Digital Crime Is Structured More Than Organised
A challenge for researchers and law enforcement has been understanding criminal activities that are adaptive, resilient and well motivated but not ‘organised’ in a routine sense (Raab and Milward 2003). A powerful explanation examines their economic logic as sophisticated, rationally governed operations with business-like structures and functions that leverage adaptive network qualities (Kraemer-Mbula et al. 2013; Kshetri 2010; Yip et al. 2012). However, there tends to be an elision between ‘markets’ and ‘economic rationality’ as if the two are co-produced. Markets in neoclassical theory are theorised as pure rational exchange when they are in fact institutionalised, culturally located, socially embedded structures (Beckert 2009; Fligstein 2002). In order to function markets do not need rationality, in the sense of calculable judgements that respond to price/cost signals, and do not necessarily breed it either (Beckert and Dewey 2017).
In terms of how we theorise illicit markets, criminology has increasingly recognised the many ways that dynamics of criminal economic entities are shaped by market relationships such as supply/demand relationships and economic opportunity structures (Becker 1968; Reuter 1983) and of criminals as rational actors (Winter 2008). The contention is that economic rationality in illicit markets should be seen as one possible situated, localised logic of action among others, and as the product of a range of practices, ideologies and technologies which are employed by users. These are: the development of a hybrid infrastructure of licit and illicit systems and technologies, sufficient weak network ties to ensure the diffusion of knowledge about trusted actors and of comprehensible business practices, formalised and informal regulatory processes, and shared cultural norms (Beckert 2009).
Cryptomarkets are suitable case studies as they are a place where the business structures involved are designed to be reproducible and are picked over by buyers, sellers and interested commentators in public discussion forums (Aldridge and Décary-Hétu 2014; Martin 2014a). Cryptomarket site administrators and vendors display various business-like attributes, such as entrepreneurship (Afilipoaie and Shortis 2015), business efficiency (Van Hout and Bingham 2014), reputation management (Décary-Hétu and Leppänen 2016) and risk assessment (Cunliffe et al. 2017; Décary-Hétu et al. 2016). Cryptomarket users themselves increasingly identify a move away from libertarian political motives to those of economic calculation (Munksgaard and Demant 2016). Administrators, vendors and drug buyers in the cryptomarkets often praise business-like and customer-focused attitudes and face challenges such as quality signalling (Wendel and Curtis 2000).
However, participants’ self-representation may not capture the way in which markets are constructs with their own cultures and politics which shape the justificatory logics market participants apply (MacKenzie 2014). I define them as assemblages of software and hardware systems, networks which form around monetary and knowledge exchange and social support, and shared practices and norms, all of which embed social and economic relationships. Cryptomarkets are not just ‘where things happen’ but their structure and logics are part of what happens.
The cryptomarkets’ appearance as open retail spaces belies complex underlying interrelations and structuring factors which may not be apparent from the ‘front end’. For example, a large proportion of trades by value are wholesale dealer to dealer so for many drug users cryptomarkets mediate rather than substitute the offline market (Aldridge and Décary-Hétu 2014). This draws attention to the different factors shaping the actions of market actors and how they address various challenges such as coordination problems, maintenance of trust and interfaces with other systems. The Tor darknet is a relatively concentrated social and physical space, with 20–50 groups hosting most of the content (Lewis 2016). Within and across cryptomarkets, groupings of vendors cooperate and share trade. Just as legal, free markets are not feverish hives of individualised competition, and are in fact composed of cooperating stable entities far more than competitive and disrupting entities, so members of cryptomarkets spend a significant amount of time making them stable and predictable.
I examine that resilience in the context of the social and technical structuring of the cryptomarkets. I look critically at what the ‘market narrative’ might say and what it misses out. I argue that the impression of a frictionless, buyer responsive free market in illicit products is illuminating and attractive to but incomplete and in some ways incorrect (The Economist 2014, 2016). Bonds of trust, obligation and support still exist, need to be worked and govern users’ actions and decisions (Tzanetakis et al. 2016). The cryptomarkets have a role in regulating and marshalling the behaviour and self-presentation of buyers and dealers and embedding these behaviours in the technical infrastructure of the market.
