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A qualitative analysis of the Russian cryptomarket Hydra
Hydra is regarded as the largest Russian-language online marketplace for illicit goods with no less than four million Euro of annual revenue. In this paper, we pro- vide a qualitative analysis of the unique organization of the Hydra cryptomarket. The theoretical framework for this study draws on information asymmetry and assumptions of signaling theory. Data collected include longitudinal parsing and non-participant observation from 2019 to 2021. Hydra is a monopolistic market- place with no alternatives of the same scale in Russia, and exhibits considerable differences with regard to international cryptomarkets. In the analysis, we present the three themes: physical stashes, formalized rules, and the architecture of the Hydra market. Contrary to the reliance on the postal system for delivering drugs in- ternationally, Hydra introduces a novel delivery method called stashes, which puts buyers at higher risks to get caught by law enforcement agents and makes them more “active” in obtaining drugs. Buyers not only have to choose and pay for drugs; they also need to go out in the streets and personally look for their purchased stuff. While elaborated formalized rules enabled by strong sanctioning mechanisms (e.g., fines) cover every possible aspect of interaction connected to the marketplace us- age, a multilayered platform architecture allows for the emergence of complex hi- erarchies and segregation between users. Hydra also provides automatic services related to drug selling (instant purchases, non-mediated disputes, etc.). In addition, personal communications between actors are confined by the architecture, so that visible public communications give buyers the only substantial grounds for decision- making. These findings raise questions considering the role of credibility signals, asymmetry of information, and formalized rules in resolving issues of product quality, stable exchange processes, and communication processes.