Silk Road Closure: Darknet Economy Thriving A Year Later

When U.S. government officials shut down the underground online marketplace known as Silk Road last fall, the operation was heralded as a victory. The FBI seized a collection of 144,000 bitcoins, worth about $28.5 million, and arrested the site's alleged mastermind, Ross Ulbricht. But one year later, experts say “Darknet” sites like Silk Road --where users buy drugs, weapons and other illicit merchandise with relatively anonymous bitcoins -- have survived and continue to thrive.

“Silk Road and other Darknet marketplaces continue to do steady business despite the arrests of additional alleged operators who authorities say worked for Ulbricht,” according to a report from the Digital Citizens Alliance, a coalition of businesses and consumers focused on raising awareness about safety on the Web. The group estimates that drug listings on the private online networks that make up the Darknet economy have increased 75 percent since the Silk Road shutdown.

“There is significantly more competition today than when the original Silk Road was seized,” the DCA report says.

The network operated using Tor, a type of open-source software users can download for free. It allows for anonymous Internet use while tapping into a network of thousands of volunteer computers. Starting in 2011, it had facilitated thousands of illegal exchanges. Users could purchase fake passports, weapons, fake email addresses and a wide variety of illicit things.

One of its major assets was the use of bitcoin. Though big corporations are just only starting to adopt bitcoin, Silk Road had used the online currency since its inception.

“Many Darknet marketplaces and vendors view bitcoin as the perfect currency for their business,” the DCA report says, explaining that its anonymous nature is highly appealing for criminal activities.

When Silk Road was shut down, the price of bitcoin fell from $140 to $129 in just one day, and thousands of drug dealers found themselves in big trouble.

But all wasn't lost for illegal marketplaces.

While Silk Road was the most popular market, it wasn’t the only one offering such unique amenities. After its demise, the FBI identified two major competitors known as the Black Market Reloaded (BMC) and the Sheep Marketplace. Other venues such as Agora and Evolution also saw their activities increase, while new platforms such as White Rabbit Anonymous Marketplace, Outlaw Market and The Pirate Market have also appeared on the scene.

“The closure of the Silk Road has seen a proliferation in the number of active retailers on alternative dark Web marketplaces,” researchers from the University of New South Wales, in Australia, wrote in a 2014 paper on the subject, noting its similarity to drug-trafficking networks. “When one store is closed or a drug is made illegal, others quickly appear to replace them.”