Organised Crime Is a Useful Performance for Cops and Criminals
Law enforcement tends to target high-value, low volume players, reflecting a ‘strong tie’ approach, rather than lower value, high volume activities (Hutchings and Holt 2016). Studies of the cryptomarkets show that there are few big players (Soska and Christin 2015) so most activity is of the small-value, high volume type. Organised crime is a convention, agreed by cops and criminals with relevant labels applied but which may not have much resemblance to reality (Lusthaus 2013). There are some common features. Organised crime groups are persistent and seek to generate profits from one set of activities that can be invested in others, so they are investment-oriented operations. There is some permanence or persistence in their activities. This requires some control, staking of claims, argument about organised crime staking claims over literal or business territory, organised as in social control rather than coordination. Organised crime limits some kinds of crime, that directed against protected members of the organisation. It provides an interface for corruption of law enforcement agents so it can employ them in the regulation of crime. It is about the distribution of power over the illegal and semi-legal spheres.
A common quip is ‘organised crime is not very well organised’ but it is patterned and sometimes coordinated. There is a meshing of cybercriminal infrastructure, globalised commerce and finance. This meshing emphasises complexity and standardisation, the monetisation of risk, and involves a great number of digitally skilled interested, underemployed or indebted individuals. Drug money provides a core resource for criminal groups to fund further criminal activity and support them moving into new areas such as human trafficking. The organisation of it is driven by economics, culture and association. Tightly associated groupings focus on volume production, whereas more value driven or opportunistic groups are loosely organised or act as associations rather than organisations.
Associations come together for specific opportunities that allow them to coordinate skills and resources (Fleetwood 2014). Cartel organisation in digital crime markets is not strong, partly because they lack the skills but also using cryptomarkets and cryptocurrencies represent a huge threat exposure for them. They are well served by existing shadow banking and money laundering services. Cartels are quite risk averse and the digital crime markets lack or are hostile to many of the established control agents they use.
Connected to a mafia family? You? i’m over here crying laughing at your stupid ass. You ain’t tied in bruh! I think we all know that.You know a guy who knows a guy. Complaint over a month ago was blue flakes in your dope.That ain’t mob.sleeping pill tricks.You think by saying you use dope it helps you identify with us.your a certified clown. Enough of my hood rant, it’s not adding any significance to this thread.I do one better. Done posting all together. on the dope side realsupremesmoke got some fiya! right now! No i’m not him or any other vendor Dopechick i mean Dopeman can throw fud at. just my review.
The epitome of drug related feuds on the internet. Tersely worded posts. Beats shooting at each other. On a side note The PowerCartel made good of their promise and gave a 50% refund. Bastards. I only got 30%.
Digital society permits a move away from place-based crime control by organised crime groups but just because there is a route does not mean they want to take it (Choo 2008). Globalisation is one effect that pre-dates digitisation and which has extended the operational reach of organised crime groups. A work of caution on the data context is needed, policing and policy focuses a lot on asset forfeiture/recovery so there is a tendency to inflate the estimated value of organised crime proceeds (Levi and Osofsky 1995).
Trade Associations Exist Alongside Cartels
One of the problems cartels have with the darknet is it is hard to control your assets and how buyers and sellers deal with a market in ‘lemons’ where quality cannot be verified (Akerlof 1978). The illicit drug markets represent this problem given the difficulty of verifying drug quality and the impermanence of typical quality markers such as branding which do not allow people to confidently gauge reliability. There are not enough incentives to stop it becoming a predatory market. Profits on the retail side are low to non-existent (Reuter 1983; Reuter and Caulkins 2004).
