Deep Web Marketplaces
Last week Joel sent everyone at USV an email outlining his journey through and exploration of the Dark Web which ultimately resulted in a purchase of a pair of boots for his girlfriend. Jonathan replied to all with “this is the best thing I’ve read on the Internet this year” to which I replied “except it isn’t on the Internet. it should be”.
Joel got around to posting it to the Internet earlier this week. It is here.
If you haven’t used Tor, if you haven’t bought stuff from these anonymous marketplaces, if you haven’t laundered your bitcoin, if you haven’t arranged for an untraceable shipment, you might want to read how all of this goes down on the Dark Web.
As my partner Brad explained in a follow up post on the topic of the week thread on usv.com, we were so fascinated by Joel’s exploration of these Dark Web marketplaces because it feels like a trip into the future in some ways. Brad said:
The really interesting thing about Joel’s analysis is what it tells us about the future of open, transparent and legal markets on the Internet.
and
All this leaves me wondering not so much if the world will move toward decentralized, and disaggregated marketplaces, but when and why. Because the activities on the dark web are largely illegal, there is no other choice. For the rest of us, we are still generally willing to depend on a centralized platform for discovery, and identity management. For the moment, we are also still willing to accept the fees, the terms of service, and the bundling, these platforms enforce. My guess is the models pioneered on the dark web will come into the light first as leaner more efficient competitors to the first generation of peer economy companies, but the question I am still struggling with is where to look. Are there legal markets where the value of a decentralized market is greater so this transition will happen sooner, or will it happen first in any market where a first generation peer economy company goes too far by economically and politically disenfranchising the value creators at the edge of their network?
This conversation gives me some small desire to go on a shopping spree myself because its easier for me to understand something with my hands than my eyes. If and when I do, I’ll report back here, as always.
Comments (Archived):
Just amazing…At first I wanted to say that it was like the early days of anything, like when I was selling millions of enabling cards for sound and graphics and the game and porn industries were the first adopters.That’s too trivial and this is more profound.Feels like I’m channeling Hiro Protagonist from Snow Crash and it took me back to my days building one of the first interaoperable communities on the web, single sign on anonymous avatar based identities at Electric Communities.I’ve written that I don’t need inspiration to work but this is just tweaking my curiosity bigtime.
“Hiro Protagonist”!!!!!!!man i love Snow Crash
They even used non-inflated electronic currency in that book. But yeah, I think I need to pay another visit to Mr Lee’s Greater Hong Kong soon.
That’s the one prediction Stephenson got 180 degrees wrong (or, he was just very early). The U.S. federal government is bigger and exerts more power now than ever.
I’d argue the US federal goverment is only more powerful because the corporations that control it are more powerful. Even are army is increasingly made of mercenaries. Stephenson still has some time for this prediction to be bang on as well.
It’s amazing that the more government expands its reach, the more some people talk about corporations. Corporations aren’t why you have to take your shoes off at the airport. Corporations don’t shoot family dogs in no-knock raids. Corporations aren’t responsible for civil asset forfeiture.
You are correct on all accounts, as am I. I like to think of most topics and issues as polyhedrons rather than two sided coins. Each one has many sides, and even more angles. If you roll a D20, half those sides are facing up to some degree, some more than others.
both posts were superb as was the resulting discussion. lots to ponderit really is a different world out there in the dark web. the privacy and anonymity requirements (and associated tech overhead) of illegal trade force participants to innovate along a bunch of vectors which have no relevance whatsoever in the open web – or so it would seem, maybe.1/ Reading Joel’s blog yesterday made me fire up Tor and check out Evolution. Cumbersome experience from beginning to end. A digital version of the cat and mouse games and precautions of trying to score offline in a strange location where you don’t know the ‘rules of the game’2/Loved the ingenuity of leveraging the post office & a dollar bill serial number to receive questionable deliveries.3/ Reminded me of those prison documentaries where they show you how the prisoners communicate/trade/smuggle in front of the guards noses without being caught.4/ Reverse innovation? Akin to looking to optimise for ‘able-bodied’ by learning how ‘handicapped’ carry out same tasks.
I was wondering how a seller’s reputation could be maintained across anonymous marketplaces when I noticed someone else had asked the same question on Joel’s blog.The answer is ingenious: a seller interlinks his profiles on the various marketplaces. Since a seller would never link to a fake profile, this is a kind of identity validation by action.Fascinating.
That struck me as well as reputation is the key currency here that drives the model.Equally fascinated.
That tells me there will be many marketplaces, because a wise seller would not put all of his reputation in one basket. So no dark Amazon or eBay?
