Drug markets: emergence of internet-based supply

Illicit drug markets link consumers to producers through chains of intermediaries. These complex systems generate large sums of money at all levels of the market. A conservative estimate values the retail market for illicit drugs in the European Union at EUR 24 billion in 2013 (likely range EUR 21 billion to EUR 31 billion).

The last decade has seen the development of online marketplaces, facilitated by the emergence of new internet technologies, which exist in parallel with the physical drugs market. Some online vendors utilise the surface web, typically retailing non-controlled precursor chemicals, new psychoactive substances or medicines, which may be falsified or counterfeit. Other vendors work on the deep web, through darknet markets, supported by technologies that hide buyer and seller identities. These markets share characteristics with legitimate online marketplaces such as eBay and Amazon, and customers can search for and compare products and vendors. Various strategies are used to conceal both transactions and the physical locations of servers. These include anonymisation services, such as Tor and I2P, that hide a computer’s internet protocol address; cryptocurrencies, such as bitcoin and litecoin, for making relatively untraceable payments; and encrypted communication between market participants. Reputation systems also play a role in regulating vendors on the markets.

Most sales on darknet markets are drug-related. A recent study, exploring sales on 16 major darknet markets between 2011 and 2015, estimated that drug sales were responsible for more than 90 % of the total economic revenue of global darknet marketplaces. Nearly half (46 %), of all darknet drug sales reportedly originated from vendors based in Europe, representing an estimated EUR 80 million over the period of the study. The main European source countries, in order of sales volumes, were Germany, the Netherlands and the United Kingdom, with stimulants, in particular MDMA and cocaine, accounting for most of the sales revenue.

Most sales on darknet markets are drug-related