The dark-net, also referred to as dark-web, has its roots way back in the 60’s, back when ARPANET was created. While ARPANET didn’t have anything to do with the darknet, both were propelled by the same desire; secure communications. This could be called the start of the desire for what is now called the dark-net. However, it was in the 90s, when the technologies that the darknet relies on were invented. Notably, Onion-Routing was developed in the mid-1990s at a U.S. Naval Research Laboratory. It was developed by computer scientists David Goldschlag, Paul Syverson and Michael Reed. The project was further developed by the Defense Advanced Research Projects agency (DARPA) until 1998.
The Beginning of the Dark-Net
In 2002, Paul Syverson and others developed what has become the best known implementation of Onion Routing, namely Tor. Shortly after in 2006, the Tor Project was founded. The Tor Project is the organization that manages and sustains the Tor software/browser we are all very familiar with today.
Although all the preceding may be true, the term darknet doesn’t strictly refer to Tor. There are other anonymizing networks that make up their own darknets. Such networks are I2P and Freenode. However, Tor has become the mainstream anonymizing network for the past decade.
How the first Dark-Net Market came to be
Tor has many legitimate use cases. Protecting journalists and whistleblowers from authoritarian regimes is an example of such cases. Despite that, over the last decade the dark-net became known for something else. The trade of illicit materials and services.
With the rise of the dark-net, a unique opportunity has been created for criminals. The technology allowed people to host websites without the fear of being tracked. With the creation of bitcoin in 2009, the perfect environment for illicit drug trades has been created.
People could now anonymously create and host hidden services on the Tor network. With the help of Bitcoin, anonymously transaction quickly became possible too. One of the first people to realize this potential was Ross Ulbricht, the creator of Silk Road. Then 26 years old, Ulbricht held libertarian views. He believed people should have the right to buy and sell whatever they wanted so long as they weren’t hurting anyone else. In alignment with his philosophy, he created the Silk Road in February, 2011.
The Silk Road was hosted as a hidden service on the Tor network. Bitcoin was used as the medium of exchange throughout. People could buy and sell products and even leave ratings and reviews to inform other buyers of safety. This marked a very big day for he dark-net as the first ever illicit online market has been established. Naturally, drugs were the most traded category on the market.
Later in 2011, the Silk Road market was starting to rapidly grow in popularity. It received mainstream media attention after Gawker published an article about it. By this time, Silk Road had caught the attention of more customers, politicians and of course, law enforcements.
Investigations by law enforcements on the Silk Road started around that time, spearheaded by the FBI and the DEA. The process consisted of several different strategies. These included infiltrating Silk Road as vendors and having direct conversations with site admins whilst undercover. The most viable strategy, however, was trying to link the identities of admins across websites and forums on the internet.
Silk Road was ultimately shut down with the identification and arrest of Ross Ulbricht in October, 2013. The impact of the closure of Silk Road on the darknet markets ecosystem was observable. A measurement of the ecosystem over time shows that the volume of sales decreased immediately after the closure of Silk Road. But this metric rapidly grew again, however. It even surpassed the height of volume of sales observed on Silk Road within only 6 months of its closure. With this in mind, it’s safe to conclude that the FBI’s actions merely closed a large monopoly. It allowed other darknet markets to show up and grow.
Law Enforcement and the dark-net
When darknet markets first emerged, law enforcement agencies saw them as threats and collaborated to shut them down. The period from the creation of Silk Road up until late-2014 witnessed massive law enforcement activity. This period can be summed up in three major law enforcement operations. All of them ended in the seizure of dark-net markets.
Over the years law enforcement got better at tracking markets. New techniques have been developed to track the bitcoin blockchain. That long with AML and KYC regulations changed the anonymous nature of bitcoin. This resulted in many more arrests as it suddenly became hard to launder bitcoin. Law enforcement agencies also shifted their strategies when seizing markets. Instead of seizing markets in order to stop trade, agencies started seizing them in order to gather data. Large market data analysis has lead law enforcement agencies many arrests over the years.
The most important thing to law enforcement intervention on the dark-net is data analysis. During the last 5 years, data analysis became a very important task for law enforcement agencies in the U.S. Dark-net directory maping, social network analysis and all types of data analysis can lead to hundreds of arrests.
All this law enforcement action resulted in more secure marketplaces. PGP encryption became the standard on all dark-net markets making it harder for agencies to use data gathered. Markets also started to use monero which makes it much harder for agencies to track transaction. Despite all these complications, law enforcement is still trying hard to adapt and find new ways to track the dark-net. The U.S. government has spent millions funding monero tracking tools in order to monitor transactions.
Both law enforcement and dark-net markets are constantly evolving. Agencies are always looking for new ways to track illicit dark-net activity. At the same time, the dark-net is always evolving and new ways to protect from law enforcement are always being implemented. This constant blow to one another is expected to continue for the coming years. As cybersecurity and technology evolves, it will become near impossible for law enforcement agents to take down dark-net markets. By that time, law enforcement will have to switch up tactics in order to track criminals using the platforms.