I recently got my hands on Diana S. Dolliver’s paper about drug dealing on the Tor network, a hidden, uncensored network which can only be accessed by special software. I got interested this topic because it allows us to analyse transactions which used to be hidden and nearly impossible to observe.
Besides the many legitimate use cases of the Tor network, it also provides together with Bitcoin the technology most cryptomarkets use. Tor allows the side administrators to host their sites anonymously without the fear of getting arrested immediately by the FBI. Cryptomarkets function similar to eBay, in the sense that they do not sell drugs directly but provide a platform where other vendors can sell their products for a small fee. The screenshot below shows how such a site looks from a buyers perspective. I chose to take a close look at the AlphaBay Market, one of the biggest platforms in December 2015.
How to analyse the AlphaBay Market?
If you access one of the larger cryptomarkets, you will probably see thousands of different offerings ranging from prescription drugs to illegal weapons. The fact that anonymous users claim to sell those products, of course, does not say anything about the actual demand and volume of the sales. This is the point where it gets interesting because the AlphaBay Market has a revealing feedback system which lists not only lists all products sold but also their prices, and purchase dates.
Assuming a constant feedback ratio, we can use this data to observe the early development of the market from only one snapshot. To automatically download the customer feedbacks I wrote a scraper in Python, which provided me with the dataset for the further analysis.
How much LSD is sold?
Unfortunately, the scraping process of a website hidden in the Tor network is a quite slow. Therefore, I decided only to download information related to LSD sales. The diagram below shows last year’s LSD sales for the weeks 13 to 50:
During November 2015, approximately $215,000 worth of LSD was sold on the AlphaBay Market. I do not have a definitive explanation for the sales increase following week 44, but my guess is that problems with competing cryptomarkets drove new sellers to this platform and their existing customers followed. This theory is supported by the fact that already established vendors like Lyseric025 were not able to significantly increase their revenue during this time.
Who are the dealers?
To better get a better understanding of who those LSD vendors are, we need to look at their other sales also:
We can see in the table above that the leading LSD seller on the AlphaBay Market was Lyseric025, who had a market share of 29% in November 2015 and generated a revenue of $65,438. Only 3% of it came from B2B sales (sale over $200) which suggest a strong focus on the end customer.
Interestingly most sellers on this list made the majority of their revenue with LSD. One of the reasons for this could be that the LSD is supposedly produced by only a few producers which wholesalers are probably only interested in selling in large volumes. This would mean that a specialized vendor could increase its profit by using economies of scale. I wonder if there is a similar specialization in other more decentralized drug markets.