite various law enforcement interventions and exit scams by online marketplaces, which have led to declining levels of trust between buyers and vendors, and less confidence in cryptomarkets.

Key findings
A quantitative assessment of the size and scope of the sale of illicit drugs was conducted through the collection and analysis of data and information extracted from eight of the largest cryptomarkets during January 2016. As the data included most drug vendors, listings and transactions, estimations of the total revenue generated should be taken as a lower boundary estimate of trade on these markets. These quantitative findings were then compared and contrasted to findings from the literature, interviews with experts and law enforcement officials, and a focus group with law enforcement representatives.
Characterise the scope and size of the sale of illicit drugs online.
Identify the illicit drugs being sold online and the extent to which they are.
Identify the role of the Netherlands in the sale of illicit drugs online.
Explore potential avenues for the detection and intervention of websites selling illicit drugs by law enforcement.
Yearly revenue by drug type † ($) $1,000,000 $4,000,000 $2,000,000 $1,000,000 $2,000,000 $3,000,000 • Total drug revenues on cryptomarkets cryptomarkets (excluding prescription drugs, alcohol and tobacco) during January 2016 were estimated to be between $12.0 (€10.5) and $21.1 (€18.5) million*. This suggests that cryptomarkets are only a niche market. According to the European Monitoring Centre for Drugs and Drug Addiction's (EMCDDA) 2016 EU Drug Markets Report, the total offl ine market for drugs is much larger: an estimated $2.3 (€2) billion* on average per month for Europe alone.
• The majority of transactions were generated by advertisements ('listings') placed by vendors, and were for values less than $100 (€87.72)*. In these instances, customers are likely buying for their personal use. However, these retail transactions generated only 18 per cent of total revenues. In fact, transactions that are likely purchased by customers with intent to resell (those greater than $1,000 (€877.2)*) generated more of the total revenues, nearly 25 per cent. Based on the extent of wholesale transactions, it is likely that some online buyers are drug dealers sourcing stock intended for offl ine distribution. Transactions Revenue

The types of drugs sold
• The illicit drugs sold on cryptomarkets were predominantly cannabis (37 per cent of total revenues), stimulants (cocaine, amphetamines) (29 per cent) and ecstasy-type drugs (19 per cent). These figures are very similar to EMCDDA estimates about drugs sold offl ine, apart from ecstasy-type drugs (just three per cent of the total European retail drug market) and heroin (28 per cent of the total European drug market, but just six per cent of the total drugs sold on cryptomarkets).
• For online markets, the main drugs sold are typically associated with recreational or 'party' use (e.g. cannabis, ecstasy, MDMA). A possible explanation for the differences between 'online' and 'offl ine' markets may be that cryptomarkets purchases typically require an element of planning, which may not suit the daily use of dependent users of heroin, for example.

Countries
• Cryptomarkets appeared to be dominated by vendors from the U.S., Australia, Canada and Western Europe. Vendors who indicated they are operating from the U.S. had the highest market share of drugs (35.9 per cent of total drug revenues), closely followed by the U.K. (16.1 per cent) and Australia (10.6 per cent). The Netherlands had a 7.1 per cent revenue share, which was less than Germany at 8.4 per cent. U.K.

10.6%
Australia • However, the revenue share from the Netherlands could be underestimated, as there are indications that some Dutch vendors are shipping drugs from locations outside the country. For example, vendors may drive across a border to ship from neighbouring countries, like Germany, so that their shipments evade the additional attention paid by border officials in many countries to Dutch parcel shipments.
• Per capita, the Netherlands had the highest revenues for illicit drug sales on cryptomarkets -Dutch vendors made a total of $1.1 million (€1.0 million)*. The country dominated sales of MDMA and ecstasy on cryptomarkets -23 per cent of total global revenues -but had only two per cent of the global sales of cannabis.

Opioids
Other drugs All drug revenues Dutch drug revenues † These numbers represent an underestimate of monthly revenues

Vendors and buyers
• Evidence is limited, but both vendors and buyers appeared to be young males from Englishspeaking or Western European countries who are well-educated, entrepreneurial and have strong IT-skills. Vendors also seem to be a mix of professional drug dealers with close ties to production, who consider Internet sales as an additional revenue stream, and 'newbies' who previously only sold drugs to friends. Vendors who sell anything but drugs 7% 29%

All vendors
Vendors who sell drugs and nothing else Vendors who sell anything but drugs

All vendors Dutch vendors
Dutch vendors • Vendors have creatively adjusted their behaviour to avoid detection, such as changes in shipping practices.
• There has been an emergence of single-vendor markets on the 'dark web', i.e. web shops that are run by one vendor only.