The dark net practitioners said: How did the cryptocurrency in the past develop?

The Internet world is full of commercial activities, and naturally there are also illegal activities. The early days of the Internet were full of pornography and other illegal transactions, but nowadays it is difficult for people to reach them through normal channels, but this does not mean that the demand for these transactions is shrinking. The largest black market trading platform on the dark network is Silk. Roads can be closed, but drugs, population smuggling and arms trading will not disappear.

These black market transactions that are outside the supervision, as long as you grab a little water and soil, you can always find a place where roots sprout. When we are constantly pursuing new technologies—5G mobile internet, anonymous chat software, chat bots, privacy digital currency, stronger end-to-end encryption, 3D printing, personal drones, etc., these black market transactions have evolved into What?

The author of this article is a member of the Dark Net organization, providing document resources and technical services to black market customers. From the past, present and future perspectives, he discussed the impact of technological development on commercial activities in the online black market. This article does not provide legal and ethical evaluation of these activities, but focuses solely on technical and operational safety. For some people who violate legal ethics, it may be completely legal for others, you have to judge for yourself.

Before 2011: Mingwang Black Market

With the popularity of the Internet, savvy black market merchants quickly learned to use it to communicate with customers, advertise and pay for goods. Most of the early Internet goods were pornography, call girl calls, stolen data, and misappropriated intellectual property (mostly software and entertainment), so either goods and services that could be delivered online, or special "personal service".

It was not until the 1990s that people actually started using the Internet to sell physical goods, such as drugs, guns, fake ID cards, etc., but because online payment and logistics facilities have not yet developed, they are usually concentrated only in the local markets of big cities. Transactions are still subject to geographic location. At that time, the credit card was the only viable online payment tool, but the illegal commodity transaction credit card was easy to detect, so the cash payment was the mainstream at the time.

During the period 2003-2007, the first anonymous but centralized digital currency emerged, and online transactions were greatly improved. For a time, the business model of e-mail shopping began to develop in the restricted area of ​​laws and regulations. Because most businesses cannot be publicly marketed, they can only be promoted through word of mouth in the online community.

With the invention of Bitcoin, the first decentralized cryptocurrency, the business model has changed. The "Silk Road" site may be the first site to combine a bitcoin payment system with an anonymous network.

2011-2017: Darknet market

When it comes to the dark market trading market, you have to mention the "Silk Road."

Simply put, dark market trading markets like the Silk Road are made up of anonymous overlay networks such as Tor or I2P, where sellers can post sales information and buyers buy in cryptocurrency. These sites also offer additional features such as private chat, credit history inquiries, payment hosting services, and forums for buyers and sellers to communicate openly.

The logistics of goods is usually the responsibility of the seller, through official postal or express parcel services, such as UPS, FedEx, DHL.

The dark market trading market is actually a centralized marketing, communication, trading, credit and hosting platform. Just like the primary form of the e-commerce platform we are familiar with now, it mainly attracts small businesses because they prefer this flat. The business model, user loyalty and market share are mainly adjusted by the market itself, rather than through a layer of dealers.

However, there is a place in the dark network that affects the user experience, that is, users have to log in using an anonymous overlay network such as Tor or I2P. This hinders the entry of a large number of potential users and is limited to non-mobile devices such as personal desktops or laptops. Obviously this is not what most modern consumers want. The centralized nature of the dark network e-commerce platform also has a certain negative impact on the security of operators.

Although the credit rating system has greatly reduced fraud from sellers, fraud from the dark market is ubiquitous. As a result, these trading platforms began to provide third-party hosting services to ensure security, and operators of e-commerce platforms can also use the money to run their own business. It was not until later the emergence of multi-party transactions that the cake of the hosting service was taken away. In a multi-party transaction, only the two parties between the buyer and the seller and the market can agree to use the funds (the implementation of this feature can be applied to certain cryptocurrencies through multi-signature technology).

Soon more serious situations emerged, legal supervision involved in the dark network, and forced to close the trading platform in the dark network. Because most of the sales and credit data is public, open source intelligence acquisition methods such as crawling, data analysis, and hacking can be used to attack, which has become a major threat to the dark network. After the account of the moderator and the operator was stolen, it eventually lost trust in the dark market. Moreover, after several platforms were supervised and offline, funds were also frozen, making the user's funds unsafe.

