Online shop Silk Road sells $2m worth of drugs a month
New analysis of the anonymous online marketplace Silk Road suggests that purveyors of illegal drugs and other black-market goods are raking in the equivalent of nearly $2 million of Bitcoins per month, which is roughly 20 per cent of exchanges from Bitcoins to US dollars that take place on the online currency's main exchange, Mt. Gox.
Try flogging narcotics on eBay and you will quickly be shut down, banned and possibly visited by your local law enforcement agencies. Silk Road gets away with its illicit trade because buyers and sellers can connect to the site only through the anonymising Tor network, also used by the likes of Wikileaks and political dissidents, and can make purchases using only Bitcoin.
Security researcher Nicolas Christin at Carnegie Mellon University in Pittsburgh, Pennsylvania, analysed the site every day from February to July this year, gathering data on its operations. He discovered that a few hundred sellers offering a range of drugs including cannabis, cocaine and ecstasy are earning an average total of 11,650 Bitcoins per day. In comparison, Mt. Gox swaps an average 59,980 Bitcoins into dollars each day.
Converting Silk Road's revenue into dollars will always be inexact, as dollar/Bitcoin exchange rates are highly volatile, but Christin places it at $1.9 million per month. Fees on each transaction mean Silk Road's shadowy owners are probably earning $143,000 a month for running the site.
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