Reputation transferability across contexts: Maintaining cooperation among anonymous cryptomarket actors when moving between markets

Lukas Norbutas; Stijn Ruiter; Rense Corten

doi:10.1016/j.drugpo.2019.102635

Reputation transferability across contexts: Maintaining cooperation among anonymous cryptomarket actors when moving between markets

Int J Drug Policy. 2020 Feb:76:102635. doi: 10.1016/j.drugpo.2019.102635. Epub 2020 Jan 20.

Authors

Lukas Norbutas¹, Stijn Ruiter², Rense Corten³

Affiliations

¹ Department of Sociology, Utrecht University, Utrecht, The Netherlands; Netherlands Institute for the Study of Crime and Law Enforcement, Amsterdam, The Netherlands.. Electronic address: l.norbutas@uu.nl.
² Department of Sociology, Utrecht University, Utrecht, The Netherlands; Netherlands Institute for the Study of Crime and Law Enforcement, Amsterdam, The Netherlands.. Electronic address: ruiter@nscr.nl.
³ Department of Sociology, Utrecht University, Utrecht, The Netherlands. Electronic address: r.corten@uu.nl.

PMID: 31972474
DOI: 10.1016/j.drugpo.2019.102635

Abstract

Background: Buyers and sellers of illegal drugs in cryptomarkets have been found to overcome trust issues created by anonymity and the lack of legal protection with the help of reputation systems. Cryptomarkets rarely operate for longer than a year before closing or getting shut down due to external shocks, such as law enforcement operations. This results in large flows of users migrating between market platforms. An important question in order to better understand why cryptomarkets recover quickly after external shocks is: to what extent can reputation be carried over between different markets? This problem is non-trivial given the anonymity of cryptomarket users and the fact that reputation is tied to a user's online identity. Here we analyze conditions under which sellers choose to migrate with the same identity and whether reputation history from previous cryptomarkets yields benefits in new contexts.

Methods: We analyze sellers' migration in three cryptomarkets (Abraxas, Agora and AlphaBay) and follow their reputation history by linking user accounts between marketplaces using the Grams database. We use longitudinal multi-level regression models to compare market success of migrant and non-migrant sellers. In total, the data contains more than 7,500 seller account and 2.5 million buyers' reputational feedback messages over a period of 3 years.

Findings: It is predominantly the successful sellers with a large number of sales and high reputation who choose to migrate and maintain their identity using cryptographic methods after market closures. We find that reputation history from previous markets creates a competitive advantage to migrant sellers compared to market entrants.

Conclusion: Reputation transferability embeds cryptomarket users beyond a single market platform, which incentivizes cooperative behavior. The results also suggest that reputation transferability might contribute to a quick recovery of online drug trade after shutdowns and accumulation of market share in the hands of a small fraction of successful sellers.

Keywords: Cryptomarkets; Dark web; Online drug markets; Reputation; Transferability; Trust.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Commerce
Drug Trafficking*
Humans
Illicit Drugs*
Internet
Law Enforcement
Trust

Substances

Illicit Drugs