Reputation in AlphaBay: the effect of forum discussions on the business success of cryptomarket sellers.

Abstract

Since the discovery of cryptomarkets, scholars have marvelled at the success of these online marketplaces for illicit items (Norbutas, Ruiter & Corten, 2020a; Przepiorka, Norbutas, & Corten, 2017). Reputation is often quoted as the primary reason that trust and mutual cooperation can emerge, given the sublegal context (Ter Huurne, Ronteltap, Guo, Corten & Buskens, 2018). While the reputation system present within the cryptomarket itself has been trialled-and-tested as a facilitator of trust, discussion forums are scarcely examined, despite growing evidence that these threads fulfil a similar function (Bancroft & Reid, 2017). This paper uses a subset of data accumulated by Macanovic and Przepiorka (2021) to explore the effects of discussion forums on the market outcomes of vendors within the AlphaBay cryptomarket. This subset contains a sample of 1,655 drug items from 555 sellers. Combining several multivariate models, it is consistently found that (1) an integral component of almost every cryptomarket’s reputation system, namely customer feedback, does not have a substantial effect on the business success of vendors active within the AlphaBay cryptomarket, whereas (2) discussion forums and (3) other indicators of seller reputation do. Limitations and recommendations for future research are discussed.