The Silk Road’s Dark-Web Dream Is Dead

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NOT SO LONG ago, the Silk Road was not only a bustling black market for drugs but a living representation of every cryptoanarchist’s dream: a trusted trading ground on the Internet where neither the government’s laws nor the Drug War they’ve spawned could reach. Today, that illicit narco-utopia is long gone, its once-secret server in an evidence storage room and its creator Ross Ulbricht fighting a last ditch appeal to escape life in prison.

But more than two years since the FBI’s Silk Road takedown, the dark web markets Ulbricht inspired are suffering a less tangible but more fundamental kind of failure: the Silk Road’s dream has died, too.

Over the last year, buyers and sellers in the dark web’s underground economy have been shaken again and again when the cryptographically hidden marketplaces they use to trade contraband goods ranging from drugs to stolen credit cards to forgeries have suddenly disappeared. More often than not, those disappearances involve the sites’ administrators running off with a significant chunk of their customers’ money. The Silk Road’s purported ideology of enabling only victimless crime has vanished. Fears of law enforcement surveillance, and suspected vulnerabilities in tools like Tor meant to protect the anonymity of site administrators have eroded the incentive to create a longterm trusted business.

The result has been that the libertarian free-trade zone that the Silk Road once stood for has devolved into a more fragmented, less ethical, and far less trusted collection of scam-ridden black market bazaars. Instead of the Silk Road’s principled—if still very illegal—alternative to the violence and unpredictable products of street dealers, the dark web’s economy has become nearly as shady as the Internet back alley politicians and moralizing TV pundits have long compared it to.

The Silk Road’s Dark-Web Dream Is Dead

Dark web market admins are learning that “if you’re trustworthy, you stay up for a while, the heat increases, and eventually you get nailed by the feds,” says Nick Weaver, a Berkeley computer science researcher who has studied the Silk Road and other dark web markets. Instead, more and more markets are opting to “exit scam,” stealing the bitcoins users have stored in escrow and in their on-site accounts and going offline without warning. “The most viable exit strategy,” Weaver says, “is to rip and run.”

The latest series of black market disruptions began with the vanishing of the most popular Silk Road descendant, Evolution, in March of last year with as much as $12 million worth of its users’ bitcoins. No sooner had its competitor Agora adopted the site’s refugee merchants than it announced it would return users’ funds and go offline too, citing a need to revamp its security; it had likely been spooked by new details about an attack on Tor hidden services, as well as the FBI’s mass takedown of dark web markets in late 2014. In the chaos of those two sites going offline, buyers and sellers scrambled to lesser-known markets like Abraxas, Amazon Dark, Blackbank and Middle Earth. All of them subsequently disappeared, too, likely having pulled their own exit scams.

Now it looks as if Alphabay, the latest reigning top market with over 50,000 listings of “drugs and chemicals” for sale and 12,000 “fraud” products like stolen online accounts and credit cards, may be cashing in on users’ misplaced trust, too. An endless stream of complaints on Reddit’s “darknetmarkets” page and Alphabay’s own Tor-protected user forum accuse the site of intermittently stealing users’ bitcoins and deflecting the blame to weak password or a phishing schemes. (Alphabay’s moderators didn’t respond to WIRED’s request for comment on the string of thefts.)

“There are numerous reports of AlphaBay funds going missing and shady behavior from AlphaBay administration,” writes one popular online drug vendor known by the name GrandWizardsLair, explaining his decision to no longer sell on the site. “Should have listened when people said AlphaBay is a scam site,” wrote another user whose bitcoins disappeared. “An expensive lesson learned.”

All of that online turmoil hasn’t necessarily sent the dark web’s buyers back to street dealers, says Nicolas Christin, a computer science researcher at Carnegie Mellon who’s published some of the most thorough measurements of the dark net markets. He says that the overall revenue of the anonymous online drug trade has hovered around $100 million a year regardless of repeated scams or law enforcement takedowns. But that sales figure has plateaued after years of fast growth, he says, perhaps in part because dark web drug buyers aren’t as happy or confident as they once were. “We’re starting to find the limits of these anonymous marketplaces,” Christin says. “Economically, it’s stable: it seems like whenever a marketplace goes down, another one picks up the pieces. Ideologically, it’s very different now. There’s no longer much of a sense of camaraderie.”

