Understanding Bitcoin Acceptance in Darknet Markets
Today, there are more varieties of darknet markets — these new dark web markets are more likely to specialize in specific goods or a unique transaction system. The report mentions that The Inferno Drainer would lure in potential victims with phishing sites that impersonated crypto brands. The cybercriminals also spoofed popular Web3 protocols such as Seaport, WalletConnect, and Coinbase to initiate fraudulent transactions.
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network. Global computing giant Microsoft added bitcoin as a payment option for a variety of digital content across its online platforms in December 2014. According to researcher Flipside Crypto, less than 2% of anonymous accounts control 95% of all available Bitcoin supply.[227] This is considered risky as a great deal of the market is in the hands of a few entities. On 10 June 2021, the Basel Committee on Banking Supervision proposed that banks that held cryptocurrency assets must set aside capital to cover all potential losses. For instance, if a bank were to hold Bitcoin worth $2 billion, it would be required to set aside enough capital to cover the entire $2 billion.
The evolution of digital currencies has led to a significant shift in various transaction platforms, especially in darknet markets. These markets often facilitate anonymous transactions, and Bitcoin has emerged as one of the most popular forms of cryptocurrency used.
To analyse the connectivity of the whole ecosystem, i.e., how markets are connected with each other, we consider sellers and buyers that are simultaneously active on multiple platforms. In particular, multihomers that are sellers in multiple markets are multisellers, and similarly for buyers we have the multibuyers. Specifically, to be classified as a multiseller, a user must be classified as a seller in at least two markets simultaneously. The multihomers play a crucial role in the ecosystem because they act as edges between markets. While there may occasionally be multihomers who are active in several markets simultaneously (see Supplementary Information Section S3), multihomers predominantly operate in at most two markets throughout the period of observation. Hence we do not distinguish multisellers by the number of markets in which they operate.
What Bitcoins Are Accepted by Darknet Markets?
- This suggests that the multiseller activity is sensitive to external shocks but also that it yields higher profits.
- When this split occurred, any Bitcoin address that had a Bitcoin balance (as ZHONG’s addresses did) now had the exact same balance on both the Bitcoin blockchain and on the Bitcoin Cash blockchain.
- The forum database would also be relevant to both the new buyers and to those looking to take down the darknet, should a relevant mishap happen.
“It’s yet another barrier for entry and barrier for purchase, which means that the sales are going to decrease because of that.” “Monero takes privacy seriously. Monero needs to be able to protect users in a court of law and, in extreme cases, from the death penalty,” the site reads. On the other hand, Monero is designed to be anonymous and does not keep any record of previous transactions. But its share of the overall market may diminish in the future, given the mostly positive pronouncements about other currencies by vendors in Recorded Future’s report. This section of the market includes what one would expect with subscriptions and pornographic content available for purchase and download.
Special markets also operate within the dark web called, “darknet markets”, which mainly sell illegal products like drugs and firearms, paid for in the cryptocurrency Bitcoin. To study the performance of sellers, we analyse the quarterly median income, i.e., the quarterly median of the money received by each seller, for each category and multisellers, as shown in Fig. We find that multisellers have the largest median income throughout the period of observation—except in the last quarter of 2017 and 2018, when they have the second largest median income. They are followed by market-U2U sellers, then market-only sellers, and lastly U2U-only sellers. Therefore, although larger in number, U2U-only sellers typically make the smallest income.
In light of such activities, U.S. regulators led by Secretary Antony Blinken are increasing scrutiny on virtual currency mixers exploited for money laundering. Tornado Cash, a leading crypto mixer sanctioned for aiding illicit entities like North Korea’s Lazarus Group, processed over $77 million in just the past month. The U.S. Treasury Department is considering new legislation to enforce stricter monitoring and reporting requirements for such mixers.
The Crystal Blockchain analytics platform of Bitfury had scraped off data in the first quarter of 2019 (Q1). The report stated that the darknet vendors had scoured a total of $240 million in Bitcoin (BTC) as compared to the $87 million in 2017’s first quarter. Despite the regular routes by law enforcement, the dark web markets are still in the process of gobbling up coins. Unfortunately, Jardine believes that 2023 marked the recovery of the illicit darknet ecosystem.
While the primary cryptocurrency used in darknet markets is Bitcoin, it is essential to understand the various types of Bitcoins or its derivatives that might be accepted:
- Standard Bitcoin (BTC): The original and most widely recognized form of Bitcoin.
- Bitcoin Cash (BCH): A fork of Bitcoin that aims to offer faster transactions and lower fees, sometimes accepted by certain markets.
- Wrapped Bitcoin (WBTC): A tokenized version of Bitcoin on the Ethereum blockchain, not widely accepted but available in some niche markets.
- Litecoin (LTC): Although not Bitcoin, some darknet markets may accept Litecoin as a substitute due to its similar features.
Why Is Bitcoin Preferred in Darknet Markets?
Several reasons contribute to the preference for Bitcoin in the darknet:
- Anonymity: Transactions can be conducted without revealing personal information.
- Low Transaction Fees: Bitcoin usually incurs lower transaction fees than traditional financial systems.
- Decentralization: No central authority regulates Bitcoin, providing more freedom to users.
- Global Access: Anyone with internet access can use Bitcoin, making it a universally accepted currency.
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Challenges of Using Bitcoin in Darknet Markets
Despite its advantages, there are challenges associated with using Bitcoin in these markets:
- Price Volatility: Bitcoin’s value can fluctuate significantly, affecting the cost of goods and services.
- Tracking Transactions: Although Bitcoin offers a degree of anonymity, blockchain analysis tools can track transactions.
- Risk of Scams: Many darknet markets are fraudulent, leading to potential loss of funds.
Frequently Asked Questions
1. Can I use currencies other than Bitcoin on darknet markets?
It depends on the market. While most primarily accept Bitcoin, some may accept alternative cryptocurrencies such as Bitcoin Cash or Litecoin.
2. Is using Bitcoin completely anonymous?
No, while Bitcoin provides a level of anonymity, transactions can still be traced through blockchain analysis. Users often employ additional privacy measures.
3. What should I consider before buying Bitcoin for the darknet?
Consider the market’s credibility, transaction fees, and whether the market accepts the specific form of Bitcoin you plan to use.
4. How do I acquire Bitcoin for darknet transactions?
You can purchase Bitcoin through exchanges, peer-to-peer platforms, or Bitcoin ATMs, but be cautious of your privacy and security.
Conclusion
Understanding what Bitcoins are accepted by darknet markets is crucial for anyone considering engaging in these platforms. While Bitcoin remains the dominant currency, alternative options do exist, allowing for a range of transaction possibilities. However, users must remain aware of the inherent risks and challenges associated with these transactions.
