Nearly 10 months after the high profile bust of online drug marketplace Silk Road, the underground industry has learned much and its participants have calibrated their activities carefully. An article posted on Motherboard depicts an interview with an online drug vendor, which if authentic, offers interesting accounts of how Bitcoin contributes to the business. Particularly insightful is the business’s influential impact on Bitcoin prices, which are near-impossible to predict and arguably have hardly any fundamental drivers.
The author notes his experience downloading the Tor client and browsing for the relevant sites under “r/darknetmarkets”. He was shocked by what he saw:
“It was Amazon for drugs, all priced in Bitcoin, all available for convenient vacuum sealed delivery to the mailing address of your choice.”
He proceeded to contact a vendor who appeared to have a near-flawless review record. He posed as journalist and was granted an interview. A wide range of issues were discussed in the broader world of underground drug dealing, to many of which the vendor declined to comment. However, he did have what to say on Bitcoin:
On the interaction between demand, profitability and bitcoin prices:
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“When business is good bitcoin volatility isn’t an issue, but when business is slow, a drop in the value of bitcoin can be the difference between making a profit and breaking even or even losing money.”
“In addition, the vendors have to find a way to safely and anonymously convert bitcoin into actual currency, which can take even longer. Considering that bitcoin can stay around the same rate for weeks and then suddenly increase or decrease by hundreds of dollars in a matter of days, newer vendors may find themselves gambling with their profits.”
Is Bitcoin making a name for itself in the “real world” of drug dealing?
“Not at all. The majority of “real world” drug dealers have no idea what Bitcoin is or even that this community exists. Of those who do, they certainly won’t share that information with others.”
“It’s too early to tell exactly how this will play out, but there are enough people who believe strongly in the long term future of bitcoin that I truly believe we will see much more widespread use of it for legitimate purposes.”