With the tracking of the postal system's shipping information and cryptocurrency transactions, sellers are also becoming the target of regulatory assaults.

These sellers, who have been successfully identified and arrested by surprise, usually hold a large amount of payment details and the buyer's delivery address, which further reduces the trust in the dark network e-commerce platform. For information security experts, the flat organizational structure makes it easy to sneak into the dark market, and it is easy to identify the identity of an e-commerce platform operation team or seller team.

Finally, the collapse of the dark-net e-commerce platform triggered a breakdown in the relationship between buyers and sellers. The seller lost credit, and the previous marketing work became useless. They were forced to temporarily or even permanently shut down their business.

2017/2018—?: Dropgangs

The problem of the dark net triggered a revolution in the online black market.

In order to prevent the loss of business and users when the dark network e-commerce platform collapses, merchants began to leave these vertically centralized platforms and complex overlapping network technologies, and use the technology that is more widely contacted to build their own communication systems. And the background.

They no longer set up websites on the dark network, started using apps like Telegram that can be easily downloaded on their mobile phones, and operated a sales channel group that can only be accessed through invitations. This allows sellers to better control the spread of their information and is more resistant to systemic failures. In order to retain customers, sellers will also send private messages to old customers, which makes it easier to evade supervision. These groups for selling goods are operated by robots, where customers can consult product information and make purchases. For the seller, they also save a lot of energy for manual customer service.

For customers, instant messaging software makes the shopping experience even better, and they can reach suppliers with a single phone. This also means that most of the communication will no longer be done through the Tor or I2P network. Buyers and sellers use their own security protection technology, usually a VPN.

Another major shift is that everyone has begun to abandon the postal system that is easily tracked and intercepted, and instead delivers goods at "dead drops." The seller will hide the goods in a public place like a park and send the address to the buyer. This means that the seller does not have to synchronize the shipments in batches, he can hide the goods in different places in advance. For the buyer, it takes a few hours to get the goods, rather than waiting for a few days of logistics. Moreover, this method does not require the buyer to provide personal information, so there is no security risk. The less data, the less risk there is.

Since the use of "airdrop bases" as the receiving address, the risk that sellers are tracked by the postal system has also been greatly reduced. He does not have to go to the post offices or letters that are being monitored in person, and all public places are places where the seller hides his identity. The most dangerous place is also the safest place.

The cryptocurrency is still the mainstream payment method, but the third-party hosting method is no longer used when trading, because the review mechanism needs to be bypassed. And customer loyalty is high, buyers and sellers trust each other, no need to host.

Today's dark web forums and chat groups are often used for marketing and initial review of the identity of buyers and sellers, and the platforms themselves do not participate in any transactions. In these places buyers and sellers will bargain and discuss how the transaction process is better. By sharing experiences, the market ecology is established, and everyone will discuss the best practices together. It also has a record of user credit, although this approach is primitive.

In addition to the safer and more efficient trading environment between buyers and sellers, the seller's ecology has also changed:

The current seller's organizational structure is different from the flat-structured dark-net market, but it has once again become a multi-level system, including procurement, sales and distribution. People at every level usually don't know the identity of people at higher levels, nor who they are. All interactions are digitized through communication systems and cryptocurrencies, and commodities are only traded at “airdrop bases”.

Purchasing is responsible for wholesale and smuggled goods, and they sell goods for sale through cryptocurrency. After the transaction, the purchase and sale are at your own risk.

The sales divide the goods into smaller units in groups and tell the distributors the address of the air base. The distributors regrouped the goods and placed them on the airdrop base based on common sales. The sales will use the communication system to inform the buyer of the specific address of the airdrop base.

In order to prevent internal personnel from being stolen when the goods are delivered, the sales staff will assign some tasks to the distribution personnel to test them: after the inspection, let the distributors take the products from the original airdrop base and hide them elsewhere. Usually there will be a piece of paper with a cipher on each item, so that the distributor can prove to the sales that they have found the item. The distributors pledge the virtual currency as a margin to the sales, and each time they fail in the test, they will be taken away by a portion of the margin. Until now, no violence has been used to ensure the performance of members.

