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Tor, the Deep Web and Bitcoin: New technology used to sell fakes

Posted by Iain Heseltine on Jan 15, 2015 11:16:20 AM
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Tor, the Deep Web and Bitcoin: New technology used to sell fakes

It is no secret that the Internet has opened up new avenues for the buying and selling of counterfeit goods. Also well known is that government agencies regularly find and prosecute counterfeit vendors on the web. As a result, much of this illicit activity has been driven 'underground' to technologies that are more difficult to track. 

In this post, we will be exploring some of these new technologies that are being used to sell fake and illegal goods. It bears stressing: Just like a lock or a gun, the technology is not inherently bad without misuse on the part of the user. Today we will look at the Tor browser, the Deep Web and cryptocurrencies like Bitcoin.

"With approximately 2.5 million anonymous users in any given day, all of the traffic from whom is routed through about 6,000 privately run "relays," users are hidden behind layers of security."

The Tor Project began as a concept called "onion routing." In the mid-1990s, mathematician Paul Syverson and computer scientists Michael Reed and David Goldschlag came up with the concept in an attempt to protect government communications. All three were employees of the U.S. Naval Research Laboratory. 

The name "onion network," which evolved into the "The Onion Router" or "Tor," comes from the way the system works, executive director of the project Andrew Lewman told the BBC. With approximately 2.5 million anonymous users in any given day, all of the traffic from whom is routed through about 6,000 privately run "relays," users are hidden behind layers of security.

There are a number of upsides to Tor in modern society. Those with privacy concerns may be able to feel more secure in their day to day browsing with the knowledge that hackers, advertisers and government bodies have less access to their personal information - though Lewman stressed that Tor is only one tool and insufficient for total privacy by itself. Journalists use the system to communicate with whistle-blowers whose lives might otherwise be at risk. NGO workers in dangerous areas use it to avoid broadcasting their personal information and affiliation to groups that might be unfriendly to them.

There is a dark side to the technology as well.

Drug dealers and other criminals are increasingly using browsers like Tor to sell their wares anonymously. Producers and consumers of child pornography and other illegal pornography use the technology to avoid detection. Frequently, counterfeiters sell fake goods over the Internet, and when they do, they use Tor to reduce the risk of being caught. All of these latter uses typically necessitate another layer of new technology: the Deep Web.

The Deep Web
Often referred to as "the Dark Net," the Deep Web refers to all of the websites that are not indexable by search engines like Google. Technically, this is an extremely wide range of sites. Your personal bank account page is, for good reason, a part of the Deep Net. So is any digital content behind a paywall or on a corporate network.

"The Deep Web is sometimes considered the 'Wild West' of the Internet."

By one estimate in 2001 by Michael Bergman writing for The Journal of Electronic Publishing, the Deep Web is about 4,000 to 5,000 times larger than the surface web. It can be reasonably assumed that the vast majority of this content is highly specific to certain users, outdated or simply incoherent.

However, when people refer to the Deep Web, they are generally referring to hidden websites. According to one blogger, hidden websites began appearing in 2004. Because of the inherent difficulties in charting the history of secret, disconnected websites, this estimate should only be taken as the time that such websites came to be popular among the niche users who frequent them.

The Deep Web is sometimes considered the "Wild West" of the Internet. Illegal goods and services are often sold on it, citizens of countries with Internet censorship laws use it to get around national firewalls, abuse survivors use it to talk about sensitive subjects anonymously - anything that necessitates anonymity, good or bad, may be taking place on the Deep Web.

A recent Vocativ piece looked at Deep Web black markets Evolution and Agora and found counterfeit goods of almost every type and price. Any fraud deprives businesses of legitimate revenues, but the counterfeits sold ranged from relatively harmless to the consumer - like fake art and clothing - to the potentially dangerous - like fake perfumes or smart phones. The latter two could be extremely risky for consumers, considering the chemicals that might be in a black market perfume or the risk of battery explosion in the counterfeit phones.

How do consumers pay for these goods? You guessed it - Bitcoin.

Depicted by an artist here, Bitcoin is an online, decentralized currency.Depicted by an artist here, Bitcoin is an online, decentralized currency.

After the massive asset bubble experienced by Bitcoin about one year ago, the cryptocurrency came into the public eye in a big way. After an all time high of almost $1,200 per Bitcoin, one coin was trading for about $310 as of 5:30 p.m. Dec. 30 on the CoinDesk index.

Like other cryptocurrencies - and there are a lot - Bitcoin is a pseudonymous, peer-to-peer means of exchange. What this means is that no single body controls the currency and that digital "wallets" don't have to be associated with an individual's name and identity. However, each wallet is identified by a string of letters and numbers, and all transactions are published on a publicly available ledger. This means that the currency isn't actually anonymous, merely pseudonymous.

"Police, regulators and security organizations like OpSec are working around the clock to find new ways to foil criminals who would use technologies like Tor, the Deep Web and Bitcoin for illicit purposes."

Like the above two technologies, Bitcoin isn't inherently bad. All of the transactions that take place between users are processed by other users who are "mining" Bitcoin. This means that they are dedicating a computer processor - or often hundreds - to making these calculations in exchange for new Bitcoins being created. As a result, there are no transaction fees or interchange fees.

The flip side is that Bitcoin is quickly becoming the go-to currency for use in illicit online transactions. Users who want to buy illegal goods, like counterfeits, may set up a Bitcoin wallet that is not associated with their name and use it to purchase them. Unless police have a way of positively associating that wallet with the person using it, which is often possible but costly, catching him or her becomes a difficult prospect.

Police, regulators and security organizations like OpSec are working around the clock to find new ways to foil criminals who would use technologies like Tor, the Deep Web and Bitcoin for illicit purposes. At the same time, wrongdoers will always be working to find new ways of skirting the law online. Working with us to include product elements that ensure legitimate copies of your product are positively identifiable is one of the best ways of reducing counterfeit sales and avoiding lost revenues.

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Iain Heseltine


Iain Heseltine is the VP of Online Brand Protection at OpSec. He has over 12 years' experience in Online Brand Protection and has held leadership roles in global operations, product development and client services. Iain has helped to implement and provide online brand protection programs for hundreds of clients globally.



Topics: Counterfeiting, Online Brand Protection