1 The Dark Web: A Threat to the Global Economy As technologies continue to advance and people around the world begin to find more creative uses for the Internet beyond YouTube and Amazon, a side of the Internet that promotes illegal activities has begun to emerge. Websites such as the Silk Road, an online black market, as well as torrenting sites that enable users to pirate movies, television shows, and music, amongst other electronic medias, have made the buying, selling, and sharing of illegal products much easier. These websites have also created an alternative economy untied to any one state, thus threatening the global economy as a whole. The usage of the Internet and the technologies associated with it (including but not limited to computers and cell phones) has led to an increase in illegal opportunities for these online black markets; at the same time, citizens and major corporations are fighting against governments and their attempts to minimize these illicit activities. Some clarification is perhaps needed. Online markets are those that, as the name suggests, exist online only. Likewise, offline markets are those that may utilize the Internet and associated technologies to access their products and do business with other suppliers, but flourish and prosper with a consumer base that deals predominantly in face-to-face dealings and arrangements. Thus the remaining pages of this paper will focus on the interconnectedness of black markets due to the Internet and how these communities can not only exist but grow in popularity. In order to understand the threat of an online black market, however, we must first understand the threat of an offline black market and the illegal economy that accompanies it. According to the authors of Introduction to International Political Economy (2013), “the illegal economy‌ provides a challenge to the three main IPE perspectivesâ€? (p. 381). These challenges
2 include, as the book states: a threat to the primary focus of mercantilists -- the nation-state -- by involving foreign actors; a dissonance with liberal idealism as liberalism is supposed to be a positive force and the illegal economy, by its nature, “can spread horrible conflict, pervasive coercion, and social decay” (p. 381); and a mirror world, of sorts, in which the oppressed attack the oppressor, rather than the other way around, as structuralists see it. Though challenges to these perspectives should exist, as no one perspective is the absolute correct one, the illegal economy has created a threat to the global economy the size of which no one is entirely certain on. Given that the subject is an illegal market, finding accurate numbers is nearly impossible to do; additionally, as our book states, “Governments and multilateral institutions often engage in hyperbole, sometimes either to tout their supposed achievements against the “bad guys” or to heighten threats for political reasons” (p. 383). Though no confirmed number exists relating to the damage this illegal economy does to legal ones, “the United Nations Office on Drugs and Crime (UNODC) estimates that the annual proceeds of drug trafficking and transnational organized crime are equal to 3.6 percent of global gross domestic product -- or about $2.1 trillion” (p. 383). The book does not clarify is this is offline trafficking or online trafficking. Such a clarification is important in order for the reader to fully grasp just how large the threat of an illegal economy is. However, $2.1 trillion is undeniably a large amount of money, and the illegal economy plays an even larger threat to legal economies. As our authors say, “...growing illegality is a major contributor to inequality and poverty in the world” (p. 383) and that democracy will not be able to emerge in countries riddled with corruption and corrupt economies. A major contributor to the illegal economy, aside from the usage of the Internet, is globalization. For the remainder of this paper, the focus will remain on the illegal markets that exist online only.
3 One of the major and predominant online black markets is the Silk Road. Joseph Goldstein, author of the New York Times article “Arrest in U.S. Shuts Down a Black Market for Narcotics” (2013), the Silk Road “began in 2011 as an underground online marketplace for drug users, a site where [drugs] could be bought from sellers across the world. It branched out to other illicit goods, including forged documents, and emerged as a black market version of eBay…” The apparent growing popularity of the Silk Road, and websites like it, is due to technological innovations. “Like the rest of the Internet, the Dark Web is being shaped and reshaped by technological innovations” (Bilton, 2013). These innovations include the use of TOR (“The Onion Router”) networks that enable users to browse the Internet anonymously and disables interested parties from tracing the user’s online movements, cryptocurrencies -- virtual cash -- that exist as “anonymous, untraceable currency”, and the fact that “many of these sites are set up so they can be quickly replicated if authorities take them offline” (Bilton, 2013). The latter point was proved in November, after authorities shut down the original Silk Road website. “No sooner was the old Silk Road shut down that a new, supposedly improved Silk Road popped up. Other online bazaars for illegal guns and drugs are thriving,” Bilton writes in his article “Disruptions: A Digital Underworld Cloaked in Anonymity” (2013). So just how popular is the Silk Road? According to Goldstein, the “...Silk Road was responsible for something approaching half of all transactions involving bitcoins” (“Arrest in United States…”, 2013). Understandable considering the Silk Road only accepted bitcoins, a type of cryptocurrency and perhaps the most popular of those available. Considering that the Silk Road makes about $6000 a day off of commissions and was, prior to the closing of the original website, bringing in about $200 million a year, one can see that the Silk Road is incredibly popular. Numbers for other websites dealing in the same type of illicit activities do not exist, but