We are building a room inside a stone building. Plenty of insulation on top of our room to reduce any thermal tell tale signs. Then growing in soil under 600W lights.
if it’s u and a mate I’d look into a bigger setup…maybe 2×600w in the flowering tent n have a 400w mh veg tent n maybe a few cfls in a clone station. I run a 600w for myself lol ok I’ve a few extra grams to sell but if u looking to make a nice tidy few pound I’d say perpetual is the way to go. I’d look into a few grow tent since its easier to work with (in my opinion) Setup wise n ur not gonna be making any holes in the wall. Clones are a good Routh especially if ur planning to be a cash cropper since you’ll have consistent,strong hardy strains n guaranteed winners in any.
Anyway, I have lots of BC Big Bud (a UK favourite), lots of Critical Mass (usually it all goes to customers in the US fast, so jump on this stuff), Caramelicious, White Widow XTRM and AK47 XTRM. All seeds except Critical Mass come from Amsterdam Marijuana Seeds. The Critical Mass is from Mr. Nice seeds. All great genetics.
Criminal networks typically consist of individuals and small, loose groupings who come together around specific opportunities (Sparrow 1991). These opportunities are managed through the role of network brokers, individuals who connect denser criminal networks to each other (Coles 2001). Weak ties, acquaintanceships known to one but unknown to each other, are crucial in maintaining functioning networks and diffusing information. The low background noise of informational gossip is crucial for how criminals receive intelligence about market risks and law enforcement actions and adjust their behaviour (Dickinson and Wright 2015). My hypothesis is that this is true of cryptomarkets. The weak ties embedded in cryptomarkets reduce the cost of establishing trust which makes them highly attractive to criminal entrepreneurs. The success of cryptomarkets is in part because they marshal these weak ties in a very effective manner. Crucially these weak ties function both within specific markets and between markets. This explains some of the surprising resilience of the cryptomarket systems in the face of both law enforcement intervention and attacks from other cybercriminals.
Illegal Markets Come in Different Types
Beckert and Dewey (2017) set out a useful typology of illicit markets, along two axes. They compare the degree to which criminality is central to the market process, and the extent to which the trades are socially legitimated. Selling counterfeit clothing is generally legitimate, but illegal. Markers in human wombs are more stigmatised. Trafficking in child pornography is both heavily criminalised and taboo. Hunting rare animal trophies is legal in many places, but attracts widespread social condemnation. To this other dimensions could be added, such as coercion and collaboration.
Infrastructure and platforms matters more than technologies which can be swapped in and out. Specific escrow systems or vulnerability exploits are the vectors through which digital crime can happen. However, criminals have got much better at replacing technologies as needed, relying instead on crime platforms (Dittus et al. 2017).
There are different kinds of illegal market depending on the transaction, the people involved and the source of the illegality. A typology produced by Beckert and Wehinger (2012) break them into illegal products (such as illicit drugs), illegal commodification (selling human organs), illegal exchange (selling stolen goods), illegal production (slavery) and third-party corruption (selling access). Each has different value structures, ethics and interrelations with the legal and semi-legal and different ideas of value. Illegality can exist at one point in the supply chain, it does not have to be something all actors are complicit in.
Mostly illegal markets are treated as parasitical, circumventing regulations and leaching value from the formal economy. However, illegal markets have always contributed value. They might distribute labour and marginal employment opportunities. In the case of drugs they introduce new products and create use value. Law enforcement action can be perceived as an attack on a community as well as on a lucrative financial opportunity. Illegal markets can therefore provide security, meaning, purpose and commonality: ones that do are probably the stickiest and hardest to shift.
From Kingpinning to Routine Crime
In terms of the internal labour structure, inequality is typical. Tochka market admin pays staff under $1000 per week, a poor return for very high risk. Admin also uses external developers to maintain the site for even less (Caleb 2019). People involved put up with exploitation in the hope of future large gains. One of the temptations of cryptomarkets is to allow a dealer to monopolise their local market, called king pinning. Kingpinning is one way people try and use the darknet to mimic this lifestyle but largely is held in contempt by darknet users as ultimately futile and likely to lead to sudden arrest or deposition from one’s pedestal by rivals.
