In a recent update, Chainalysis, a leader in blockchain analysis, unveiled their 'Crypto Crime Report,' emphasizing the rise in Bitcoin transactions within darknet markets, also known as DNMs. grew in 2019 to well over half a billion dollars.
However, Chainalysis revealed that only a fraction, less than 1%, of total cryptocurrency transactional activity was geared towards DNMs last year.
While Bitcoin remains a staple on the dark web, the broader spectrum of Bitcoin transactions appears predominantly legitimate, challenging the narrative that Bitcoin primarily serves nefarious purposes.
But Bitcoin Isn’t Anonymous, Right?
Bitcoin’s basic framework is pseudonymous by nature, wherein linking a BTC address to an IP or exchange account can reveal the user's identity.
This isn't a favorable scenario for those acquiring illegal goods like stolen credit cards on darknet markets, yet Bitcoin's widespread use persists in all realms of the crypto universe, including DNMs.
There are privacy enhancement tools like mixers that can obscure Bitcoin's trail, but their adoption is not widespread among either mainstream or dark web users. Alternative methods also exist for discreet Bitcoin acquisition, but many DNM patrons bypass these measures, either due to lack of knowledge or confidence in Bitcoin's pseudonymity alongside privacy technologies like Tor.
Many individuals active on darknets inadvertently generate a trail on the Bitcoin blockchain, which entities like Chainalysis can tap into, aiding law enforcement in decoding particular activities. This raises the question, why opt for Bitcoin?
DNM Stagnation
Created almost 10 years ago now, the Silk Road Silk Road was pioneering in integrating Bitcoin payments into its platform. But astonishingly, the landscape has not evolved much since those days.
A seasoned DNM vendor, known by the moniker Vendor_BBMC, indicated on Reddit that today’s markets are rooted in tech dating back to 2011, containing flaws law enforcement can exploit.
These markets are in a perpetual cycle of emergence and collapse, with some exits being scams, others due to law enforcement actions, and a few shutting down orderly. Yet new sites arise, often as near replicas of older ones.
The ongoing creation and closure of DNMs persist, without substantial transformation otherwise. Reliance on Bitcoin within this hidden net economy remains a constant since its inception, though change appears to be on the horizon.
Monero on the Mind
Bitcoin is evidently the core currency in most DNM transactions.
However, recent years have seen a proliferation of smaller marketplace entrants distinguishing themselves by adopting privacy-oriented coins like Monero for discrete transactions. XMR Highlighting privacy has become both a marketing angle and a security measure for these sites, with Monero (XMR) support attracting users who prioritize privacy.
Some lesser-known DNMs have emerged focusing exclusively on Monero. While no major DNM has shifted entirely to this approach, a few have begun offering XMR alongside Bitcoin, providing users a choice. In their report, Chainalysis forecasted a potential rise in Monero-centered markets.
We might witness more DNMs integrating, or possibly mandating, the use of privacy coins like Monero. Monero’s obfuscated public ledger complicates the tracking of senders, receivers, or transaction amounts. As it stands, Empire is a notable darknet market accepting Monero, but this could shift significantly by 2020.
William M. Peaster is a seasoned writer and editor focusing on the crypto sphere, particularly Ethereum, Dai, and Bitcoin domains. His work is featured in Blockonomi, Binance Academy, Bitsonline, and others. Passionate about smart contracts, DAOs, dApps, and the Lightning Network, he’s also delving into Solidity. Reach out to him on Telegram at @wmpeaster.