Most likely your right.Putting these pieces together is like building inside of a game of sorts.Everything is decentralized. Everything in flux. Reputation possible outside of place and any centralized regime.Always the pragmatist, i’m looking for behaviors I understand now that tie it together and ties that I don’t that can be brought back for design and use now.Kinda a rabbit hole experience for me.
Let’s add to your rabbit hole…now imagine trust in the dark web also based on 6 degrees of separation (which also maps even more to real life in my book).It’s the digital equiv. of “I gotta guy”…
Yes! It’s all down to ‘brand’ for want of a better word – complete accountability, yet almost complete anonymity….hectic
Reputation is also what drives price in this model (which is so often true in the real world too).
yupreputation is brand in the real world of course.
lots of the systems they devised are so simple yet genius.
A new, untrusted, seller might link to a strong highly reputable profile
Yes, but the strong highly reputable profile would not link back.
An incredible insight into another world. The interplay of reputation, anonymity and network is fascinating in the true sense of the word – This was amazing for me: “Marketplaces come and go (or get seized by the FBI) but sellers need maintain their reputation”
This is screaming for Blockchain based implementations, and there is work happening on this form of pseudo-anonymous, decentralized commerce and services.Maybe we got the Internet wrong for the past 20 years, and imagine if browsing had started as a Tor implementation with 1 billion users today, not just the 4 million it has now.Regular, normal, law-abiding people deserve anonymity and protection, not just the bad guys and criminals.
That’s a very cool thought.
We are such good friends maybe cause we look at things so much from flip sides.The greatest change agents of our time–Twitter, Facebook, Uber, AirBnb, the internet itself!–didn’t solve problems as much as they captured opportunity by platforming behavioral wants that just didn’t have an infrastructure or an avenue.I don’t think the world is waiting for blockchain at all. I think the world is ripe for new behaviors to crack a spot in the market and they make designing them all the more possible.
You two are the Siskel and Ebert of the AVC community. Or maybe the Jane Curtin Dan Ackroyd point counterpoint duo 😉
I take this as a huge complement actually.
It was meant as a compliment. I enjoy and learn from your back and forths
Ha. Good thing you didn’t say Hannity & Colmes 😉
Which one them then is the ignorant slut?
neither. let’s keep it as a figurative comparison…
I think we agree on the later point. The blockchain is a technological spark that can set the wheels in motion for disrupting new systems that were based on central controls, even if they fulfilled our needs.Users/people start by having frustrations with the current systems and status quos, before they realize what the needs and behaviors are to be. Then innovators create new systems that replace the old systems. A lot of old and not so old systems are up for disruption. Even Uber and Facebook could be disrupted again. Maybe they were a taste for better alternatives.There are lots of frustrations with today’s web.Frustrations are the mothers of new behaviors.
Frustration didn’t drive Uber or AirBnb or FB or any of the large consumer platforms.Possibility does. Satisfaction does. Enjoyment does. Adopted natiural behavior doesFor IT and b2b sure I agree. For the mass market–not how it works.We build stuff to mitigate frictions. We use stuff cause it feels right.
Can I ask, why not both? It doesn’t seem binary, yes/no to me.. it seems like both are needed
Of course you are right.Just different points of view. I look at business and marketing from the customer and market side, as a amalgam of behaviors that you tap.Others look at it from a problem solving perspective. From a platform perspective.Parts of a whole.People will jump through the worst hoops and UX aberrations to find satisfaction. People will ignore the most beautiful, well designed thing that simply doesn’t touch them.
Ah, right, makes sense. I won’t belabor the point, but obviously too many approaches on consumer end try to control discovery / curiosity / use case process. What we need is more flexible approaches to the web, which is why bitcoin is so interesting when you start to think of other kinds of currency that it supports (identity, anonymity, etc.).That’s part of what appeals to people about any sort of marketplace, that there is trust held as it might be in a financial institution but the value of nodes depend entirely on a bunch of other nodes…it’s a reflection of the human experience (and why thinking ecosystem/correlation is much harder but also more valuable for anyone building marketplace / framework things).
great response.
Obviousness fuels growth of those names.
“Possibility does. Satisfaction does. Enjoyment does.”.Cheap does! Many platforms make things cheaper. Which robs value from the product/service. Sooner rather than later it begins to rob quality from the product/service. Then you end up paying more for junk than you paid for quality.
I meant user frustrations…
This is why I don’t believe that ALL startups can be framed as solving a ‘major pain point’ or frustration. Some provide new possibilities and delights. A good example is twitter.
