UK is biggest online drug dealing country in Europe

By August 9, 2016Bitcoin Business
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Screengrab from Silk Road
The now-defunct Silk Road website, showing products that were allegedly available. Photograph: AP

The UK is home to more online drug dealers than any country in Europe, according to a new report that estimates the value of the monthly trade in drugs through darknet markets to be as much as £16m a month globally.

British dealers generate just more than 16% of the monthly global revenues – about £1.8m – across the eight largest marketplaces, taking home an average of £5,200 each, according to research commissioned by the Dutch government.

It found that three years after police in the US seized the Silk Road – the original online drugs marketplace – and arrested its founder, the numbers of drug deals taking place in successors to the site had tripled, revenues had doubled and six times as many product listings were available to buyers.

Researchers from Rand Europe, working in conjunction with academics from the UK and Canada, in January collected data on drug deals from the eight largest darknet markets, which are Amazon-type online marketplaces that can only be accessed with an encrypted connection.

They found that by far the most vendors operated from the US, which hosted 890 drug dealers, with the UK hosting 338. However, British dealers proved to be far busier, averaging almost double the number of transactions each over the month.

Germany and the Netherlands were joint third in the numbers of dealers, with 225 each, although Dutch vendors made fewer but on average larger transactions, and operated in a far smaller jurisdiction.

The report says: “The Netherlands appears to have a substantial concentration of cryptomarket vendor activity (13.4 vendors per million population) in comparison to the United States (2.8 vendors per million population) and the United Kingdom (5.3 vendors per million population).”

The study found that cryptomarkets had grown substantially “but not explosively” since Silk Road’s takedown.

Despite the massive publicity that the darknet has received, its online markets still only attract a niche among drugs consumers. Its £16m upper estimate of global drug revenues compares to an estimated monthly offline market for drugs of about £1.7bn for Europe alone.

Stijn Hoorens, project leader for the team behind the report, said: “It could be explained by some of the challenges that these markets have faced over the years with ‘exit scams’, [which is] administrators who take their sites offline, saying for maintenance or something … in some cases they have just left with all bitcoins that were held in escrow. That has affected trust between the users of the cryptomarkets and the operators.”

However, the research also found evidence that darknet drugs sales may have a role in supplying offline drug markets, with dealers buying stock wholesale for distribution. A quarter of the drug sales were for listings worth more than $1,000 (£768), the team found, suggesting that these shipments may have been bought for resale.

A further important finding of the study was that most sales and revenues were generated within continents, rather than from sales between far flung jurisdictions, Hoorens said.

“That was somewhat surprising to us, because it’s sometimes claimed that the internet facilitates global trade and I think we’ve shown that, at least thus far, that doesn’t seem to have been the case,” he said.

“It seems that the within North America revenues, and within Oceania, and within Europe – revenues are much bigger than those between those continents. We can only speculate about why that is the case but I think if you look at the importance of cannabis still on cryptomarkets … that is often produced locally.”

Cannabis dominated the listings that the Rand team found online, making up 37% of listings across marketplaces, followed by stimulants at 29% of listings and ecstasy-type drugs, at 19%. Those figures contrasted with European monitoring centre for drugs and drug addiction estimates for offline drugs sales, which put heroin at 28% of total sales and ecstasy at 3%.

The report says: “A possible explanation for these differences between ‘online’ and ‘offline’ markets may be that cryptomarket purchases typically require an element of planning, which may not suit the daily use of dependent users of, for instance, heroin.”

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