This way of using chat communication software, cryptocurrency and airdrop bases makes each group member completely independent of other groups and has no knowledge of the behavior of higher-level members. The members of the distribution team are no different from an ordinary person in the operation of the airdrop base and are difficult to recognize. Even if he was arrested, he could not track others according to him. This organizational structure is natural and safe and can prevent police investigations and arrests. Personnel can be highly substitutable, and members can change and operate quickly.

Moreover, sales people often use advanced physical anti-reconnaissance means to prevent procurement personnel from receiving inspections when receiving goods. It is therefore difficult to destroy this organizational structure from the top down.

In this kind of organizational structure, if someone is unfortunately arrested, then he has no important information to inform, and he has no knowledge of people, places, meeting time, etc., because he can know that too much communication will not happen at all. .

This kind of organization that conducts airdrop transactions under a multi-level architecture is called an airdrop gang.

The result of this evolution has led to a high degree of decentralization and professional segmentation of dark-net market transactions. Everyone has less information, faster logistics, highly isolated participants, and independent sales channels.

Three major risks facing airdrops

Cryptographic currency tracking:

The nature of airdrop help naturally requires everyone to pay in cryptocurrency. However, buyers generally do not have enough cryptocurrency in their hands. This requires a basic setup similar to an exchange, and this is where it may be regulated.

Message tracking:

In order to keep in touch with consumers, the airdrop help must operate some basic settings. Law enforcement agencies may identify and track these basic settings and ultimately identify the operator. There are policies and measures to counter. Operators are also proficient in using anonymous technology to disguise themselves.

Airdrop base monitoring:

Law enforcement agencies will monitor those suspicious airdrop bases to find members of the short-sellers. But it also brings a lot of problems to law enforcement. First of all, there are so many suspicious airdrop bases, and even if everyone is lucky enough to catch everyone who goes to airdrops, they can't call so many monitoring resources. Second, if the operators of airdrop bases use some basic anti-reconnaissance means, it is difficult to distinguish between ordinary consumers and airdrop personnel.

The risk of cryptocurrencies being tracked may be resolved quickly. The technology in this field is developing very fast. New trading methods may be invented, such as decentralized peer-to-peer chain trading, or there may be additional privacy layers added to cryptocurrencies that are slightly weaker in this regard. Encrypted currencies like Beam and Grin also provide users with sufficient privacy protection while supporting their chain transactions with mainstream currencies such as BTC and ETH.

The other two risks have also been well resolved by professional operations.

Credit evaluation

Airdrops are faced with different problems than the centralized dark-net market, for which credit is even more important than finding customers because there is no suitable tool for evaluating credit. Only complaints about spam and market manipulation are now open on the forum, as other transactions are simply nowhere to be found.

Perhaps the operators and sellers of the Dark Web Forum will come up with a solution to this problem, such as proof of sales in an encrypted form, which buyers can use to evaluate sellers in public forums. This is a distributed security calculation method that records the credits of buyers and sellers. It does not cause spam messages and brush evaluations. But this will add some additional risks, such as law enforcement agencies will have more data on seller activity. However, this risk will decrease as technology develops, and buyers and sellers will gradually accept this approach to improve transaction efficiency.

Site selection of airdrop base

The airdrop base needs to meet three requirements:

1. The number of airdrop bases must be large. More alternative addresses also mean more security in the face of regulation.

2. For the buyer, the delivery address he received must be easy to find.

3. The airdrop base cannot be easily found.

These three points constitute the biggest problem of site selection: there must be a strong information asymmetry between the trader and the ordinary person, so that the short base will not be discovered by passers-by.

The airdrop base and the secret base are no different, which leads to the airdrop base being difficult for him to find if the recipient has not undergone extensive training and preparation. In order to avoid this situation, the address of the airdrop base will be used repeatedly, but this also brings another risk that the sender and the recipient will be more easily found by the regulator.

Ideally, an airdrop base will only be used once. This is difficult to be found by supervision unless it is bad luck.

Airdrop gangs encounter a variety of difficulties and challenges. The main problem is that the documentation for each airdrop base is recorded in great detail, including GPS coordinates, photos of the surrounding environment, and photos of hidden cargo equipment (such as empty coke cans). These documents increase the risk of being discovered by airdrops.

