"Fantastic!"
That's the sarcastic reaction of one deep web dealer after losing $1,000 in a single night due to this week's catastrophic Bitcoin price crash.
The virtual currency has been declining in value for all of 2014, but it began 2015 particularly badly — losing 30% of its value in a matter of days. At the time of writing, the cryptocurrency is sitting relatively stably around the $205-mark. But it's a level not seen since the end of October 2013, and well below its $350 valuation just a month ago.
The price drop has had a damaging impact on the mainstream Bitcoin economy. One mining operation has already been forced to temporarily close its doors because it's no longer profitable. Other businesses are being forced to sell off Bitcoin reserves in order to stay afloat — risking driving prices down further.
But that’s just legitimate businesses. Bitcoin’s growth has been built upon far more nefarious uses — chief among them: buying and selling drugs online. And it turns out drug dealers are freaking out about the price crash just as much as everyone else.
Drug dealers and their customers have spent days lamenting over the decline using forums accessible only through anonymising software Tor. “Out a couple of thousand over this,” writes one dealer. “Bad f---ing time to start up. I really hope it bounces back and stays there. I can’t believe how fast they’re dropping. $330 to 280 to 220 in just a few weeks. Bye bye profit.”
“I am losing losing 10-20% on all orders in escrow now!” says another. “Make that 30%!!! There goes all profit! FML.”
Deep web markets almost exclusively accept Bitcoin as payment, and typically adjust prices automatically to account for Bitcoin’s fluctuations. The customer will always pay the same dollars-worth of Bitcoin, the amount varying depending on the exact price of the virtual currency at the time of purchase. It means that if a vendor makes some big sales, and then the price of Bitcoin plummets before they cash out, they can find their profits slashed, or even losing significant amounts of money.
One user suggests that vendors should weather the storm and buy up in Bitcoin, in anticipation of a rise. “The people this is bad for is buyers who are getting less and less for the coins they bought,” they argue. Another says they’ve “bought a chunk to last me 6 months. Surely it won’t go lower.”
But others disagree. “Some of the really big sellers might be able to do that,” a dealer writes, “but many of us have overhead costs that need to be paid to keep the business running! I believe in Bitcoin’s future and try to hold, but when you have been holding since around $800 and you need to cash out under 200, it hurts!”
One deep web cocaine dealer spoke to Business Insider about the price crash. “It’s pretty damn sad,” they said. “We have worked so hard over the past 3 months, and for profits to get halved? It’s hard to swallow, simple as that, but what can you do. It’s a gamble, whether you hold or sell.”
They'd cashed out and had a massive payday during the bubble in November 2013, so they weren't immediately hurt by the dropping prices. But it’s still “hard work down the toilet.” And other, newer dealers don't have that luxury: they’ll be forced to sell reserves at a loss just to keep going (and potentially forcing the price down even more in the process).
There's been a "slight drop" in sales over the last few days, the dealer said, but it's too early to say what's the cause. As for the future, “it might drop a little or might go up a little… we will just have to ride it out :)”
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