I wonder how the windblown thieves who seek to hold consumer items and touch them cope with the world where much value is held digitally and there just isn’t that much to steal? The group of largely successful crooks seen in various research studies have wealth pouring through and out of their hands in the form of expensive clothes, cars and tat. They don’t put it aside because this is the aim, to be seen and envied by others. Their potlatch consumption is superficially successful but eats itself, and its community. Individualistic, hostile to local government, university, schools: what do these institutions have in common? A bit socialist, unnecessary from their point of view and probably also hindering their hoped for transformation from small time criminals to the big time. I wonder what has happened to them now there are some routes into the medium big time through the darknet and other rather easier ways of conducting one’s business out of sight? Has the bling crime been replaced by the internet crime with a slightly different set of values? After all, being on the darknet means one cannot display one’s wealth to others. Some have done this e.g. Alphabay’s Casezes but online. Their glory days are generally brief—there’s always someone younger, tougher, fitter to take over, relegating some in their early 20s to menial drug dealing after some hog days. Those who are ‘oppositional’ in these areas tend to hold down jobs and standard political views.
Crime is more typically embedded in routine. The focus of is often on the high disruption one off crimes that never happen in the same way twice. Mostly however it is just low level heartache. Criminal markets have functional motives and psychological rewards. Criminal activity is routinised and scripted. As with other aspects of the illicit markets, reducing motives to economic gain is limiting. Economic gain can come in unexpected ways. For example, many drug dealers find returns from soaring bitcoin prices are greater than returns for drugs. Participating in markets then changes people’s preferences and motives in a feedback loop. They learn to be ‘players’. Some participate and become badder, some less bad. Everyone changes through interaction and learning, testing themselves against decisions that come up.
Normal Scammers and Legit Vendors
Scams were normal risks. They were expected and victims were expected to look out for themselves. There were two kinds of market scam. The ‘normal scam’ was an expected part of the crypto market experience. There were a range of normal scams. An otherwise reliable vendor selectively failing to deliver to a customer was thought of as irritating but a normal part of the business ethic for large vendors. A vendor with a poor or no reputation scamming a buyer was likewise expected and nothing the buyer could complain about. A market administrator conducting an exit scam, leaving with bitcoin in escrow, was disruptive but not overall cataclysmic. Scams in this sense are business models rather than market deviance. They were scams that the markets could recover from and that they were resilient towards.
Another class of scams began to emerge in 2018–2019 and were extra-normal scams where a scammer manipulated the data held by the market or its trust mechanism. For example, using market data to blackmail customers and vendors was seen as catastrophic. The scam would work by the attacker making the users’ data public. Doing so would lead to the buyers or vendors not being able to operate in the cryptomarkets at all. These were attacks that the markers were not resilient to and which are hard to recover from.
Business Strategy and Trajectory
One market vendor describes his or her situation: I require FE because I cant afford to lose money on BTC fluctuations. If I do, then I’m out of pocket and customers lose out on savings and such things. I need to meet profit targets and stick to a business plan or else there is no point in being here. Maybe I will have happy customers but I dont want to vend forever, I have a business plan and once I reach a certain amount in savings then I’m done. I’ll stay around the forum cause I like it but I wont vend anymore. Not that its any of your business, it’s my business and I will run it whatever way I want and I’m certainly not going to let someone with no life who thinks he is some kind of darknet robin hood but is only right 15% of the time by pure chance.
There are a range of business types present in the cryptomarkets which combine technical and organisational systems in different ways (Moeller 2012). They can be differentiated by size and also internal structure, their trajectory and how they link with other criminal operations and supporting services such as couriers and bagmen. Greater predictability in their operations means skills of capital management, stock control, customer responsiveness come to the fore. A vendor’s market strategy is constrained or enabled by financial factors such as their access to startup capital, their ability to secure product through the drug distribution chain, and proximity to distribution systems. A simple way of categorising market relations is to look at the internal structure of vendor businesses. Common business types were single vendors with one person in charge of product sourcing or production and distribution, extended organisations with sourcing and distribution separate, and franchises or secondary distribution systems. Franchising allowed a vendor to maintain their market position while limiting the size of their operation and manage risk by minimising cross-border traffic.
