What is the Internet black market?

In order to understand the Internet black market, it is important to first define the Surface Web, Deep Web, and Dark Net.  The Surface Web is comprised of content on the Internet that can be found using a search engine.  If Google, Bing, or Yahoo can find certain information, it exists on the Surface Web.  Surface Web information is both accessible and indexed.  The Deep Web consists of information that is un-searchable by a search engine, information that is indexed but not accessible.  For example, if you buy something online on Amazon, someone cannot search for your credit card information via Google.  Amazon utilizes this private information and does not make it available for public use.  Organizations such as public libraries, local governments, and businesses such as online retailers manage a great deal of data in the Deep Web.  Information on the Deep Web is estimated to be hundreds, if not thousands of times larger than information on the Surface Web.  The Dark Net is a small subset of the Deep Web, it contains information that is restricted and non-indexed.  Activity on the Dark Net that has to do with exchange is done using the Tor network.


The Tor, The Onion Router, network enables anonymous communication and transactions.  It is decentralized and cannot be shut down from an administrative location, the routing system prohibits law enforcement’s ability to identify specific users.  The information sent via Tor is encrypted.  It then travels through numerous nodes in the network.  When information travels through the Tor network, messages are ‘bounced’ between nodes which makes them virtually untraceable.  Tor is similar to mix-networks because messages are wrapped in layers of encryption.  This encrypted information contains keys of all the intermediate nodes (relays) that the information will reach before it reaches its final destination.  When the information reaches each node a layer of encryption is lost and the information continues traveling randomly throughout the network, losing layers of encryption as it goes.

This network allows for anonymous and untraceable communication because there is no correspondence between incoming and outgoing messages from each node the information travels through.  This is the most prominent form of anonymous communication, the robustness of its security lies in the diffusion of trust all through the system.  Platform providers can use various code bases to make marketplaces within the dark net, sellers then advertise their goods on these different sites.  Some sites are open to anyone, others require a referral.  Sellers utilize various technique in order to attract buyers.  The use of logos, community bonding through forums, and reputation through repeated interaction creates a more transparent and user-friendly community.  Various sites rank their members based on their tenure and the trust they have built up on their site.


Because Bitcoin is the most popular and widely adopted anonymous crypto currency, it is used as a medium of exchange on Tor.  A Bitcoin is technically a solution to a mathematical equation with a fixed set of solutions.  They are able to be stored in a virtual “wallet”, similar to cash, and are exchanged with low transaction fees through anonymous virtual transactions.  This is a peer-to-peer currency that does not require verification from a central third party (Christin, 2012).  Bitcoin uses the Blockchain which is a transparent public ledger distributed by a peer-to-peer network.  This Blockchain technology prevents ‘double spending’ of Bitcoins by certifying that the same Bitcoins haven’t already been used in a transaction.  Thus, exchanges made using Bitcoins over the Tor network are extremely difficult, if not impossible, to trace.


Economic Rockstar Podcast Interview

Check out my interview on the Economic Rockstar Podcast:


In this interview I cover some of my teaching techniques, my research on the Internet black market, and many other fun economics topics!