Measuring the Silk Road

Recently from Nicolas Christin at the Carnegie Mellon INI/CyLab:

We perform a comprehensive measurement analysis of Silk Road, an anonymous, international on- line marketplace that operates as a Tor hidden service and uses Bitcoin as its exchange currency. We gather and analyze data over eight months between the end of 2011 and 2012, including daily crawls of the marketplace for nearly six months in 2012. We obtain a detailed picture of the type of goods being sold on Silk Road, and of the revenues made both by sellers and Silk Road operators. Through examining over 24,400 separate items sold on the site, we show that Silk Road is overwhelmingly used as a market for controlled substances and narcotics. A relatively small “core” of about 60 sellers has been present throughout our measurement interval, while the majority of sellers leaves (or goes “under- ground”) within a couple of weeks of their first appearance. We evaluate the total revenue made by all sellers to approximately USD 1.9 million per month; this corresponds to about USD 143,000 per month in commissions perceived by the Silk Road operators. We further show that the marketplace has been operating steadily, with daily sales and number of sellers overall increasing over the past few months. We discuss economic and policy implications of our analysis and results, including ethical considerations for future research in this area.

Nicolas’ Conclusion:

We have performed what we believe is the first comprehensive measurement analysis of one of the largest anonymous online marketplaces, Silk Road. We performed pilot crawls, and subsequently collected daily measurements for six months (February 3, 2012–July 24, 2012). We analyzed over 24,000 items, and parsed over 180,000 feedback messages. We were able to determine that Silk Road indeed mostly caters to drug users (although other items are also available), that it consists of a relatively international community, and that a large number of sellers do not stay active on the site for very long. We further discovered that sales volume is increasing; currently corresponding to approximately USD 1.9 million/month for the entire marketplace, corresponding to USD 143,000/month in commissions for Silk Road operators. Informed by these measurements, we discussed some of the possible policy remedies. A surprising result is the tight coupling between Silk Road and the Bitcoin market – the daily sales on Silk Road correspond to almost 20% of the average daily volume of USD-BTC exchanges on Mt.Gox, the largest exchange forum. As a result, it seems like a potentially effective intervention policy would be to destabilize the value of the Bitcoin, to create instability in the marketplace.


PDF here.

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