Silk Road
http://mashable.com/2013/10/02/silk-road-drug-dealer-interview/
On Tuesday, the FBI shut down Silk Road, an online marketplace that allowed buyers and sellersvto conduct all their transactions anonymously. The site generated sales of about $1.2 billion, andvwas dubbed the “Amazon.com of vice” due to contraband drugs accounting for 70% of salesv(including heroin, LSD and cannabis). Silk Road was kept on the computer network called Tor, which could be downloaded as a browser and was heavily encrypted to make any outside data identification impossible. Typical credit card information was not used on Silk Road, but instead, all buyers and sellers used “bitcoins,” an electronic “cryptocurrency” that provides anonymity to its users; there is no central authority that facilitates the transfer of this payment. This sophisticated black market demonstrates many of the principles of social networks we have learned in class.
Traditional drug dealing is risky business: people must go to dangerous neighborhoods or associate with sketchy people to buy or sell drugs, which runs the risks of violence from competition or punishment by law enforcement. Nevertheless, this market exists, but it is much smaller than an online network providing the same substances. For instance, Cornell probably has a few drug dealers with whom some students are familiar, but these few nodes are unlikely to form strong ties with many people. The greater number of edges a given student is away from one of these drug dealers, the less likely he or she is to act on the connection (i.e., buy or sell drugs), partly due to the greater risk involved.
But the anonymity provided by Silk Road eliminated this risk. Individuals felt much more comfortable buying these illegal drugs using “fake” money on anonymous networks, from the comfort of their own homes. One might think that due to the anonymity on Silk Road there would be virtually no strong ties on the site, but the heavy traffic on the network proves otherwise. The extensive rating system and consistent multiple purchases formed trusted ties between buyers and sellers, who themselves have ties with others. According to the Strong Triadic Closure property, a Silk Road user who has bought cocaine from one seller consistently and LSD from another so often that the user is strongly connected to each, those two sellers are likely to establish at least a weak tie, sharing their own strong connections with one another and becoming more likely to engage in mutual business. This example provides the basis for the fast rise in triadic closures, which in turn spurred the meteoric proliferation of illicit online drug sales, compared to traditional in-person drug deals.