“I don’t think the world is waiting for blockchain at all.”.I agree. The world is getting tired of devices. History repeats itself and people are going to let go of this stuff and go back to ‘real world’ things. Like shopping at the mall and interacting with people face to face..We still have major unemployment, hunger, homelessness, etc. The difference is we’ve seen what the internet can and will be used for and it wasn’t what we thought. Now it’s back to the drawing board in the real world.
I agree, we are trying to solve problems by throwing more layers of technology in between us and the problem. If software is this great force multiplier, its entirely possible its multiplying the wrong things, like apathy, isolation, and disconnection.
You are correct!!! And you say it well.
I think you may be right and wrong at the same time.I think technology is helping people use physical assets more efficiently than they have in the past – think Uber or Sidecar. That may indeed lead people back to ‘real world’ things, but it will be facilitated by technology.As for your comment on unemployment, hunger and homelessness, what does that have to do with the internet?
I guess you’re a youngster?
Define youngsterI guess you’re an oldster?
By technology standards yes I’m an oldster. When I was a youngster, like yourself, the internet was gonna’ fix the world. Everything was gonna’ be great and everyone was gonna’ be free from everything that was bad..Unemployment, hunger and homelessness were just a small few of the things the internet was going to fix!
I dunno about you but the first ten years I spent on the internet were all anonymous, or rather pseudonymous via IRC, message boards, etc. It’s the past ten years where I’ve been reduced to the sum of my twitter bio. So, I think we got it right, then were led astray, and the pendulum is swinging back the other way now so that’s wonderful to see.
“You” got it right. i do hope we go back to more anonymity.
“This is screaming for Blockchain based implementations…”.Nah. You’re just not thinking for yourself. You’re being assimilated into the borg. We’re going back to cash. We’re all tired of playing with computers. It’s not satisfying anymore.
I’m paying with cryptocurrency…take it or leave it 🙂
I’ll leave it. But thanks for playing.
Uber, but using the blockchain to match passengers and livery cabs !(your ride will arrive in…2 hours, maybe)
2 words: decentralization + p2p
Blockchain is probably overkill… don’t need 2-phase commit for all use cases… could have a distributed NoSQL in the cloud counterpart to the blockchain’s transactional no double-spend architecture…makes me sort of wonder…what is the S3 / AWS of all this going to be?Seems like there should be a cloud dump where anyone can anonymously dump bits everyone else can read.Maybe a p2p service, ‘decentralized p2p Mongo in the cloud’? And then for e.g. a p2p car service, all the cars run the app and cooperatively store/distribute the data?Or is it just something like Pastebin, with the app posting e.g. car availability and signing stuff with their PGP key, doesn’t need to be decentralized?Maybe a legit business… anonymous version of S3, be the cloud storage platform where anyone can post bits of any kind for everyone to read for free, sell APIs and services to apps.Extending this thought, you can go to AWS console and imagine P2P counterparts to every layer. TOR is a networking layer. Blockchain is a transactional database layer. Pastebin is more of a NoSQL layer. Bittorrent is CDN/content delivery. Bring’em all together, and you could have Heroku for the anonymous yet trusted p2p app.
ok, turned that into a blog post – http://blog.streeteye.com/b…
I’ll respond there, but completely agree w/point about free speech.Essentially – and I really struggle with this because it feels conspiracy theorist – it has to do with whether or not centralized authority is trying to control how people think. That’s absolute madness, as you say, but when you look at the testimony of federal agents from Manning and other trials, the gov’t position really reads like that. If you’re a centralized authority you’re responsible for an ecosystem, and ecosystems by definition can’t be controlled.
I love where you are taking this blog. It’s the first time I have ever read a blog where I feel like I don’t have a lot to contribute to the conversation because I am trying to catch up with my knowledge base on the subject. It’s really refreshing to see this kind of thought leadership taking place instead of the usual stuff on growth hacking, fund raising etc. You are creating an environment where we can all really learn. Please keep sharing.
It’s the curiosity involved which is impressive to me.
That is spot on. Curiosity is the number one thing I look for in VCs. A desire to understand is way more important and powerful than a desire to make money. In fact the former leads to the latter but the latter doesn’t lead to the latter
Curiosity is one thing that is lacking greatly in the geographic area that I live in. You know how lucky you are to reside in NYC but you really don’t know how lucky you are. (Along with the fact that you get to work with so many young people that are looking to get ahead in the world..)
another VC secret, revealed.
But Fred… All the great successes have had a huge desire to make money. This country was built by people who have/had that desire!.The desire to understand is for the realm of scientists and inventors. Most of which don’t get rich from their desire or their efforts..The people who sit in the proper position make the money. People who can see opportunity and make the most of other people’s work make the money..Sales people make the money. People who can convince others to do what they want them to do make the money. Visionaries who can motivate others to perform make the money..Curiosity killed the cat!!!
