Via Ars Technica:
A recent Carnegie Mellon study sheds light on the Bitcoin-fueled economy of the internet’s underground drug bazaar Silk Road.
Silk Road is an online marketplace that uses Tor and Bitcoin to preserve the anonymity of all involved. The site itself is set up as a Tor hidden service, which makes it practically impossible to locate the site’s servers. And the use of Bitcoins prevents the authorities from identifying market participants by following the money.
Most of the items listed for sale are illegal drugs. To place an order, the buyer transmits the appropriate number of Bitcoins to the site operators, who hold the funds in escrow while the goods are shipped. Once the buyer confirms the product has arrived, the escrowed funds are released to the seller.
Christin began crawling Silk Road in November 2011. From February to July of this year, he attempted to crawl the site on a daily basis, yielding a wealth of data about activity on the site.
Silk Road buyers are required to provide feedback on their purchases, and these reports are publicly available. This gave Cristin a handy way to track the volume of activity on the site. He reports that the volume of transactions on the site increased “from approximately 8,000 BTC/day to approximately 15,000 BTC/day, before seemingly retreating down to 11,000 BTC/day. The latter decrease is, however, an artifact of the Bitcoin sharply appreciating against all major currencies, rather than an indication of a drop in sales.”
Read more about Silk Road’s thriving, yet mostly anonymous, market at Ars Technica.