Online Black Market Drug Haven Sees Growth Double

$1.9 million worth of goods--mainly illegal drugs--are traded on Silk Road monthly.

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The FBI says a majority of the items sold on Silk Road were illegal drugs.

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Nearly $2 million worth of illegal drugs are being sold monthly on an online black market website known as "Silk Road," and sales have doubled over the past eight months, according to a new study by a computer scientist at Carnegie Mellon University.

Silk Road is only accessible through the anonymous Tor network, a service which has been frequently used by people in countries that censor the Internet.

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But while Tor protects people in those countries from being prosecuted, it has also allowed for the proliferation of black market sites such as Silk Road, making it nearly impossible to shut them down.

Similar to Craigslist, completely anonymous sellers on Silk Road blatantly advertise things such as "1 G Afghan Heroin (Strong!!!)" and "Premium Quality MDMA Crystals." Books, pornography, electronics, and clothes are also sold on the site, but the large majority of offerings are either illegal or controlled drugs.

The administrator of the site, who goes by the username "Dread Pirate Roberts," writes that users "may be shocked to find listings here that are outlawed in your jurisdiction." But the marketplace does have some rules—no child pornography, stolen goods, or assassination services.

The site came into the national spotlight in June 2011, when an expose posted on Gawker started a firestorm in Congress. At the time, New York Democratic Senator Charles Schumer said the site is "more brazen than anything else by light years," and called on the DEA and Department of Justice to shut down the site. He said he'd "bet [his] bottom dollar in this instance there is [an investigation] underway."

More than a year later, the site has only grown in popularity, according to Nicolas Christin, author of the Carnegie Mellon report. Christin monitored the site from November 2011 to late July of this year. During that time, he found more than 24,000 unique items being sold. On November 29, there were 220 sellers, by the end of July, there were 564, a 156 percent increase.

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"We see this market is growing—we can sit down and talk about what the appropriate response should be, should we try to shut them down," he says. "But we should revise this 'War on Drugs' concept. I don't think we should take this fight online."

He says any attempt to take down the site would likely require "serious resources."

"As a technologist, it doesn't seem like taking it down is a very viable option," he says. "The main thing running it is pure economics and demand—I doubt it's going away anytime soon."

Christin points to the fact that an offshoot of Silk Road, called the Armory, which sold weapons, failed due to lack of demand.

"Law enforcement didn't shut it down," he says. "It closed because they didn't have enough buyers."

In the paper, he outlines four potential law enforcement responses—and none of them involve finding the site's operators, who he estimates rake in close to $150,000 each month from commissions they take.

Still, despite the fact that Silk Road's monthly trades would add up to more than $20 million a year, it accounts for a fraction of the $300 billion worldwide drug trade.

The resources it'd take to shut it down might not be worth it, he says, if law enforcement even had the ability to do so.

"I don't have the slightest idea where it's operated out of," he says, although close to half of the sellers on the site are based in the United States.

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Silk Road's main vulnerability, he says, lies in its currency system, known as Bitcoins. Bitcoins are essentially anonymous online currency created in 2009—they are traded on various online marketplaces for dollars, euro, or British pounds. Payments on Silk Road are made in escrow, drugs are delivered by mail, and users' addresses are deleted immediately after a transaction is completed.

But Bitcoins are highly volatile, reaching about $32 dollars per Bitcoin in June 2011 to a low of $2.50 per Bitcoin in October. Bitcoins currently trade for about $11 a piece, which means a gram of heroin can be bought for as little as $110.