How to spot the difference?
Remember what Jordan Belfort’s boss in Wolf of Wall Street said…. “We don’t give two shits HOW technology works. We just want to get rich!”
Me too!
Really cool. Future of blockchain based identity?
Thought it was quite interesting for the first time a few traditional financial service companies (banks and the NYSE) participated in the series C round w/ Coinbase. Hedging, validation or a little bit of both?http://www.wsj.com/articles…
Validation IMO
All of that and more hopefully
…and FOMO- fear of missing out + learning from the kitchen as opposed to from the restaurant table.
Amongst AI community, Deep Learning and Dark Knowledge are where the leading lights, including Google’s, are at:* http://fastml.com/geoff-hin…The graphics are purely tongue-in-cheek: Johnny Depp in ‘Dark Shadows’ and Emperor Palpatine ‘Star Wars’ obviously (can’t wait for JJ Abram’s film!!!).
Also, Facebook went Deep Web in Oct 2014:* http://mashable.com/2014/10…
My daughter is working on a near to the future science fiction script (she’s interested in TV writing and wants to try her hand at a spec script). What a perfect link to send her. The future isn’t so far away.
Awesome. Depending on where she is at with her skills and interest, you should have her check out some writing/screenplay/movie classes on Skillshare…can’t recommend it enough for both teaching the basic skills and community driven feedback/learning and motivation. I also find it a very easy format to digest at your own pace and on your own time…
that’s a great idea. I’ve sent her about 10 amazing podcasts to listen to but that’s way more hands on.
Best post of the year!
Joel’s not mine
Sometimes you win by feeding the rock to the open players…
Always!!!!!!
feeding the rock to the open players.I’m assuming that’s a sports analogy but I can’t find any reference to it anywhere.
The rock is generally a nickname for a basketball (but sometimes a football or just ‘ball’ too).The open player just refers to the team member who is either not being covered (obviously) or at the very least has the best chance at success in a given moment because of their current situation.As an example Bill Russell is a Hall of Fame basketball player who has won the most championships of any player in history…he was a *great* player, but he often attributes his ability to win by playing team basketball (i.e. not *everything* and every shot was on his shoulders)…Jordan is also considered a great player, who only started to really win championships once he started playing team ball…lots of cases around this really…And as a counter-example, right now the popular opinion is that Carmelo of the Knicks does not play ‘team ball’…he is a great individual player, but the team goes nowhere[1] because he doesn’t ‘feed the rock to the open player’ :-D[1] Though the team *finally* won a few this week!
The open player just refers to the team member who is either not being covered (obviously) or at the very least has the best chance at success in a given moment because of their current situation.Shows what makes a great test question! You came up with a statement that I could only guess some of [1] (because of who said it (you) and to whom they said it to (Fred)). I was thinking actually football. Which also has open players, right?. So on a multiple choice I would have had 50% chance of getting that correct after eliminating the obviously wrong answers. (Actually so does hockey …)In real life though (to my point about testing in another comment) I understood the gist of your comment in context which was much more important than whether “rock” referred to a basketball or a football. Or hockey. Eh?[1] And not easily google.
+1 🙂
If you are interested in this subject you can’t miss Silk Road: Theory & Practice by the fabulous gwern.
These marketplaces act as a lubricant for people to ‘get shit done’ in the face of laws that should not naturally exist (War on Drugs). I look forward to the day when there is similar practices and mechanisms for normal people to skirt the ‘social laws’ and restrictive mores that currently plague everything we call ‘social’ today.
You don’t have any nice local stores where you can carry around a cup of coffee and shop with cash?
I see Brad’s comment as 2 sides of the same bitcoin (pun)Are there legal markets where the value of a decentralized market is greater so this transition will happen sooner, or will it happen first in any market where a first generation peer economy company goes too far by economically and politically disenfranchising the value creators at the edge of their network?One feel likes push and the ofeels like pull… Alll depends on when they meet
Great question. A lot of marketplaces depend on edge users for social capital / to define how platform is built, then distance themselves when growing (causing all sorts of pain for product development, branding, etc). I think the part that no one likes to admit is that at a certain scale (much, much earlier than most people realize) it becomes an ecosystem and when that happens if the model isn’t flexible enough some % of those value creators leaving will devalue the continued development of platform.
+ that devaluing also affects the cool factor as it relates to “wow this feels like a thing I can help create / shape, and have ownership in.”
