Report: Bitcoin use on darknet markets doubled in 2018

Bitcoin use on darknet markets (DNMs) doubled in 2018, a study has shown, rising to an average of $2 million per day. Bitcoin has long been used to buy goods on the darknet due to its relative anonymity, and looks set to remain a favorite on DNMs, despite the existence of more privacy-focused cryptocurrencies.

A study released by data firm Chainalysis has revealed that bitcoin transactions on the darknet rose throughout 2018 to around $2 million daily, which is nearly double the activity measured at the start of the year, Reuters reports. But over the course of the entire year, bitcoin flowing into darknet markets actually fell to $600 million from $700 million in 2017. This drop was reportedly due to major darknet sites such as Alphabay and Hansa getting shut down. The marketplaces sold everything from guns and illegal drugs to fake IDs.

Despite these major successes for law enforcement, transaction volume has continued to rise on the darknet and is set to further grow, Kim Grauer, a senior economist at Chainalysis claims. She asserts that bitcoin’s volatility has done little to stop people dealing with it, saying: “For someone who wants to buy something on a dark marketplace, the fact that the bitcoin price is fluctuating doesn’t really matter.”

It doesn’t look like darknet marketplaces will be going anywhere anytime soon. As noted in a blog post by Chainalysis, it is incredibly hard to shut down such sites:

“Darknet market activity has been remarkably resilient over the last few years, despite continued efforts by law enforcement to shut down illicit activities. When one darknet market closes, others pop up to take its place.”

The blog post adds that although darknet market activity fell by 60 percent after Alphabay closed in mid-2017, the slowdown was “short-lived.” Much of the trade from Alphabay has since moved to Dream. Chainalysis has actually claimed there is “some evidence that darknet activity even increases after closures.”

As news.Bitcoin.com reported this week, the hidden market ecosystem exploded since the closure of Silk Road – the first DNM – and increasingly sophisticated methods are being developed to outwit law enforcement. Methods like ‘dropgangs’ and ‘dead drops’ are being used to evade the clutches of the three-letter agencies.

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