A year after the infamous Silk Road darknet marketplace was shut down by the FBI in 2013 for facilitating the sales of all things from guns to cocaine, a group of programmers developed a new darknet market, aptly naming it “DarkMarket.”
Shortly after its launch, DarkMarket rebranded itself with a more innocuous name, “OpenBazaar.”
On its face, OpenBazaar looked like Silk Road, but with one key difference: it was fully decentralized, meaning that it wasn’t hosted on servers in one central location that could be easily shut down by law enforcement.
Instead, the service was hosted on every one of its users’ computers, otherwise known as a peer-to-peer network.
OpenBazaar isn’t the first online anonymous marketplace to go online since the Silk Road was shut down, but it is the first decentralized one.
This has led some to considerable hype, with some believing the marketplace would be “fed-proof.”
This piqued the curiosity of Privacy Engineering graduate student James Arps and CyLab’s Nicolas Christin, who published the first major analysis of the Silk Road economy.
What does this market – its products, users, and vendors – actually look like?
The duo ended up spending 14 months monitoring OpenBazaar’s activity spanning 2018 and 2019 and are presenting their findings in their study, “Open Market or Ghost Town? The Curious Case of OpenBazaar,” at this week’s Financial Cryptography and Data Security conference in Malaysia.
“We observed a reasonable number of products on the marketplace, but the economic activity was modest at best,” says Christin, a professor in Engineering and Public Policy and the Institute for Software Research.
“And, most of this economic activity seems to be generated by illicit product sales.”
To collect the data, the researchers created a custom crawler – a bot that automatically browses and indexes content—to scrape data about OpenBazaar’s products, sellers, and users.
Their crawler would generate an overall picture of the market every two to four hours on a daily basis.
Over the course of those 14 months, the team observed more than 24,000 distinct product listings, more than 1,000 sellers, and more than 5,000 users who were only interested in browsing or buying items.
While that may sound like a reasonable collection of activity, the researchers also found that fewer than 200 sellers had documented at least one sale during the period.
OpenBazaar’s observable sales during the 14-month period totaled around $86,000, the researchers believe, equating to roughly just over $6,000 a month.
Cannabis, stimulants, and psychedelics alone accounted for more than 70 percent of sales.
Compare that to the Silk Road in 2013, which regularly generated more than $10 – $15 million per month in sales.
The team also observed the overall lifespan of users to be quite low. More than two-thirds of the users stayed on the network for less than a day and never returned.
Vendors, on the other hand, tended to stay a bit longer, especially if they documented at least one sale. Roughly three-quarters of all participants used the network for less than a week, while a few users remained on the network throughout the entire measurement period.
“So far, OpenBazaar just isn’t a very popular market,” says Christin. “One big contributing factor may be that OpenBazaar isn’t as easy to search for illicit products as centralized marketplaces.”
Because OpenBazaar’s built-in search engine censors illegal items, users must navigate to third-party services to be able to find them, which may be too complex for most users to do. Centralized alternatives, however, still provide an easy way for users to search for illicit products.
Additionally, since OpenBazaar operates on a peer-to-peer network, every participant in the market is required to download special software to access the market instead of browsing the market on the web like centralized markets.
Until changes are made in these areas, the researchers believe, OpenBazaar may remain the ghost town that it currently resembles.
The rise of OpenBazaar
One weakness of Dark Web marketplaces is their dependence on an operator, or group of operators, who control the sites. Once identified, these persons can be tracked down and prosecuted.
The development of decentralized marketplaces such as OpenBazaar generates new challenges that do not exist with Dark Web markets. With OpenBazaar, there is no marketplace operator for law enforcement to target.
On the other hand, each individual user engaged in illicit commerce could become a target instead. Decentralized markets are also much harder to shut down.
Image Source: OpenBazaar
A project which began in April 2016, OpenBazaar has experienced considerable growth. Since the launch of OpenBazaar 2.0 in late 2017, the network has seen over 100k nodes created and 20k nodes with at least one listing.
