[Dossier] A Dive among the drug entrepreneurs

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On the “darkweb” or “deep web” a very informative drug market for the drug liberalization is developing. Let’s dive in this world.

 

MANDATORY : 90% of the darknet users are newbies and are scammed in less time than they spend trying to connect to the darknet. If you don’t understand what you’re doing, please don’t do it, we’re not here to make you waste your money & time.

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It does not appear necessary to explain in detail to the Counterpoints readership multiple faults inherent to the prohibition of drugs; others have talked enough of this here, here or here. Among these flaws a significant negative effect of the prohibition is that it feeds organized crime.

 

The legal and legitimate economy cannot meet the demand on drugs, this creates a vacuum, and that vacuum has long been filled exclusively by organized crime. The dealers are fighting for the monopolization of certain areas, and use violence to resolve their conflicts. We never saw Carlsberg and Kronenbourg attacking each other with AK-47 to gain beer market shares. Thus, the prohibition is a source of insecurity.

 

Another perverse effect can be noticed at the consumer level. Indeed in a prohibitionist regime, they have no means to know exactly what product they buy. No brand let alone label indicating the components. An unsatisfied user can’t file a complaint against his dealer. With each purchase, consumers run the risk of consuming something very different from what they want. The consequences can be deadly when the dosages vary greatly from one drug to another: a safe dosage for one drug can be a deadly mix for another. The dealers have little interest in providing a quality product: their clients can not file a complaint against them if it turns out that the product does not match the description.

 

Despite the many adverse effects of drug prohibition are now widely documented and recognized beyond the liberal circles, continuing prohibition. In France the public debate is very present on this and the politicians do not dare publically take position against this repressive regime, although some admit its faults in private. So what? Must we wait patiently for the State to admit its mistake and finally relax its policy on narcotics after much inflamed committees and debates in parliament?

While waiting for the big night of the end of prohibition, alternative solutions develop spontaneously through the wonderful tool that is the Internet. Firstly, the Internet has allowed the users the development of communities where they exchange information about drugs, their primary and secondary effects, proper dosage, ways to reduce the toxicity, possible mixtures or avoid the maximum recommended usage frequency, etc. widely recognized by the community of users for its reliability the sites like Erowid centralize the information. This encyclopedia of drugs, allows knowing dosages and other information about a large number of drugs, probably saved the lives of thousands of people around the world. Its popularity is such that in February the site won a prize of $ 82.765 with a competition organized by Reddit.

 

But the greatest innovation in recent years that can make the prohibition of drugs irrelevant to the black markets is darknet. Also called “deep web”, the darknet, is an underground part of the Internet, hidden from search engines, and only accessible using the Tor browser H16 which has recently promoted in his article the tools to avoid state monitoring. Furthermore it allows navigating the classic internet without a trace, Tor provides access to a variety of sites called “onions” that cannot be easily discovered and attacked by state services. These “onions” include free blacks markets including the best known Fire Silk Road. The site fell following the intervention of the US authorities, but many new markets appeared after it. Here you can find an article on the trial of Ross Ulbricht, creator of Silk Road and its various issues that go beyond the subject of drugs.

 

These markets are nothing less than a revolution in the organization of the distribution of drugs. Anonymous and using electronic money bitcoin, they allow to meet supply and demand for drugs and to exchange freely and peacefully online.

 

Their main virtue is that they allow to match supply and demand for drugs, consumers can order online and receive at home the products they want. Thus they reduce fighting between criminals who share the drug markets. Failing to go to war with guns, the darknet dealers have no choice but to fight back by offering products that appeal to consumers. In rare cases, these dealers try to attack by hacking respectively. The advantage here is net for the whole population in terms of lower insecurity. More drug trafficking will be held online, less criminal dealers and organizations will have the opportunity to perpetrate violence in the public, the more society will be pacified.

 

Another virtue of these markets is that they allow the birth of a spontaneous order of the distribution of drugs that approaches the one we would know if the drug market was legal. Hayek would marvel at the organization of the darknet markets, with their numerous self-regulatory mechanisms.

 

One of the central mechanisms for these markets is that of the “escrow”. A buyer orders a product, but does not send bitcoins directly to the seller. These bitcoins are first put on waiting on a contract basis and will only be released once the buyer declares to have received the product. This mechanism prevents an unscrupulous seller to collect the money without sending the product. There obviously is a risk that buyers say they had not received the product when it was sent, and in this case the seller may have a systematic return policy. If either party is not satisfied and is struggling to reach agreement, a third party will mediate the conflict to decide who should return the money placed in discount. We are witnessing the birth of an embryonic legal system which aims to resolve conflicts without using violence and this without any government intervention.

