Al­phaBay dis­ap­pears: Three sce­nar­ios to look for next

Kuwait Times - - TECHNOLOGY - By Rick Hol­land, VP Strat­egy at Dig­i­tal Shad­ows

The Al­phaBay dark web mar­ket­place has been in­ac­ces­si­ble since 5 July, 2017. With no sub­stan­tive ex­pla­na­tion from the site's own­ers, users have spec­u­lated that ei­ther an exit scam (where ad­min­is­tra­tors steal user crypto cur­rency de­posited to the mar­ket­place and shut down the ser­vices) or law en­force­ment ac­tion has taken place. Dark web mar­ket exit scams are noth­ing new; the Evo­lu­tion mar­ket exit scam in­fa­mously re­sulted in the loss of 40,000 bit­coins.

These exit scams are one of the risks when con­duct­ing busi­ness in crim­i­nal mar­ket places. Re­cent re­ports have sug­gested that in­ter­na­tional au­thor­i­ties had seized the site, along­side the ar­rest of one of its al­leged op­er­a­tors. Both ex­pla­na­tions re­mained un­con­firmed at the time of writ­ing, but with each day that passes the prospect of Al­phaBay re­turn­ing be­comes in­creas­ingly un­likely. So, what would a post-Al­phaBay fu­ture look like? We be­lieve there are at least three pos­si­ble sce­nar­ios:

An older mar­ket­place

As is of­ten the case when a pop­u­lar mar­ket­place dis­ap­pears, users will sim­ply mi­grate to other es­tab­lished sites. Al­ready we have seen for­mer Al­phaBay ven­dors ad­ver­tis­ing their prod­ucts on other mar­ket places, in­clud­ing Hansa and Dream Mar­ket. Sell­ers have lever­aged their Al­phaBay ven­dor rat­ings as a mea­sure of their trust­wor­thi­ness and rep­u­ta­tion. Re­lo­ca­tion is made eas­ier as many es­tab­lished ven­dors and reg­u­lar cus­tomers would have al­ready had mul­ti­ple ac­counts across the ma­jor mar­kets.

With Al­phaBay seem­ingly out of the pic­ture, other sites will jos­tle for supremacy by try­ing to at­tract new users through ad­ver­tis­ing and mem­ber­ship deals. RS Club Mar­ket, for ex­am­ple, an­nounced a re­fer­ral of­fer on 09 Jul 2017 (a few days af­ter Al­phaBay's dis­ap­pear­ance) en­cour­ag­ing mem­bers to in­vite new users in re­turn for 30 per­cent of the site's com­mis­sion fee. The House of Lions mar­ket­place, sim­i­larly, has given Al­phaBay sell­ers an op­por­tu­nity to ne­go­ti­ate on the ven­dor fee if they can ver­ify their ex­pe­ri­ence and rep­u­ta­tion.

En­larg­ing your cus­tomer base, how­ever, brings its own chal­lenges. Hansa users have re­ported is­sues with ac­cess­ing the site in the last week. As Hansa does not re­quire users to lo­gin to view prod­ucts, a large in­crease in web traf­fic may have dis­rupted the ser­vice. Now Hansa ad­min­is­tra­tors have been forced to sus­pend new reg­is­tra­tions as the deal with "tech­ni­cal is­sues" caused by what they have called an "Al­phaBay refugee" in­flux.

New mar­ket­place to re­place Al­phaBay

Some Al­phaBay users were so fond of their for­mer haunt that they have cre­ated a new it­er­a­tion of the mar­ket­place, dubbed Gam­maBay. We dis­cov­ered the fol­low­ing call to arms by a self-de­scribed Al­phaBay vet­eran on Red­dit:

At this stage, the Gam­maBay site is still in its in­fancy, and the mar­ket­place sec­tion re­mains un­fin­ished. With only 20 mem­bers reg­is­tered on the site so far, it is un­likely the new site will be able to reach the heights of its pre­de­ces­sor. More­over, with ru­mors that Al­phaBay had been dis­rupted by law en­force­ment, many users have ex­pressed a re­luc­tance to reg­is­ter for Gam­maBay, fear­ing that the site is ac­tu­ally a honey pot in­tended to lure in for­mer Al­phaBay ven­dors. Per­ceived trust in a mar­ket will play a large role in its chances of fu­ture suc­cess.