4 are most likely flourishing considering the popularity of the Silk Road. Andy Greenberg, author of “Black Market Drug Site ‘Silk Road’ Booming: $22 Million in Annual Sales” (2012), writes that the Silk Road has an incredibly high number for customer satisfaction: 97.8%. Of course the popularity and appeal of online illegal markets is the same as online legal markets: the convenience of shopping online is much greater than shopping offline. Bilton writes that “buying illegal drugs online is now easier than buying them on the street corner.” What the growing popularity means is that more people will turn to the usage of cryptocurrencies to buy their products. The anonymous cash and anonymous possession of this cash enable online buyers to purchase their products without having the money traced to their offline identity. The need for anonymity is crucial. Though some such as Edward Hadas, the economics editor at Reuters Breakingviews, believe that “...even if Bitcoin were to succeed, governments would either ban it or take over the system” (Bilton, 2013), a large majority believes that Bitcoin and cryptocurrencies like it are here to stay for the foreseeable future. According to the article “A Surge in Value for Bitcoins” by Nick Bilton, the “value of all cryptocurrencies has been rising” (2013). At the time of this writing, one Bitcoin is valued at approximately $880 USD. The problem with cryptocurrencies, aside from the relative ease of being “pickpocketed” online, is that the currency is not tied to any legitimate government -- or any government at all. According to Felix Brezo and Pablo G. Bringas, authors of the article “Issues and Risks Associated with Cryptocurrencies such as Bitcoin” (2012), the “definition as a distributed currency comes from the absence of an existing central entity in charge of regulating either the value or the amount of the total existing coins.” As we discussed in class, governments have manipulated the value of their currency in order to promote trade and tourism with other
5 countries. Cryptocurrencies are, in a sense, “pure” of value, as there is no manipulation involved with it. Just as the money that goes towards cryptocurrencies is not going back into the economy, lawmakers and opponents to Internet piracy argue that the money that would have gone towards movie and music sales have been “robbed” of the rightful shareholders. As the article “You Wouldn’t Download a Car…” (2013) by Jason Yoakam says, “The common understanding of Internet piracy seems to suggest… that the act of making a copy for recreational use is a crime on par with literally taking that item out of the owners hands.” This is not true, however; nor is the idea that Internet pirates are “stealing money” by downloading their media of choice rather than purchasing it through legal means. The former point is refuted by the very word mentioned in the quote: copy. Internet pirates do not steal the original, nor do they steal a tangible product. They download a digital copy of the product. This ties in with the second point that pirates “steal money” because the money that would have gone towards a tangible product is spent elsewhere. Unlike the online black markets that use cryptocurrencies, money saved by pirating a product is put back into the economy through the purchase of some other product or service. Chances are, according to a 2013 report by the European Commission, that “increases in clicking links to illegal sites leads to a minor increase in clicks to legal download sites. What this demonstrates is when accessibility is equal, piracy actually leads to increased legal downloading. Conversely, it has been found that… a lack of online access can lead to higher levels of illegal downloads” (Yoakam, 2013). This point is proven in the piracy of HBO’s popular program Game of Thrones which is the most pirated show in 2013 (as well as the years prior). HBO does not offer any online streaming services save for HBO-to-Go, a service that requires members to purchase HBO and pay an additional fee to access the online streaming. Shows like Arrested
6 Development and Breaking Bad, which are offered on Netflix and Hulu, are not pirated nearly as much due to the easy accessibility. Many torrent sites are watched, even, according to Tom Risen, author of “Online Piracy Grows…” (2013). In his article he writes that “A new study found that illegal file-sharing websites have grown more popular in 2011 and…. officials say online piracy is so widespread that they use it to track consumer trends.” Indeed, Netflix uses “file-sharing platforms to help determine what TV series the company buys.” These file-sharing websites connect audiences from around the world where fans of shows, movies, and music, can access a product immediately rather than wait for the product to be released in their home country. “Telecommunication technologies,” Nicola Lucchi writes in her article “The Role of the Internet…”, “amplify the ways people can share and distribute information.” This ties in with what was said on page one: that the Internet, and the illegal activities that are performed over it, threaten governments because they cannot control the different ways people can access information, nor can they control the information that transnational actors provide (Lucchi, 2013). Government attempts to stop Internet piracy have largely been unsuccessful. China, for example, has threatened “to exit the online video industry if [online piracy] continues” (“Joint Action…”, 2013). In China alone “LeTV has found evidence of 650 copyright violations by QVOC and evidence of more than 800 infringement violations from Baidu’s Yingyin.” (QVOC and Baidu being Chinese torrenting programs.) We have seen the rejection of government intervention in the United States in 2011 with the proposed legislations of SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act). Most recently, the executive branch has tried to breathe new life into these failed legislations with the Trans-Pacific Partnership, a trade agreement
7 between the United States, Canada, and twelve of the Pacific Rim countries -- the largest of its kind. Not only did grassroot organizations protest the machination of the partnership but Congress as well voiced their discontent, though this is largely because they were not granted any voice in the creation and editing of the partnership. As the government increases its attempts in stopping not only online piracy but the online black markets as well, more and more people vocalize their discontent with the spying methods the government employs to dissuade these activities. Indeed, the plan to intervene seems to have failed already, as “...companies are [now] competing to show users how well their data is protected from prying eyes…” (Perlroth, 2013). Ironically much of the protest is about how the government uses illegal methods themselves to stop these illegal activities. These security breaches into the privacy of American citizens, as well as reports on the NSA’s activities, have had global impacts. “Already, the Snowden revelations threaten to erode the market share of American technology companies abroad,” Perlroth writes. For example, “In India, government officials are now barred from using email services that have servers located in the United States.” In both instances of online black markets and online piracy, the problems seem to lie with governments worldwide and their approaches with addressing the problems. For piracy, the major problems seems to rely largely on the accessibility of the products. People in foreign countries would not need to pirate if they were granted the product at the same time as American audiences; people worldwide would not need to pirate if the product was affordable and easily accessible. The usage of black markets does possess a threat to world economies but it seems fruitless to up the invasion of privacy rather than investigate why these markets exist.