The issue becomes what do you do with criminal activity such as child porn, slave trade, sex trade? If it’s there and you are there, can any participation be justified?
You don’t buy! Then it goes away. The only reason for someone to provide such things is to make a buck. If they can’t make a buck they’ll stop.
Assuming the cost (and effort) is near zero under almost no circumstances will you be able to get people to stop doing those things. (Same reason people still send out spam.)Separately people do many things on the internet where they don’t “make a buck” but they continue to do so. Nobody is paying you to write comments, correct?
Rich said “criminal activity”. There are people who do things for their own entertainment. Like me chatting here. Again Rich’s comment used terminology that implied making money..I again assert that people engaging in the mentioned activities for money will stop if they don’t make money..The reason this blog exists if for Fred to make money. Help to build a start up following. Fill his investment pipeline. Collect management fees for his effort. Etc..*We* the visitors have intense discussions *because* of Fred’s desire to make money by using a blog to promote his wares..Make no mistake most of what is done on the internet is about making money. You might not see it but it’s there either directly or indirectly. Much of the time it is a slight of hand approach so that users don’t know what’s going on..Even when you see websites that appear to be helping people the underlying desire is to make money. Either through propaganda or other tactics.
someone wants it though, and most people find it immoral…
>>”Jonathan replied to all with “this is the best thing I’ve read on the Internet this year” to which I replied “except it isn’t on the Internet. it should be”.Not to be that guy, but I believe you’re confusing the “Internet” and the “World Wide Web”.
Not really since a) Nobody uses “I did such and such on the WWW” and b) The www is part of the internet and c) Everyone knows what he means (because of “a”).This is one of the reasons that I hate schools and the testing system. To much emphasis on exact answers in an analog world where that doesn’t always matter and probably matters so much less than it did in the past.
Actually it’s important to state web or internet. As you know the web needs the internet to run. The internet doesn’t need the web. So it’s important for people to realize that they can use the internet and ignore the web if they want. They can create their own protocols and do as they wish via the internet.
You can be that guy. The fact that I received it via electronic mail over the internets onto my computer is why I said “on the internet” 😉
ha
to me “read on the internet” means “read on a public site/blog”
This conversation gives me some small desire to go on a shopping spree myself because its easier for me to understand something with my hands than my eyes.I am the same way. Separately a (cheerful) suggestion to Brad would be to include more analogies in your writing. Would make it easier for some of us to understand.or will it happen first in any market where a first generation peer economy company goes too far by economically and politically disenfranchising the value creators at the edge of their network?So (as only one case) the above needs a “for example what if Etsy did ….”
What will motivate entrepreneurs to build these decentralized networks? Won’t it make it really hard to capture value? That’s what’s missing for me in seeing the potential of the block chain et al.
It seems there is no darkweb fulfillment service. Still relying on USPS and FedEx to ship the contraband. Someone will eventually come up with a decentralized darkweb Uber, though.
Deep Webbed DRONE!
What amazes me that how media in general is covering the story of Silk Road Trial which started this week which will have far reaching consequence on the way Internet works. Is the DSR is convicted in this trial, then next Mark Zuckerberg could be convicted for the crimes committed using Facebook. I think far more crimes have been committed using Telephone and Facebook. I think the implication of this trial is will for more important than Net Neutrality. What surprised me was even though this the very knowledgeable and Internet Savvy community, I dont see any comments on the implications of Silk Road Trial.
Yeah, Sarah Jeong’s is doing some good reporting on that (http://www.forbes.com/sites… ). It’s simultaneously weird / laughable / scary how it’s going.Can you lay out your thinking around this —–> “…next Mark Zuckerberg could be convicted for the crimes committed using Facebook.” Curious to know how you see the connection.
Ross Ulbricht was just an entrepreneur just like Mark. If Ulbricht is convicted, using the same principle (it would provide precedence) any internet Entrepreneur can be convicted for the action by their customers. Since Raj Rajarathnam was convicted of insider trading using wiretapping, now its legal to use wire tapping for white collar crimes (previously wiretapping could only be used in gang crimes). Less media coverage and less awareness could mean judge & jury would be more aggressive towards Ross.
First of all buying boots for your girlfriend is brave! The fit and the feel mean so much to a women. My wife would never let me buy her boots or shoes at all! I’m curious how your girlfriend liked them? What if you needed to exchange them for a different size!
“Are there legal markets where the value of a decentralized market is greater so this transition will happen sooner, or will it happen first in any market where a first generation peer economy company goes too far by economically and politically disenfranchising the value creators at the edge of their network?”Decentralized Fiat-Bitcoin are not only greater but essential! https://bitsquare.io/blog/w…