In addition, even carefully written documents still require the buyer's ability to read and understand, and to follow the instructions accurately, which will cause the recipient to show some suspicious behavior near the airdrop base, for example, they will stare at a photo. For a long time, it seems to be incompatible with the passers-by around.

In the beginning, a Bluetooth transmitter was used to help the recipient locate. In addition to placing goods in the airdrop base, people will also have a small electronic device to transmit signals that can be received by the smartphone and indicate the direction and approximate distance. In addition to GPS positioning, the recipient also needs to install an app on the phone. Bluetooth transmitters can be purchased in the market for less than $10.

However, such equipment may also be used by unauthorized parties to locate an airdrop base. As long as you search for a place on your smartphone that is suitable for an airdrop base, you have this risk.

It is said that some devices do not continuously send signals, you have to activate it first. First, the recipient wants to create a WiFi hotspot on the phone (this feature can be turned on in the settings). The homing signal will only begin to be sent when the Bluetooth transmitter is connected to this dedicated WiFi hotspot. Devices like this are actually cheap (less than $15), but there is a risk of being tracked by the recipient, even at very long distances.

Another solution is to use another WiFi-activated transmitter that emits a loud and special sound that is sufficient for the recipient to hear, rather than transmitting a Bluetooth signal.

The life of these transmitters is surprisingly long. The standby duration can be set in advance before starting to accept the activation signal. In the acceptance phase, they are usually active only a few seconds per minute. So you only need a very cheap chemical battery to allow these transmitters to stand for days or even weeks, and you don't need a more expensive rechargeable battery.

We hope that there will be transmitters that can receive ultrasonic signals in the future. The recipient's smartphone can send a special signal through the speaker to activate the transmitter. The transmitter then sends a homing signal and the recipient can navigate along with his mobile phone. This can be made into the form of an App, making the user experience of the entire positioning process more friendly and convenient.

Future trends

Future trends in this area may focus on optimizing the buyer experience. A better homing transmitter will be developed, and mass production at a manufacturing facility in Shenzhen can reduce costs.

Communication services will better integrate anonymity and complete payment systems, and even include the positioning capabilities of airdrop bases. The credit rating function will also be integrated.

These communication services will be used by both the black market and legitimate buyers. Integrated automation and human-computer interaction with peer-to-peer payment will surely become the most important technical means in this business model. The early market in this direction has been occupied by Chinese communications companies, Telegram and Facebook.

With the development of technology, the black market is likely to grow faster and faster. In the city, a wide variety of goods will be widely sold in an anonymous and secure form. More and more people will participate in the ecology of the black market and will make a living and hold a fixed salary. In addition to being a newsboy, teenagers will also serve the airdrop base.

This will lead to the further development of basic service settings for buyers and sellers in the black market. Someone will serve the airdrop base operators, who move their products from one airdrop base to another. They are also equivalent to the buyer's receiving agent, which can guarantee the safety of the buyer, and does not require the buyer to personally collect the goods. This will allow this distribution model to be widely distributed and applied to more products. The line between the black market and the compliance market is blurring. On this ambiguous line, new equipment and technology will gradually develop. A natural black-and-white device like a safe can be paid in a point-to-point cryptocurrency.

Investigate further into the future, perhaps the entire city will be covered by a large number of temporary airdrop bases, becoming a dynamic land, composed of people and cheap drones. The operating cost of this mechanism is very low, and only some people have developed this mode of picking up air cargo. Both buyers and sellers can rent drones on the app. For example, the seller puts the drone on a roof and the buyer takes it with another drone. Tracking such transactions is extremely difficult because of the variety of anonymous communication techniques used.

In the future, the flying distance of the drone will be farther and farther, the load capacity will be stronger and stronger, and the price will be lower, which will be used more widely, so the procurement group of the airdrop will become safer. Doing things more efficiently.

Keep on opening the brain: we now have 5G mobile internet, anonymous chat software, chat bots, privacy digital currency, stronger end-to-end encryption, 3D printing, GPS positioning, personal drones (including short flight distance helicopters and long What are the consequences of combining fixed-wing aircraft, visual navigation and other technologies? Or what happens when these technologies are combined with other things?

We do not know whether they are good or bad for society. But we'd better start thinking about how to deal with the consequences they may have and consult with professionals. It’s all in 2019. Don’t expect to rely on those members and representatives to make suggestions.