Dealing with uncertainty on anonymous online drug markets

This project aims to develop an economic sociological approach to understanding the social contours of anonymous drug markets. In recent years, new technological developments on the Internet allow users to proceed with illicit drug transactions with almost completely anonymous identities and locations. These innovative technologies include anonymising software for communication purposes and virtual currencies such as Bitcoin for payments. At the same time, supply and demand serve to self-regulate and develop a significant and growing drug market that systematically bypasses drug policy. The transformation of drug markets raises questions of governance and individual freedom of communication. It also has a significant effect on drug prevalence, harm reduction and human health. A conceptual framework for understanding this under-researched but increasingly significant phenomenon has yet to be developed. The proposed research project will address this gap by examining how social interactions of cryptomarket users resolve conditions of uncertainty in terms of valuation, competition and cooperation and thereby generate a theoretically informed and empirically grounded understanding of the social dimension of cryptomarkets. Uncertainty arises in market exchange in general, but also under conditions of illegality, and is even more present in an anonymous environment like that found on cryptomarkets. I approach this research with the assumption that in contrast to material drug transactions, technologically enabled practices of concealing personal information allow actors on cryptomarkets to coordinate their activities similarly to legal economic activities on the Internet. To investigate social practices for resolving uncertainty, the project proceeds as follows. First, I will develop a preliminary conceptual framework to anonymous drug markets by employing the approach of social order of markets. The project`s point of departure is the understanding that markets are socially constructed arenas shaped by social practices, norms, conventions, values, cultural beliefs, power relations and institutional arrangements. Secondly, the concept will serve as an analytical lens through which to conduct multi-sited digital ethnographic research on socially and culturally embedded practices of cryptomarket users for reducing uncertainty in terms of valuation, competition and cooperation, and which serve to stabilise market exchange. To reconstruct social practices, data gathering will include online monitoring of marketplaces, online observation of various online discussion forums related to the marketplaces, self-presentations of actors on cryptomarkets, and anonymous online interviews with users of these marketplaces. The empirical findings will, thirdly, enrich and adapt the initial theoretical concept of cryptomarkets. Outcomes of this project will also inform drug policymakers as well as public health bodies regarding implications of the use of hidden services on the Internet to bypass government regulation.

Although drug markets on the Internet are proliferating, it is not well understood how they operate. The aim of this research project was to examine the internal social and institutional contexts of digital drug markets in a case study on cryptomarkets. Cryptomarkets make use of digital technologies to disguise identifying information of their users and thereby enable easy access to a wide range of illicit drugs delivered by traditional postal services without their knowledge. Conceptually, a perspective of economic sociology was used to study the social coordination of economic activities on cryptomarkets. The project's point of departure was the assumption that drug markets are socially constructed arenas shaped by actions of actors and governments who make use of formal and informal rules, cultural meanings, institutional arrangements and power relations. Methods used to explore practices of cryptomarket actors include multi-sited digital ethnographic observations and semi-structured interviews with market actors. The data collected was used to analyse how drug distribution was enabled within the anonymous environments of cryptomarkets. For drug markets to operate, three coordination problems need to be resolved by cryptomarket actors (e.g., administrators, moderators, sellers, buyers): valuation, competition and cooperation. Unlike traditional drug markets, where actors meet face to face in order to reduce uncertainty about law enforcement and exchange outcomes, cryptomarkets were found to make use of a set of socio-technical practices to reduce uncertainty in market transactions. The project suggests that repeated exchanges occurred when cryptomarket actors solved three coordination problems in novel ways: 1. informal institutionalised standards like a classification system facilitate the navigation of individual cryptomarkets. In addition, marketing and advertising offers signalling product quality were introduced to reduce uncertainty about the value of drugs being traded; 2. an institution-based feedback system as well as sellers' reputation scores help build trust in an anonymous environment; 3. cryptomarkets enable competition to emerge between individual cryptomarkets and between sellers both at national and international level, which ensures profit opportunities for cryptomarket administrators and vendors while operating under conditions of illegality. This project showed that while state authorities police and sanction drug transactions on cryptomarkets, their actors negotiate and establish shared norms and understandings that facilitate coordination of exchange practices. This research also showed that both cryptomarkets and social media platforms are becoming a growing field of activity for drug distribution, connecting sellers and buyers beyond geographical restrictions and legal regulation, making it even more difficult to address new forms of digitally mediated drug markets with old assumptions, data and research.