Virtual Currencies and Online Illicit Drugs Sales: Opportunities and Challenges for Policy Makers

Cryptomarkets are online markets where a wide range of licit and illicit goods and services can be bought and sold. To protect the anonymity of their participants, cryptomarket administrators require that all payments be made in virtual currencies such as bitcoin. Launched in 2009, the bitcoin currency now has a market cap of over $16 billion USD and allows for the anonymous transfer of funds instantly and across national borders. An interesting feature of bitcoin is that all bitcoin transactions are registered in a public ledger called the blockchain. The blockchain does not contain the name of the sender nor of the receiver but does contain the anonymous identifiers of each endpoint as well as a date and an amount. The general aim of this presentation is to describe the opportunities and challenges for policy makers that derive from the use of virtual currencies like the bitcoin to facilitate online illicit drug sales.
A literature review will be conducted to examine the legal status of the bitcoin currency in various jurisdictions around the world. The BitCluster software tool will also be used to track the flows of bitcoins to and from cryptomarkets. This software tools takes advantage of errors made by cryptomarket actors in their handling of their bitcoins to group together payments that appear to be coming from different actors but are actually coming from the same person.
Bitcoins have been regulated in one of four ways: no regulation, taxation of revenues generated through the sale of bitcoins, regulation of the actors involved in the trading of bitcoins and the interdiction of bitcoins. The BitCluster tool measures the size and scope of cryptomarkets and to profile the range of transactions facilitated by cryptomarkets. Flows of bitcoins between cryptomarkets are also presented.
Efforts to regulate bitcoins have failed so far and the currency is still very much available and popular. Blockchain analysis provides a new method to study and understand the online sale of illicit drugs and policy makers should take advantage of it to make better informed policies. Cryptomarket participants should be aware that their poor understanding of how bitcoins work can leak much information about their operations.

Ce contenu a été mis à jour le 2 mars 2017 à 23 h 52 min.