Crypto drug markets reduce, not increase harm, researchers argue

Cryptocurrencies have been wrapped up in online drug trading controversies for year. But a new piece of research wants to challenge a few assumptions…

by Tom Rodgers

A British-Canadian research team is challenging the orthodoxy that the rise in drug sales on cryptomarkets will only increase the harms to users and society at large.

A joint paper co-authored by Professor Judith Aldridge, a Toronto-born criminology researcher now based in Manchester, UK, argues that the selling mechanisms particular to cryptomarkets all serve to reduce harm. These include payment escrow, dispute resolution, and user reviews. Face-to-face drug deals are less likely to offer buyers good quality illicit drugs, and more likely to put buyers at risk of physical violence, Aldridge writes.

Cryptomarkets are defined as online markets where illegal products like firearms, sex services or drugs are offered for sale. Payment is usually taken in one or more forms of (relatively) untraceable cryptocurrency like Bitcoin or Monero.

Between September 2013 and 2016 cryptomarket drug sales nearly tripled, with revenue for vendors estimated at more than $14 million in US dollars per month.

And in 2018 a gang of engineering and pharmacology students at the University of Manchester were jailed for a total of 56 years after accepting more than £1.3m in Bitcoin for sales of liquid ecstasy, party drug ketamine and psychadelics 2CB and LSD on the darknet.

Most marketplaces are hidden from public view and accessible only by invitation. Names include Wall Street Market and Dream Market.

One conclusion not drawn by Professor Aldridge and her research team which appears to be correct is that while drug cryptomarkets do afford drug buyers more protection than if they were buying offline, the people running drug cryptomarkets are not afforded the same protection.

Silk Road

The most famous cryptomarket for drug deals was the Silk Road marketplace.

Only accessible via the Tor browser, it was founded in 2011 by American computer programmer Ross Ulbricht, who went via the online moniker Dread Pirate Roberts. But this mainstream fame attracted the attention of the authorities.

Ulbricht was arrested in a 2013 raid carried out by the FBI and in 2017 lost his appeal against a life sentence for running the Silk Road.

In a sweeping move on 21 March 2018, news aggregator Reddit banned a slew of popular subreddits dedicated to the sale of illicit products including illegal drugs. These drug subreddits included r/Darknetmarkets, r/xanaxcartel, r/DNMSuperlist and r/HiddenService .

But while most of the focus of public policy is skewed towards identifying and shutting down these cryptomarkets, researchers say that cryptomarkets actually reduce harms for buyers by cutting out the possibility of rip-offs and violence.

In a February 2018 study, published in the journal Addiction, Aldridge argues that each strand of how cryptomarkets operate lessens the likelihood of both financial harm (the likelihood of being ‘ripped off’ or sold drugs that don’t exist) and health-related harm (the likelihood of being sold poor quality drugs, drugs that are cut with dangerous or poisonous substances, or being targeted for violence by the drug seller).

While “[i]t is likely that cryptomarkets will increase both the amount and the range of substances that are sold…. we argue that the effects on harms will depend upon whether cryptomarkets also increase the quality and safety of products that are sold, provide harm-reducing information to consumers and reduce transactional conflict involved in drug purchasing”, the study says.

Payment escrow is a standard feature of popular cryptomarkets. Basically, the user pays the market, not the seller, and then the market transfers that payment to the seller when the product (in this case illicit drugs like cocaine, MDMA powder or cannabis) has been received by the buyer.

User reviews are important too. On cryptomarkets, drug buyers can rate the buying experience (speedy payment acceptance, good communication, quality product) in much the same way as is available on legal online markets like Amazon or Ebay.

Moving drug buys online also reduces the chances that drug dealers can enact violent retribution against the buyer if there is a problem with the payment, or the buyer wants to change, alter or cancel their order.

Compare this to street-level drug buys, where all the power is in the hands of the drug seller or dealer.

Mechanisms

A second joint paper co-authored by Professor Aldridge titled Conflict Management in Illicit Drug Cryptomarkets, was submitted on 21 March 2018 and has been accepted for publication in the International Criminal Justice Review journal. Aldridge’s co-authors from the University of Montreal are Assistant Professor David Decary- Hetu and researchers Carlo Morselli and Masarah Paquet-Clouston.

It notes: “This article examines conflict management strategies within cryptomarkets by coding discussion forums between vendors and buyers. Violence, as expected, is absent.”

Aldridge writes that her team’s analysis is not intended to inform public or governmental policy, but instead “illustrate[s] the multitude of informal social control mechanisms that are consistently at play and which underlie the self-regulatory and communal processes that are firmly in place.”

The argument is, then, that it is the exact set-up of cryptomarkets that includes user reviews, payment escrow and dispute resolution that denies the chance for violence against drug buyers.

“Drug dealers…are commonly considered to have a predilection toward the use of violence to resolve disputes arising from dealing activities.”

But “new trends surrounding the distribution of illegal drugs via online channels (drug cryptomarkets) have shifted the transactional setting from the physical to the virtual realm, thus decreasing the likelihood of violent resolution even further.”

The article concludes: “Importantly, our arguments cannot and should not be generalized to virtual platforms that lack the third‐party services unique to cryptomarkets – including payment escrow and dispute resolution.

“Future research examining the harms and benefits connected to various market‐place types must also distinguish carefully among on‐line as well as off‐line market subtypes, including buying from friends, known and unknown dealers.”