Uncertainty and risk: A framework for understanding pricing in online drug markets.

BACKGROUND: The pricing of illicit drugs is typically approached within the risks and prices framework. Recent sociological and economic studies of prices in online drug markets have stressed the centrality of reputation for price formation. In this paper, we propose an account of price formation that is based on the risks and prices framework, but also incorporates internal social organization to explain price variation. We assess the model empirically, and extend the current empirical literature by including payment methods and informal ranking as influences on drug pricing. METHODS: We apply our model to estimate the prices of cannabis, cocaine, and heroin in two online drug markets, cryptomarkets (n = 92.246). Using multilevel linear regression, we assess the influence of product qualities, reputation, payment methods, and informal ranking on price formation. RESULTS: We observe extensive quantity discounts varying across substances and countries, and find premia and discounts associated with product qualities. We find evidence of payment method price adjustment, but contrary to expectation we observe conflicting evidence concerning reputation and status. We assess the robustness of our findings concerning reputation by comparing our model to previous approaches and alternative specifications. CONCLUSION: We contribute to an emerging economic sociological approach to the study illicit markets by developing an account of price formation that incorporates cybercrime scholarship and the risks and prices framework. We find that prices in online drug markets reflect both external institutional constraint and internal social processes that reduce uncertainty.

Doing Internet research with hard-to-reach communities: methodological reflections on gaining meaningful access.

This article contributes to scholarship on digital sociology by addressing the methodological challenge of gaining access to hard-to-reach online communities. We use assemblage theory to argue how collaborative efforts of human participants, digital technologies, techniques, authorities, cultural codes and the human researcher co-determine aspects of gaining access to online subjects. In particular, we analyse how credibility and reflexivity are assembled in an online research context. This is exemplified by our own experiences of researching hackers that dispute surveillance and the social embeddedness of darknet drug market users. In this article, we demonstrate the utility of an assemblage perspective for understanding the complexities involved in negotiating access to hard-to-reach communities in digital spaces.

Comparing cryptomarkets for drugs. A characterisation of sellers and buyers over time.

INTRODUCTION: Cryptomarkets operating on the darknet are a recent phenomenon that has gained importance only over the last couple of years (Barratt, 2012). However, they now constitute an evolving part of illicit drug markets. Although selling and buying a variety of psychoactive substances on the Internet has a long history, new technological developments enable systematic drug trading on the net.These technological innovations on the Internet allow users to proceed with (illicit) drug transactions with almost completely anonymous identities and locations. In this paper, we provide a systematic measurement analysis of structures and trends on the most popular anonymous drug marketplace, and discuss the role of cryptomarkets in drug distribution. METHODS: Data collection and analysis include a long-term measurement of the cryptomarket 'AlphaBay', the most popular platform during the survey period. By developing and applying a web-scraping tool, market data was extracted from the marketplace on a daily basis during a period of twelve months between September 2015 and August 2016. The data was analysed by using business-intelligence software, which allows the linking of various data sets. We found 2188 unique vendors offering 11,925 drug items. The findings of our long-term monitoring and data analysis are compared over time and across marketplaces, offering a detailed understanding of the development of revenues generated, characterisation of countries of origin and destination, and distribution of vendors and customers over time. RESULTS: We provide a nuanced and highly detailed longitudinal analysis of drug trading on the darknet marketplace 'AlphaBay', which was the largest cryptomarket in operation. 1) Total sales volumes for the 'drugs' section was estimated at approximately USD 94 million for the period from September 2015 to August 2016. 2) In addition, about 64% of all sales are made with cocaine-, cannabis-, heroin-, and ecstasy-related products. 3) Average selling prices increase over time for categories including cannabis and hashish, ecstasy, opioids, psychedelics and stimulants. 4) The five most frequent countries of origin as indicated by vendors are the United States, United Kingdom, Australia, the Netherlands and Germany. Moreover, it was demonstrated that drug distribution on cryptomarkets is conducted at a regional rather than global level. 6) Furthermore, 4.88% of vendors made over USD 200,000 and were responsible for 52.9% of total revenues generated over the period analysed. In contrast, 57.51% of vendors managed to sell drug items worth less than USD 10,000 within a period of twelve months. The findings suggest that 'AlphaBay' was a cryptomarket mainly from and for Western industrialised countries. In contrast, countries of the global South are neither among the main countries of origin nor destination countries.

The transparency paradox. Building trust, resolving disputes and optimising logistics on conventional and online drugs markets.

BACKGROUND: In recent years, marketplaces in the darknet emerged where vendors and customers can exchange illicit drugs and other goods on digital platforms by using hidden internet services. The main thesis of this paper is that in an online environment, different practices for building trust and reputation emerge that stabilise market processes. METHODS: Qualitative and quantitative data from a recent German project on conventional (offline) small-scale drug dealing as well as qualitative case studies on four online vendors operating on Agora market are used to explore alternative practices for building trust and reputation. They also explore the use of violence and logistics established on cryptomarkets in comparison to traditional dealing. To analyse the data we applied qualitative content analyses. RESULTS: For conventional commercial illicit drug dealing on various kinds of markets, trust between buyer and seller is a crucial issue, often emphasized by restricting deals to well-known persons. While this typically includes face-to-face contact, the opposite is true with online drug trading. It is characteristic of cryptomarkets that the parties involved in a transaction know neither the personal identity nor the physical location of one another. This is realised by using aliases, anonymising software, and cryptocurrencies for payments. Violence typically only plays a role in traditional drug dealing, but mostly, if at all, just as a latent threat for potential rule-breakers. Processing a transaction anonymously includes escrow services for the buyers, which makes trading more reliable, although they cannot completely prevent scamming. Furthermore, online drug marketplaces usually offer a customer feedback system that allows customers to rate vendors and review products. A positive vendor feedback helps building reputation and trust in such an online environment. With regard to logistics, most conventional small-scale dealers restrict their acts of selling to private surroundings to avoid encounters with law enforcement. In cryptomarkets, the purchased drugs are delivered by traditional postal services, sometimes to false addresses or to someone else's name to conceal the identity and address of the buyer. CONCLUSION: On virtual drug markets practices of building trust, conflict resolution and logistics is constantly evolving. They offer improved security solutions on the one hand while on the other hand scamming and fraud seem to be widely used on both online and conventional drug markets.