Economics of the Dark Web: Let it Be, Let it Be

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Laissez Faire economic theory is a guiding principle of capitalism. Although it is viewed as the ultimate form of free markets, we do not experience laissez fair principles regularly. Because the dark web exists as an anonymous international market, no government controls the it. Laissez faire principles explain that while governments have no place in business decisions, there still must be a form of police to make decisions on disputes. Moderators on the dark web act as that police: there to maintain order and regulation, but not to create rules that prevent commerce. They hold money in escrow, resolve disputes about products, and issue refunds. Dark web markets exist with limited intervention, and this can make prices lower, result in better quality products, and enhance the focus on customer service. It also has some dire consequences, such as scams, that come along with the territory.

TOUS POUR UN, ET UN POUR TOUS!

Since there is no overarching government to determine price point or set standards, supply and demand rule the markets. If vendors want buyers to purchase their products, they must price their products competitively. With the lack of price regulation and taxes, vendors decide on the price points of their products. Aside from a marketplace commission, which is relatively low, vendors retain their profits rather than paying money to the government. While a vendor could choose to sell their product at a high price to make a maximum profit, customers are less likely to buy the product when they could find an alternative for a smaller price. Because of this, drugs on the dark web cost less than those bought in person. It also reduces the risk of harm to both the buyer and seller since payments are upfront, anonymous, and not in person.

HIGH RISK, QUALITY REWARD

Much like how demand affects price, demand also affects product quality. Customers want to spend their money on quality products, and will pass over products of lesser quality. Vendors who want to gain a reputation and a following will create quality products to get customers to return and positively review their products. As discussed in our blog “Blind Trust”, buyers rely on reviews of quality, stealth, and previous experience when buying a product. Some dark web buyers purchase classic drugs like marijuana, cocaine, and ecstasy. Their interest is finding high quality drugs at a fair price rather than a quick high or trendy drug. Since the product procurement process is quite involved (buying bitcoin, sorting out encryption, finding a vendor and product you believe you can trust, and waiting for shipping), buyers want to be rewarded for their high-risk situation and the time-consuming process.

WHAT COULD POSSIBLY GO WRONG?

Without the oversight of a governing body, the dark web also lacks rules to prevent vendors from taking advantage of customers. When you get scammed on the dark web, a moderator may give money back from escrow, but if a transaction has already cleared, you are most likely out of luck. The anonymity and lack of regulation give the vendor protection from a customer pursuing them after a scam. Without laws, there are no consequences for malicious actions.

Since the dark web runs on recommendations, approval rates can make or break a vendor. Vendors can create fake reviews for themselves to make their scams seem legitimate. Despite reviews being the best way for customers to pick their purchases, a certain level of suspicion should still be attributed to each review. There is no honor in dark web business, everyone is simply there for profit.

The dark web has a very complicated standard for what is acceptable. On some sites, all products are fair game. Drugs, porn, and exploits are all viewed as equal and acceptable. On other sites, certain types of crime are considered off limits. In others still, a sense of nationalism becomes more apparent with rules exempting certain regions from being carded or scammed, or restrictions on purchasing goods on their site.

1-800-DARK-WEB-BLING

The laissez faire economics of the dark web provides us with a unique and interesting experimental view into the the consequences, both positive and negative, of this lack of regulation.

As we see above, vendors cater to customer needs. Since future business relies on reviews, vendors provide excellent customer support. If a customer asks about a product, they often receive a prompt response and a thorough answer to their question. To get good reviews and elevate customer satisfaction, vendors often send samples or extra product with an order. Keeping the customers happy helps a vendor build a reputation that will bring future business. Vendors and product discussions appear frequently on market forums and Reddit. Vendors respond to these threads for extra service and interaction with their customers.

On the dark web the customer is generally regarded as king. Because of the customer centric focus, vendors create high quality products and offer them at low prices. A vendor who has poor customer service and a low-quality product will quickly lose business to a stronger and more reliable vendor. Maintaining a good reputation and being agreeable creates a strong dark web vendor presence that ensures future business. But vendors are not above cheating and acting selfishly to get themselves to a profitable level, and scams and fraud is certainly rampant. There is no honor among thieves.

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