The future of anonymous markets

While the name “Silk Road” may come to mind when discussing darknet markets, the concept has existed long before its arrival, starting in the early 1970s. Here, we will cover an article written by Smuggler, discussing previous attempts at creating a darknet market and their failures, and explore how we are nearing an era of equilibrium – between technology and society. The end result is a highly decentralized, and perhaps an unstoppable, peer-to-peer marketplace.

“We will refrain from any legal, moral or ethical judgment on these activities but focus on the technical and operational security aspects. What is illegal and unethical trade for one is perfectly legal for another. Judge for yourself.”

Despite the ongoing improvements, earlier darknet markets were not very reliable or secure. This was until the 2000s with the introduction of pseudo-anonymous centralized digital currencies, private mailing systems and more advanced technologies such as Tor – The Onion Router.

While this was starting to pave the way for greater service and marketplace, the scene changed rapidly with the introduction of decentralized cryptocurrencies and the launch of darknet markets such as the infamous Silk Road:

“With the introduction of Bitcoin, the first decentralized cryptocurrency, a paradigm shift took place. It was likely “The Silk Road” that first fused the availability of this new kind of online payment system with anonymous access and publication of web content.”

Introducing Bitcoin and The Silk Road

Bitcoin paved the way for many new methods of peer to peer systems that were previously not possible. Due to Bitcoin being a trust-less, immutable system, someone could make a transaction without giving up their identity, worry about being tracked or doubt the payment path. Other important features – missing in previous darknet markets – were offered by The Silk Road as it introduced “merchant-to-buyer private communication, reputation tracking, payment escrow services and forums in which both merchants and buyers can have public discussions…”.

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On the downside, accessing darknet markets – such as The Silk Road – still required a person to have knowledge about using Tor or other forms of privacy, anonymity, overlay networks. They were not easily accessible and furthermore:

“The centralized nature of these markets, the binding of customers to market, use of the postal service and the flat hierarchies of merchants had significant negative operational security implications.”

Despite the improvements on earlier darknet markets, websites such as The Silk Road still had security issues. As a result, the FBI managed to track down its alleged operator and shut down the website after it’s two and a half year operation.

While there have been several other versions of The Silk Road and other darknet markets, “the loss of darknet markets led to severe disruption of client-merchant relationships – identities and reputation being lost, previous marketing efforts being negated – often leading to temporary or even permanent collapse of merchant business.”

So how can we improve on this model?

The future of darknet markets

At the heart of cryptocurrencies is the distributed, public network – decentralized by design. This system architecture ensures that in the case of an attack no single point can be targeted. While this has proven to be a robust method of securing a digital network, it leaves space for one to wonder: what if we were to combine the benefits of existing encrypted, decentralized, digital networks with that of our physical world? A hybrid system powered by individuals, secured with available technologies:

“To prevent the problems of customer binding, and losing business when darknet markets go down, merchants have begun to leave the specialized and centralized platforms and instead ventured to use widely accessible technology to build their own communications and operational back-ends.”

Darknet and anonymous markets are following the path of anti-fragility – the more you try and break it, the stronger and more robust they become. The earlier forms of these markets existed on the darknet, requiring Tor and other overlay networks. Now they exist on your regular messenger applications, accessible via mobile phones by most people – without any technical knowledge.

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Furthermore, vendors use random public locations referred to as “dead drops” instead of postal services which are susceptible to tracking. Dead drops is the method by which each vendor can choose their own distribution location, whether it is in an empty can or a spot under a tree. This method also means that item can be sent to the customer at a much quicker speed with a higher level of anonymity as no personal information is required – such as a name or an address.
To strengthen security and further decentralize the process, vendors have introduced several layers of operation – procurement, sales and distribution:

“This concept of using messaging, cryptocurrency and dead drops even within the merchant structure allows for the members within each layer being completely isolated from each other, and not knowing anything about higher layers at all. There is no trace to follow if a distribution layer member is captured while servicing a dead drop. He will often not even be distinguishable from a regular customer.”

So let us imagine the current situation. You connect with an anonymous vendor via a messaging app. Chances are you will go through the process with an automated bot without ever dealing with a person – unless you are a regular customer or need specific attention. Once you have paid for your item using a form of cryptocurrency, you are sent the location of the item, though not its exact location. Once you arrive at the approximate location – using your device and an app – you activate the tracking beacon attached to the item, with either your WiFi or Bluetooth connection. The beacon then sends you its exact location.

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While this imposes its own risks, other methods are being developed to ensure that the signal cannot be tracked and that a location is only used once. Just like most distributed networks, an attacker would only have access to individuals, not the entire network. Going into the future – with the advancements of drones and other technologies – we can expect a service nearing the heights of decentralization, as items can be passed from one drone to another or moved around by regular people “which will blur the lines between the black and the legal market”. Perhaps in the future people will be able to gain an income by helping distribute and relocate items.

“Continue thinking, what is possible if we combine: 4G/5G mobile internet, anonymous messaging, messaging bots, anonymous and untraceable digital currencies, strong end-to-end encryption, GPS, cheap electronics, 3D printed mechanics, cheap drones – both short distance multicopters and long distance fixed wing, visual processing for navigation, and lots of code.

We have no idea what that will mean for our societies, good or bad. But we better start thinking how to deal with the effects. And we should ask the right people about it, not those still captured in the 20th century and the lobbying by industry.”

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