But this problem is unusual due to the essential reputation mechanism. Indeed, just as on Ebay or Amazon, for each purchase a buyer gives the seller a note and a comment. An unscrupulous drug dealer won’t be able to do business for long on the darknet without getting very quickly a bad comment. A good reputation is an essential key to success for a seller on darknet.

 

Quality control does not end on buyer opinions. Indeed they can buy from different organizations test kits that enable them to ensure that the received product is the one ordered. For more details, users of markets can also carry out tests of products to laboratories. Few laboratories that agree to receive illegal drugs to analyze their composition, and among them we find the Energy Control laboratory in Spain which is tolerated by the Spanish authorities. For 50 € bitcoins, the lab analyzes the composition of the sample received and sends the result online. Each user can keep the results of this analysis for himself, but we regularly observe their publications so that everyone can have a precise knowledge of the quality of the products of a particular seller. Thus, although there is no state agency in charge of hygiene products, these markets are organized so spontaneously to promote the best products and exclude those of lesser quality.

 

Darknet markets are open to all, you don’t have to be part a criminal organization to sell. Many sellers are private individuals who we’d never suspect of such activities if we met them in the street, and many people have a remarkable entrepreneurial spirit.

 

Driven by the fact that they have every interest in satisfying their customers, dealers of darknet turn into real entrepreneurs. The quality of drugs sold on the darknet is an essential success criterion and can be found of purity rarely equaled those drugs available on the street. Beyond this essential criterion, darknet entrepreneurs fight against competition on different criteria: price, product reference options, delivery, discretion for the sent packet, responsiveness, etc. Each seller has a window on which he can describe his policy, next to which one can find reviews of previous buyers. It is also surprising to find these showcases all the vocabulary we used to read in the legal economy: Darknet entrepreneurs continue to focus on an unparalleled customer satisfaction.

 

Beyond competition among sellers, we are also notice a competition between markets. After the fall of Silk Road 1 and 2, the market evolution for a time became the largest and popular. But this success did not last very long, since last March the market administrators operated a so called “exit scam” of closing the site and left with all the bitcoins posted by users. It is estimated that millions of dollars were kept by these people. Following the end of Evolution, other markets have come to replace the directors whose always promise more security to avoid the possibility of an “exit scam”, but also an attractive interface, speed of operation, etc. Each market has a specific policy regarding the types of accepted products or services. If all markets accept the drug trade, no Sizeable market accepts the exchange of child pornography files. Few markets accept firearms, generally available in very small number.

 

All these markets, however, have the drawback of having a centralized structure and therefore susceptible to hacker attacks, a closure by authorities or sudden departure of the directors. One can imagine that future markets will be fully decentralized and include the project of Open Bazaar.

 

The benefits of such a spontaneous order are numerous. For drug users are obvious since they can buy from the comfort of their home high quality products instead of drugs of dubious composition bought on the street. If these users benefit from lesser health problems through darknet markets, the whole society that benefits from the work of productive individuals. These are families who do not lose their child who tragically took a powerful drug synthesis while the street dealer claimed he was selling a LSD. According to the American state, 6 people died of drugs purchased on Silk Road. If every death is tragic, that figure 6 dead is exceptionally low given the massive amounts of drugs sold on Silk Road.

 

In addition, the entire society benefits from a reduction of insecurity through the online trade replacing the one that was once held in the street. Insecurity is also reduced by the fact that much of the sellers consist of independent contractors. More will be so less organized crime will be funded, limiting its capacity for harm.

 

Finally, more surprisingly, the company can also benefit from the generosity of some darknet entrepreneurs as the dealers paid part of profits to humanitarian aid to Nepal. By transferring $ 5,800 in bitcoin, hoping to improve the image of the darknet markets. The personal publicity he gets by this gesture is surely of no coincidence either.

In conclusion, we are gradually moving towards the end of drug prohibition, including the movement of legalization of cannabis in the United States. In France, however, the prohibition is still present and very few people dare to publicly challenge it. Its negative effects are many, but before the state finally decides to change its policy on narcotics, things are changing. Internet has never before seen circulation of vital information on the risks and benefits of each drug and their respective strengths and remedy from the absence of prevention which the State could take.

Informing citizens about the risks and benefits associated with each drug would imply recognizing that people consume despite the ban, that the state cannot afford a prohibition regime. Internet has also allowed in recent years the emergence of black markets like darknet where the spontaneous order that prevails benefits not only to drug users but to the entire society. This is a life-size experiment that confirms in a very practical thesis defended for over two centuries the Liberals on the virtues of free capitalism.

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