“Nodes” means the installation of the app and creation of a profile or store that can connect to others on the network and be discovered.
It may not sound like much when you compare it to some online giants like Ebay, but OpenBazaar is still in its infancy.
The platform does not anonymize the user by default. Originally, the onus was entirely on the user to mask their identity if they desired.
Now, since the release of OpenBazaar 2.0, users can opt to access the site using a Tor browser, which allows great anonymity. Payments can be made using Bitcoin, but you also have the option to pay using traditional formats.
Most of the items sold on OpenBazaar are simple consumer goods. On OpenBazaar, you can find items such as food, cigarettes, clothing and accessories. OpenBazaar is a neutral technology that can be used for many types of transactions.
It was not developed to cater to any particular type of commerce, such as illicit and illegal goods. Like any technology, much like the Internet itself, the OpenBazaar network reflect society in general: some people will do bad things, most will not.
This all sounds innocuous at its surface but as you dive into how the platform works, it becomes clear how easy it is to use OpenBazaar for nefarious purposes. To locate products on OpenBazaar, you must select a search engine and each search engine will list different products.
According to tests, when searching using the OB1 engine, no drugs were found. However, when switching to the Blocktooth engine, a number of cannabis products and other drug-related items were listed.
By using different search providers or if you know the vendor’s URL, you may be able to access an even wider array of illicit goods. It’s impossible to know. Even OpenBazaar has no insight into what is being sold on their platform, and in what numbers.
In addition to the availability of street drugs on OpenBazaar, there is an even more insidious possibility.
Counterfeit and stolen merchandise could find a home on OpenBazaar, providing sellers with a level of anonymity that parallels the Dark Web, but using a platform with enough mainstream appeal to increase visibility and reach on the Surface Web over time.
A lucrative opportunity, no doubt, and a grave concern for corporate security professionals. Selling counterfeit or stolen goods is possible through OpenBazaar, and if there is such an opportunity there will be those who will want to exploit it.
While the Dark Web and OpenBazaar function in different ways, the outcomes for the seller are quite similar. On OpenBazaar, anyone can sell anything they want.
They can mask their identity and hide their location. It is on the side of the user that the real benefits are clear, in that it is much more difficult to scam users in the way that is done on the Dark Web.
This can only help the OpenBazaar platform as it establishes itself and evolves to become a viable alternative to the Dark Web. For security professionals, the problem of combating illicit trade continues to become more complex and the number of online locations to monitor more daunting.
Perhaps our most interesting finding is that darknet markets’ transaction activity appears to be less influenced by the ebbs and flows of the cryptocurrency markets and other forms of seasonality compared to other services.
The graph above shows a comparison of total Bitcoin transaction volume between darknet markets and three other types of services over the course of 2019.
While all categories see spikes in July around the same time as a Bitcoin price surge, darknet markets exhibit a much less dramatic spike than the others.
Looking across the entire year, darknet markets’ transaction activity remains within a much narrower volume range, suggesting that customer behavior is less influenced by changes to Bitcoin’s price.
Drugs still rule the darknet, but aren’t the only inventory on offer
Above, we see how the top markets have shifted over time. Those focusing on drugs consistently remain the most popular. We should note though that some of the highest-earning markets shown above only serve specific countries or regions.
For instance, Hydra Marketplace, by far the most popular market on the graph, caters only to customers in Russia. Below, we have another version of this chart showing only markets with a global customer base.
Some of the markets shown in the second graph are more popular in some countries than others, but overall, the data shown below will be more relevant to investigators based in the U.S. and Western Europe.
The dominance of drug-focused marketplaces holds here as well. However, it’s worth noting that markets specializing in other illicit goods also bring in sizable funds. Joker’s Stash Market and UNICC — two of the only markets to maintain steady popularity through the entire time period measured — are the best examples one popular market category known as card shops, which specialize in sales of stolen credit card information. We’ll examine card shop activity in greater detail later in this section.
Provided by Carnegie Mellon University