Christin argues that the dark web markets have been in a state of ethical decline since the moment Ross Ulbricht was arrested in late 2013. Ulbricht had, at least in theory, restricted the Silk Road’s sales to only “victimless” contraband, positioning the site as the seed of a non-violent anarcho-capitalist revolution. (Never mind the six murder-for-hires of enemies he’s been accused of commissioning in secret.) He treated his users as a community, and wrote them love letters and ideological manifestos. All of that made him a trusted administrator whose political ideals assured his followers that he wouldn’t rip them off for a quick bitcoin. “What we’re doing isn’t about scoring drugs or ‘sticking it to the man.’ It’s about standing up for our rights as human beings and refusing to submit when we’ve done no wrong,” Ulbricht wrote to me using his pseudonym, the Dread Pirate Roberts, before his arrest in 2013. “Silk Road is a vehicle for that message … All else is secondary.”

But as so often happens with revolutions, reality caught up with utopia. After Ulbricht’s arrest in late 2013 and the takedown of the Silk Road 2 (founded by several of Ulbricht’s staff members) a year later, the ideological bent of the dark web crumbled. Evolution, a new drug market created by former administrators of a credit card fraud site, took over, with none of the Silk Road’s prohibitions on fraud or stolen goods. Today Alphabay offers its buyers a similar array of hacked credit cards and accounts. Given that these sites cater to actual thieves, it should have been expected that they’d eventually resort to defrauding their customers, too, Christin points out. “They’re not ideologically motivated,” says Christin. “They’re in it to make money. When the temptation gets high, it shouldn’t come as a surprise that they take what’s on the table.”

For careful dark web customers, cryptographic tools do exist to avoid exactly the sorts of bitcoin-stealing scams that have plagued the Silk Road’s descendants. A bitcoin feature known as multi-signature transactions allows buyers to put money in an escrow account that requires sign-off from two out of three parties—the buyer, the seller, and the site itself—to retrieve the funds. Unlike the traditional, centralized escrow used by the Silk Road, no single party of those three can spontaneously choose to run off with the money. A new, fully decentralized marketplace known as OpenBazaar would go much further, allowing people to buy and sell products with bitcoin through a peer-to-peer system, with no central server that could be raided by the site’s admins or seized by law enforcement.

But dark-net market observers remain skeptical of those solutions to the underground economy’s trust issues. OpenBazaar remains in a beta prototype state for now, with only a few hundred users running test transactions on its network. And multi-signature transactions require just enough effort and technical know-how—it involves copying multiple bitcoin addresses into certain bitcoin wallet programs to generate that multi-signature escrow address—that the vast majority of dark web consumers still haven’t bothered to figure them out, says Berkeley’s Weaver. And if they do, he warns that there may be so few multisignature transactions in the larger bitcoin economy that those next-gen drug deals would by highly visible on the blockchain, bitcoin’s public ledger of all the cryptocurrency’s movements. Savvy law enforcement agents might use that data to filter out and track the dark web’s drug deals to individual computers, just as theytracked $13.4 million bitcoins from the Silk Road to Ross Ulbricht’s laptop. “The usability of [multisignature transactions] is awful,” he says. “And even if people did use them, they have this problem of glowing on the blockchain.”

All of that has contributed to a kind of stagnation in dark web market innovation, says a figure named Gwern, who served as one of the pseudonymous moderators of Reddit’s darknetmarkets forum until he stepped down from the position last summer. Gwern noted in a goodbye post to Reddit’s dark web market community that the scene simply wasn’t evolving fast enough to keep up with its constant cycles of broken trust, security failures and petty theft. “I was originally lured in by the fascination of watching a small cryptopunk revolution, and I was hopeful that it would go beyond the [original Silk Road] model into multisig and beyond,” he wrote in the lengthy message, using “multisig” as shorthand for multisignature transactions. “Instead, [that] business model has proven remarkably durable despite the constant wearying turmoil of exit-scams and hacks and…there seems to be little chance that things will change substantially soon.”

That lack of evolution has made what was once a kind of sci-fi, online drug-buying wonderland into a collection of sketchy criminal sites that more than ever mirror the offline black markets they were meant to replace. The dark web markets are “still there, just…boring,” Gwern sums up in an email. “The resplendent dream has been replaced by a dirtier reality.”

Source:http://www.wired.com/

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