CaptainBeard had someone doing his drops for him and that person was not a good choice for him and the first package never arrived. CaptainBeard had some problems with that guy and got rid of him. So now shipping has been rectified. CaptainBeard send out another package, this one FedEx next day and it arrive AOK for my drop situation. Buyer ‘Alscarpets’
Some have clearly expressed longer-term visions for their business which balance the benefits of higher turnover versus the risks it represents such as lower profit margins, greater business complexity and attracting the attention of law enforcement and rivals. For those reasons they can seek to stay small and focused on retail level customer orders. Others have a plan to move from retail to bulk orders over time. These vendors that are trying to break into the bulk sales market seek to develop a close relationship with a selected client base.
A network strategy allowed vendors is to leverage network effects by identifying what I have termed ‘super-reviewers’, forum members who are particularly active and trusted by other users in the market who can be targeted with free samples and discounts. They are a kind of key reputation actor common in online criminal networks (Dupont et al. 2016). They are identified and acted on by the vendors in order to maximise reputation and sales for example by using free samples, a good way of building a reputation and are an effective entry strategy for new players (Coomber 2003). Reputation capital in the cryptomarkets is mediated through the reputation systems and forums. As many users noted, however, it is hard to differentiate between the many vendors who have almost the same highest possible score. They then turn to super-reviewers for judgement. Super-reviewers play a significant role in mediating a vendor’s transition from small to bulk sales, and from being on the public market to taking their business private. Their role is akin to ‘power reviewers’ on licit platforms, a role that is deliberately created and rewarded by the platform designers. They have many weak ties to other market participants so act as diffusers of reliable knowledge.
I’m waiting for more good reviews before I start selling in larger weights. If official tests are positive then I’ll move into bulk. This takes time. The purest coke costs more and sells quickly compared to my standard product. The standard coke takes up most of my capital. The connoisseur market is tempting but I’m not ready for it yet. Vendor, Hazmates
So although the driving factor for some was making large profits as quickly as they could, many were self-limiting, seeing a distinct cut off point in their business trajectory, and for others there were inbuilt limitations of capital or ability to manage their customers and the feedback system (Hammersvik et al. 2012). They could limit their business size to avoid the risks of having other employees, or having to commercialise. A final point in some vendors’ trajectories is closing or passing the business on. Some have a set aim in mind and leave the market having achieved a desired level of profit. A good business can be sold to another vendor which allows the vendor to depart with minimal disruption to their client base.
Underpinning their market strategies were business practices that manage customer demand (Martin 2014b). I have divided these into demand facing and market-oriented practices. Demand facing business practices sought to manage the business identity and the customer base, such as through branding, pricing strategies and product quality management. Market-oriented business practices involved managing challenges arising from the market infrastructure. They included practices of hedging against bitcoin fluctuation and extended to strategies to damage rivals’ businesses through distributing negative reviews and all the way to cyber attacks on rival markets.
To some extent their practices were a function of market position in the sense of the relationship to the market overall rather than the size of the business. Positioning could be seen as a function of the business type but there were more complex factors at work in terms of the dynamics involving others in the market. Market position was therefore partly out of the control of vendors and was sometimes a function of business type and in other cases was due to the opportunities that came up and their ability to exploit them. Many vendors moved from retail to bulk operations as they were able to access larger quantities in the supply chain or as their customers changed their requirements. A different approach was the vendor developing their ability to control different steps in the supply chain. Some were able to take charge of most or all of the supply chain from production to retail distribution. This was the exception. Most vendors represented different steps in the chain, including the cryptomarket service industry. They provided precursor chemicals, or took other roles in the supply chain, or provided hosting or ancillary services such as bitcoin tumbling services which launder bitcoin.
