Compared to the days of Silk Road in 2013, the number of transactions of illicit drugs on the cryptomarkets has tripled, with revenues doubling, says a new report by RAND Europe.
The not-for-profit research institute, whose mission is to help improve policy and decision-making through research and analysis, names vendors who indicated they were operating from the U.S. as having the highest market share of drugs (35.9 percent of total drug revenues).
This is closely followed by the U.K. (16.1 percent) and Australia (10.6 percent). Germany is next at 8.4 percent while The Netherlands had a 7.1 percent revenue share.
That is 890 vendors operating from the United States followed by 338 from the United Kingdom and 225 from Germany.
Online Drugs a Niche Market
Commissioned by the Research and Documentation Centre on behalf of the Dutch Ministry of Security and Justice, RAND Europe came up with a study that looked at the characteristics of vendors, buyers and other actors involved in online drugs trade.
It also looked into the type of narcotics being sold online, the size of online drugs trade and how this might be tackled through law enforcement activities.
Total drug revenues on cryptomarkets (excluding prescription drugs, alcohol, and tobacco) during January 2016 were estimated to be between $12 million and $21.1 million. Considering that the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) states that the total offline market for drugs is much larger, and is estimated to be $2.3 billion on average per month for Europe alone, the figures suggest that cryptomarkets are only a niche market.
However, it says there is evidence that drugs sold on cryptomarkets are fuelling offline drug markets with buyers sourcing stock for offline distribution.
Top on the list of the reported illicit drugs sold on cryptomarkets are cannabis (37 percent), stimulants (cocaine, amphetamines 29 percent), and ecstasy-type drugs (19 percent).
Seeking Out the Internet Drug Trade
RAND, which collaborated with Judith Aldridge from the University of Manchester and David Décary-Hetu from the University of Montreal, used four broad potential strategies that are available to law enforcement agencies for the detection and intervention of the internet-facilitated drugs trade.
The plans include traditional investigation techniques applied in the drug chain (e.g. surveillance, undercover operations); postal detection and interception (e.g. collaboration between law enforcement agencies and postal services); online detection (e.g. big data techniques, monitoring of online marketplaces, tracking money flows); and online disruption (e.g. taking down online marketplaces).
The researchers say there are around 50 so-called cryptomarkets and vendor shops where anonymous sellers and buyers find each other to trade illegal drugs, new psychoactive substances, prescription drugs and other goods and services.
The most well-known and popular crypto-currency or virtual currency, used on cryptomarkets to make purchases. On Silk Road, only bitcoin was supported as a payment currency. Bitcoins are not issued by any government, bank or organisation, and can be purchased in person or through online exchanges such as CoinBase.