Bitcoins and deep web sites like The Silk Road have been getting a lot of attention this year, and that attention has led to a huge boom in the use of Bitcoin currency, much of it to purchase drugs. A new study estimates that since March, drug sales using Bitcoins are now up to $2 million per month.
Nicolas Christin, a researcher at Carnegie Mellon, monitored the online marketplace Silk Road over a period of months. The research turned up some striking statistics about the volume and distribution of transactions made on the secretive site, which primarily facilitates drug deals.
Silk Road sellers have collectively had around $1.9 million of sales per month in recent months. Almost 1,400 sellers have participated in the marketplace, and they have collectively earned positive ratings from 97.8 percent of buyers. And the service is growing, with Silk Road’s estimated commission revenue roughly doubling between March and July of this year.
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.”
The growing volume of transactions has been lucrative for whoever operates the site. Christin estimates that Silk Road’s operator earned an average of $143,000 per month during the period he was monitoring the site. And revenues have been increasing rapidly.