Building a Hybrid Infrastructure to Cope with Uncertainty
A big part of user activity is threat identification and avoidance (Aldridge and Askew 2017; Holt et al. 2016). Ripoffs and predation are present and have to be protected against (Moeller et al. 2017). Scams are the deliberate manipulation of trust or market systems to create a profit without delivering product. It could be a business model in itself or an end point of the trajectory of otherwise reliable vendors or markets. Administrators shuttered several markets in this way. Although not common, there are vendors for whom the exit scam is a goal. In this model, they build up their client base with free samples or inducements before leaving with multiple large orders unfilled. Lucrative exit scams also work at market level. Selective scamming also exists, which allows the vendor to increase profit margins while maintaining a reasonable reputation. A smart scammer can manipulate the feedback system, for example by changing the delivery date until it is too late for the customer to give feedback. In those situations, the only redress was to appeal to the market administrator. In terms of business, scamming is not just an ethical issue. It is sometimes forced by the closure of a market, or is a final goodbye from a vendor leaving the market. Market participants recognised a distinction between businesses set up to milk market users and those where the vendor quits their obligations due to external factors. The latter were thought of as normal scammers driven by changes in the cryptomarket and its infrastructure rather than a commitment to scamming as a business strategy as such.
The market infrastructure is composed of a number of different technical and social network interfaces that mediate the drug market as a whole. This is more than just increased transactional efficiency compared to offline markets but also involves a set of practical stances which play out and are reproduced within the cryptomarkets and their associated discussion forums. One way this shaped the judgements vendors make is when a sufficiently trustworthy relationship is established they can go private have an invited only clientele within the cryptomarkets or move their client base entirely off the market. Doing so allows them to manage their turnover and operate without relying on one single cryptomarket. This reduces risk for vendors from market-based scams and from closure due to law enforcement activity or cyber attacks. In contrast to that densely structured approach, other vendors reduce risk by reproducing their business across multiple cryptomarkets (Broséus et al. 2016). They rely on resilience through replication and hedge against market failure. Super-reviewers also operate across different markets and track and share information about vendors on the forum.
A major problem for vendors is the risk to profits from Bitcoin fluctuations. Bitcoin is a volatile currency. A deal might be finalised at one value and shipped at a lower one, sufficient to wipe out the vendor’s profit margin before they can convert the bitcoin into another currency. The risk can be mitigated by offering buyers incentives to Finalise Early (FE). FE shortcuts the market’s escrow system. Typically a buyer’s payment is held until they confirm receipt of the product or a certain amount of time has passed. FE means payment is immediate. It puts a risk on the buyer who then only has the goodwill of the vendor to rely on should the shipment not arrive. Some buyers do not have the choice of avoiding it. Buyers who are rated low and are assumed to be less reliable may have to pay a premium or take on risk by being required to FE. Those who decide not to take on the risk of FE have a smaller and also less reliable selection of vendors from which to choose.
Until we do reach these volume customers, our business model is capital locked, unable to source additional volume product (the only reliable way to import) and facing delays when it comes time to re‐inventory. Vendor ‘Babezinclubland’
Larger vendors may use couriered drop shipments that allow them to operate outwith the postal system so avoiding possible law enforcement surveillance and ensuring correct delivery.
Coordination and Cooperation
Vendors make strategic use of their relationships with others. Small-scale sellers rely on shared knowledge and resources with others on a similar level. Smaller scale, more artisan cannabis producers would share recipes and material using specialised, closed discussion forums on the darknet or on social media. They would club together to buy growing material, giving themselves more buying power. In this they acted like trade associations which leveraged buying power and shared knowledge about the market and products. Groupings of larger and more ‘professional’ operations exist which see their position as constantly under threat from hostile vendors attempting to undermine their reputation.
As I said I will keep two brands of #4 [heroin] available to fill [vendor] Afghantracy’s gap. I will list it today, get your orders in by 10 pm GMT if you want me to ship it by Tuesday. Good going Tracy, I’m happy she is okay and all is well. The market is a big banquet and there is enough custom for all. The two of us are steady and robust. Vendor, Mixican
Cyber attacks on Merkat damage market diversity. Reduced range of cryptomarkets is AWFUL for the darknet. Perfect markets do not exist. Nobody who cared about the darknet would attack a market. Having just one cryptomarket is very very risky. Buyer ‘3MT’
Many users had a sense of obligation to other users and the community as a whole. One interviewee was a trained chemist and tested the drugs he bought using various reagents. He then posted the findings online with more information about the drug’s characteristics.
