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Pricing of illicit drugs on darknet markets: a conceptual exploration

Andreas Zaunseder (Centre for Citizenship, Civil Society and Rule of Law, University of Aberdeen, Aberdeen, UK)
Angus Bancroft (University of Edinburgh, Edinburgh, UK)

Drugs and Alcohol Today

ISSN: 1745-9265

Article publication date: 13 July 2020

Issue publication date: 19 May 2021

208

Abstract

Purpose

Trading illicit drugs on cryptomarkets differs in many ways from material retail markets. This paper aims to contribute to existing studies on pricing by studying the relationship between price changes in relation to changes in nominal value of the cryptocurrency. To this, the authors qualitatively study product descriptions and images to expand the knowledge on price formation.

Design/methodology/approach

The authors analysed 15 samples based on visual and textual scrapes from two major drug markets – for Dream Market between January 2014 and July 2015 and for Tochka between January 2015 and July 2015. This longitudinal study relates changes in process to variations in the Bitcoin exchange rate and selling strategies. The analysis of the marketing of drugs online also addressed the development of the vendor profile and product offers.

Findings

Product prices change in relation to variations in the Bitcoin exchange rate. This points to the application of mechanisms for automatic price adaptations on the market level. Real prices of the drug offers constantly increase. The authors assert that there is a bidirectional relationship. Vendors structure price and discounts to encourage feedback. And feedback in combination with signals of commitment and authenticity inform pricing. Product descriptions are an important feature in the successful marketization of goods, whereas product images are predominantly used as an aspect of recognisability and feature of the vendor’s identity.

Research limitations/implications

Findings suggest that there is great potential for further qualitative research into the relationship between the online and offline identity of drug vendors, as well as price setting when entering the market and subsequent changes for offered products.

Practical implications

Findings also suggest that further investigation into the constitution and management of vendor’s identity on the cryptomarkets would allow a better understanding of vendors and their interactions on cryptomarkets.

Social implications

A better understanding of drug trading on cryptomarkets helps to more effectively address potentials for harm in the online drug trade. Also targetting crime would benefit from a better understanding of vendor idenities and pricing.

Originality/value

The findings represent a valuable contribution to existing knowledge on drug trading on cryptomarkets, particularly in view of pricing and vending strategies.

Keywords

Acknowledgements

The authors would like to thank Gwern Branwen for collecting the dataset and making it publically available, the ESSD Organising Team for inviting us to present parts of this research at the Annual Conference in September 2016, the ESSD participants for their helpful thoughts and fruitful discussions, and last but not least Alison MacPherson for her indispensable support with the complex technical challenges.Declaration of Interests: There are not conflicts of interest for either author.

Citation

Zaunseder, A. and Bancroft, A. (2021), "Pricing of illicit drugs on darknet markets: a conceptual exploration", Drugs and Alcohol Today, Vol. 21 No. 2, pp. 135-145. https://doi.org/10.1108/DAT-12-2019-0054

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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