The Bitcoin drug business is getting more competitive

June 28, 2013

Bitcoin burst into mainstream attention after Gawker wrote about the online drug marketplace Silk Road in 2011. Silk Road uses Bitcoin, with its decentralized, anonymity-friendly architecture, to shield its users and operators from law enforcement scrutiny. That's important because Silk Road sellers sell all manner of illicit goods, from marijuana to cocaine to prescription painkillers.

(Nick Adams/Reuters)
(Nick Adams/Reuters)

Forbes reports that Silk Road has been so successful that new firms are entering the Bitcoin drug market. And one of them has a fun promotional video, telling the story of "Charlie," who moved to a new city and wasn't able to find any weed. Then, he learned about the online drug marketplace Atlantis, and "the next day Charlie is high as a damn kite."

Atlantis says it has lower fees and is more user-friendly than Silk Road. And the site has embarked on an ambitious publicity campaign. The site's anonymous CEO participated in a reddit "Ask Me Anything," boasting that Silk Road "has more users, but our service is better (to put it bluntly)."

Another site, called Black Market Reloaded, keeps a lower profile. "I don’t see myself as a big leader or a personality to be praised," its anonymous administrator wrote on the site's forums, according to Forbes. "I see my role here as the guy in the machine room, simply making the ship float and move forward"

While Bitcoin has grown more popular for illicit uses like drugs and gambling, use of Bitcoin for legal activities has also exploded.

"While it's true that illicit transactions probably did help bootstrap the Bitcoin economy early on, we are way past the point where such transactions account for any sizable portion of the economy," argued Jerry Brito, a researcher at the libertarian Mercatus Center, in a blog post last week.

For example, BitPay, a vendor that helps legitimate vendors accept Bitcoin payments, has been growing rapidly. The firm announced in April that it had processed $5.2 million in transactions for the month of March. In comparison, a 2012 study estimated that Silk Road, the leading drug marketplace, accounted for about $2 million per month in transactions in the first half of 2012.

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Ezra Klein · June 28, 2013