Customers are in the main not very rational in what they do. They do not act on information but their sense of the vendor and the appearance of the product. Vendor ‘GlobalMegaCorp’
The different approaches vendors had can be seen as straightforward economic strategies and on one level they are. They are also strategies promoted by the structure of the markets with feedback mechanisms and mimicry of clearnet markets. There are different ideological stances were at work, in the sense of coherent value-oriented positions. Many are pragmatic and looked to the market as a source of income. A second group seek to demonstrate that the markets were a viable libertarian space for contract-driven relations (Munksgaard and Demant 2016). A third adhere to a resistant ideology which was a counter to the capitalist imperative of the market. They are critical of commercialisation and see the cryptomarkets as a place to conduct business without capitalist ideology being ever-present. Many respondents and those buyers and sellers commenting on forums consciously chose to resist what ‘crime as business’ might imply. Although they welcomed many aspects of the market relationship, they also valued the better social relationships and positive community activities that would go on around the market exchanges themselves. These included harm reduction initiatives, supporting people in decisions about drug use and desistance, and supporting less profit-driven and more artisan or responsive producers (Barratt et al. 2016).
Structuring Opportunity
Key to understanding how criminal opportunities are structured in cryptomarkets is contextualising economic motives and understanding how they are self-limited and restricted by the overall market infrastructure. Cryptomarkets are deviant social enterprises in that they are a context of exchange that is in part but not wholly structured by economic opportunity. Cryptomarkets are a location, rather than an organisation, in that there is little control over members (Lusthaus 2013). While the technical organisation can be highly structured, the social organisation of the cryptomarkets combine formal ‘jurisdictions’ of administrators (Valverde 2014) with less defined but still significant social ‘beats’ within the cryptomarkets and lateral regulation and social sanctioning by users. There is no natural logic of ever expanding supply. Some vendors choose trust and predictability over obtaining the biggest orders possible. Many market-related actions are not financial, calculated or exchanges at all. They involve reciprocity, sharing knowledge about risks and opportunities, sharing startup resources, and maintenance of the hybrid social and technical infrastructure. Conversely there are many monetary exchanges that are not exchange related such as scams, extortion, or more benignly, gifting and reciprocal exchanges of goods that do not even involve the distant prospect of financial settling up. One tempting conclusion is that the cryptomarkets solved some problems that drug users and dealers used to have. For example, social supply is the non-exchange distribution of drugs in friendship or reciprocity networks (Coomber et al. 2015). It might be assumed that the retail aspects of the cryptomarkets replaced social supply since this kind of distribution is not market friendly. However, it is very much in evidence both within the markets and mediated by them (Barratt et al. 2016).
Cryptomarkets enable and disable different types of crime and different orientations towards the illicit market. In this they function as formal and informal regulators. Conflict management strategies are highlighted by Morselli et al. (2017) as informal social regulation, consisting of ‘tolerance, avoidance, ostracism, third-party intervention, negotiation, threats.’ The act of excluding competitors or types of criminal activity that are perceived as low-value or carrying a high risk of law enforcement attention acts to constrain some types of criminal activity such as banning the sale of weapons. This might be motivated by moral revulsion about particular crimes but also by knowledge of the fact that these crimes bring with them unreliable and unprofessional users who are likely to attract the attention of multiple law enforcement agencies. A combination of moral pressure from users and self-interest encourages market administrators to regulate the items and services being sold. Critical to the development of business models in the cryptomarkets is the diffusion of knowledge about anonymity and security practice. There is a collective effort made up of many individuals and organisations that are not directly connected (Granovetter 1973). That provides these markets with notable resilience in the face of technical and law enforcement disruption.