Al­ter­na­tive so­lu­tions

The fall­out from Al­phaBay's dis­ap­pear­ance could have far­reach­ing im­pli­ca­tions for the fu­ture of the mar­ket­place model. If an exit scam has taken place, the de­clin­ing trust in these mar­kets may lead dis­il­lu­sioned users to­wards al­ter­na­tive meth­ods for con­duct­ing on­line trans­ac­tions. If law en­force­ment was re­spon­si­ble, then the risk of le­gal ac­tion will only en­cour­age ven­dors to seek more se­cure and anonymized meth­ods of trade.

Al­though sites such as Al­phaBay are very pop­u­lar for goods such as drugs and credit card in­for­ma­tion, cy­ber­crim­i­nals sell­ing sen­si­tive data or mal­ware vari­ants have fre­quently opted for di­rect peer-to-peer (P2P) com­mu­ni­ca­tion and re­la­tion­ships made on spe­cial­ized fo­rums. While ven­dors and cus­tomers might lose the con­ve­nience of trad­ing on a pop­u­lar mar­ket­place, they could de­cide that a P2P model will give them more con­trol and help safe­guard against exit scams and loss of funds.

Fol­low­ing the seizure of Silk Road in 2013, some peo­ple be­gan work­ing on a new, fully-de­cen­tral­ized mar­ket­place known as OpenBazaar. This open source project is a P2Pr mar­ket­place that al­lows the un­re­stricted sale of goods be­tween anony­mous users. OpenBazaar is ac­cessed through a fron­tend client which can be freely down­loaded from the project web­site. All trans­ac­tions are made us­ing Bit­coin and are recorded on the project Blockchain as cryp­to­graph­i­cally signed smart con­tracts.

Short, long-term fore­casts

In the short-term, we as­sess that an ex­ist­ing mar­ket­place such as Dream Mar­ket or Hansa will most likely fill Al­phaBay's shoes. The most suc­cess­ful mar­ket­places usu­ally have a com­bi­na­tion of: a user-friendly in­ter­face, ad­min­is­tra­tor sup­port ser­vices, at­trac­tive fee struc­tures, and - cru­cially - a strong over­all level of sta­bil­ity and rep­u­ta­tion among the on­line com­mu­nity. As per­haps the two most es­tab­lished mar­kets with the largest num­ber of ex­ist­ing users, Dream Mar­ket and Hansa are best placed to cap­i­tal­ize.

Nonethe­less, as Hansa's re­cent tech­ni­cal dif­fi­cul­ties have high­lighted, these sites will have to un­der­take im­prove­ments to en­sure their user ex­pe­ri­ence is in line with what mem­bers will de­mand. For Hansa and Dream Mar­ket, this will mean min­i­miz­ing tech­ni­cal is­sues and re­fin­ing their as­so­ci­ated fo­rum pages, which both pale in com­par­i­son to what the Al­phaBay fo­rum once of­fered.

In the long-term, the fall of yet an­other pop­u­lar dark web mar­ket­place will only in­crease calls for a more se­cure, sta­ble and trust­wor­thy al­ter­na­tive to the cur­rent mar­ket­place model. Here we be­lieve P2P mod­els such as that es­poused by OpenBazaar have the po­ten­tial to be­come in­creas­ingly at­trac­tive of­fer­ings to ven­dors and cus­tomers alike. It re­mains to be seen when a suit­able plat­form will fi­nally break through and dis­rupt the mar­ket. Dig­i­tal Shad­ows will con­tinue to track the likely demise of Al­phaBay and its suc­ces­sors.

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