Key to self-regulation is small-scale performances of market norms. Cryptomarkets marshal the entrepreneurial dealer in the direction of performing as a customer service operative, emphasising secure packing, timely dispatch of product and accuracy of claims made about the product. They do this partly through the structure of the market itself and also through the community of practice that encourages this kind of representation and action on the part of sellers and buyers. They share much with clearnet marketplaces in that the apparently neutral, automatic referencing and rating system requires quite a lot of management by vendors. A critical point for the study of drug market is whether it is still useful in the light of this to divide the crime market into big men, middlemen and small fry, when we know the relationships are dynamic. Hence, we might move from studying market position to market action such as the role of mediation, franchising, supply chain control strategy and leveraging/arbitrage action such as exploiting differences in control regimes.
‘Following the money’ does not then necessarily lead to the biggest fish as cryptomarkets are a structure of mediation and embedding rather than a structure of business. Mediation works through network roles, weak ties therefore going beyond the traditional ‘brokerage’ function identified by Pearson and Hobbs (2003). Brokers ensure flexibility, avoid networks becoming brittle; they also act as innovators and introduce or validate innovations in the market (Morselli and Roy 2008). The networks have high functional differentiation between for example purchasing, processing and export. Market intelligence is necessarily limited. It cannot be assumed that online markets are inherently more transparent to market actors than street-level markets, but it is the case that they are mediated in different ways and the knowledge used can come in different forms. Mediation involves coordination and here it is interesting that vendors are often guided by indicators from other actors and not market signals. The embedding of cryptomarkets in other systems shapes the dynamics of vendor businesses and market activity. Cryptomarkets are a flexible and resilient crime architecture (Kenney 2007). A development within cryptomarkets is how they are changing the role of trust (Décary-Hétu and Dupont 2013). Maintaining trust is a perennial challenge in criminal networks. Lack of trust creates high transaction costs (Yip et al. 2013). This should point towards criminal networks being very dense and tightly bounded, with minimal links to other networks which could compromise criminal operations. However, this is not the case. While criminal networks, including transnational networks, are often highly embedded (Kleemans 2012), they are rarely hierarchal or controlled by a ‘big boss’ and they have porous, fluid boundaries. Indeed a smart vendor would try and maximise weak ties and minimise strong ones. Super-reviewers had a key role and it was notable that unlike licit web services which replicate the same role there was nothing in the technical infrastructure to recognise them. Instead, buyers and vendors sought their opinions out and looked to reward them.
Economic rationality, like other logics of a criminal marketplace, is performed when suited. Like violence it is a signal deployed where appropriate to generate desired effects among one’s peers, victims, police and rivals. There are many logics overlapping in cryptomarkets. There are market-focused logics of customer service, professionalism, market forces as independent forces in the marketplace. There are non-market logics of cooperation and community that emphasise cryptomarkets as illicit social enterprises. Maintaining and acting out these logics is central to the work of vendors and buyers and supports the market as a functioning social space. The form these logics take vary between cryptomarkets depending on their configuration. Some promote greater experience sharing and non-exchange-based cooperation, particularly those focused on psychedelics and cannabis. Others emphasise instrumental logics and tangible economic benefits. Economic rationality is an outcome of particular configurations, rather than a driving force in the motives of criminal market actors. Those involved deploy and arrange the market architecture to fine tune the interface between the technical and social network aspects of the online criminal infrastructure.
Conclusion
If cryptomarkets are deviant social enterprises then, as Haller (1990) asks, other than the subject matter, exactly what difference does it make that the enterprise is illegal? Research has examined business practices among criminal networks such as malvertising (Zabyelina 2016), techniques which have much in common or sometimes are exactly the same as the same techniques in licit business activity. The illicit is not an external force shaping these enterprises, but is one feature of the background that vendors try to design out using encryption, stealth and security practices. Hence we cannot fully understand the decisions made by cryptomarket vendors if we rely on the licit/illicit distinction as the main driving force shaping criminal markets. Many of the processes I explored show cryptomarket enterprises adopting processes common to the licit business world. In answer to Haller’s question, many of the differentiating factors he identified are not present. Both vendors and buyers showed role specialisation. Indeed the enterprises may be more stable and internally organised than was characteristic of ‘organised’ crime.