Government Efforts Against Dark Web Markets
- In most cases, these service providers are mandated under the law to provide regulators with unlimited access to such data.
- The seizure of Bitcoin and arrest of Ulbricht were meant to send a clear message to all other cybercriminal enterprises.
- 2) DNMs operating in former Soviet countries generally employ fewer on-chain operational security measures.
- In the seven years since its inception, Litecoin has been able to piggyback off an extensive infrastructure of Bitcoin.
- Monero is an altcoin that was founded in 2014 and has been gaining ground because nearly all details of transactions including the digital addresses of senders and receivers, as well as transaction values, are concealed.
- The term “Darknet” usually refers to the part of the internet, which is not indexed by search engines like Google that skim the “surface web”.
Bitcoin’s congested blockchain and high transaction fees have claimed another casualty.
Tony is also the Founder of CoinChartist.io – a technical analysis educational resource designed for crypto traders. Tony is a partner of Elliott Wave International, TradingView, and a member of the CMT Association. Its role as a currency for the dark web has remained, however, until now.
Understanding Bitcoin Acceptance in Darknet Markets
As cryptocurrency has surged in popularity, the darknet has emerged as a unique marketplace for various goods and services. Among the different cryptocurrencies in circulation, Bitcoin stands out as the most widely accepted among these illegal online marketplaces. However, it’s crucial to understand what bitcoins are accepted by darknet markets, as different markets may have varying policies regarding payment methods.
To understand and anticipate any upcoming shift in the next six to 12 months, Recorded Future analyzed 150 of the most prominent message boards, marketplaces, and illicit services. Unexpectedly, Bitcoin Cash was the third most common cryptocurrency with 13 percent of vendors trusting it as a payment method. While darknet markets’ total share of incoming cryptocurrency activity remains extremely low at 0.08%, recent increased volume speaks to the resilience of darknet markets in the face of heightened law enforcement scrutiny. Similar to previous years, the vast majority of darknet market transactions flow through exchanges. Exchanges are by far the most common service customers use to send cryptocurrency to vendors, and for vendors to send funds to cash out. After a small decline in 2018, total darknet market sales grew 70% in 2019 to over $790 million worth of cryptocurrency, making it the first time sales have surpassed $600 million.
Types of Bitcoins Accepted
Experts say ransomware actors are increasingly demanding ransom payments in Monero, and some even charge less if a victim pays in the coin. Meanwhile, authorities around the world are also trying to curb the booming darknet markets. Most recently, Finnish customs took down Sipulimarket, a major Finnish-language darknet marketplace, used by the drug dealers. White House Market became one of the largest and most active darknet markets after Empire Markets, another such top marketplace, which went offline last August.
For FinCEN’s recent alert identifying red flags on potential Russian sanctions evasion attempts, including through the use of cryptocurrency, see here. For a local machine configuration he recommends a computer purchased for cash running Linux, using a local Tor transparent proxy. For operations security he suggests avoiding storing conversation logs, varying writing styles, avoiding mobile phone-based tracking and leaking false personal details to further obfuscate one’s identity. Before it was shut down in 2013, Silk Road was the most popular darknet market.
Wallet-less escrow makes it impossible for markets to exit scam users by removing the need for them to deposit funds to a wallet controlled by the market. Instead, they receive a new disposable wallet for every order they place, and the cryptocurrency they deposit goes straight to the vendor — the market itself never actually controls it. Cryptonia was an active market that incorporated both multi-signature transactions and wallet-less escrow, though it recently closed down voluntarily. The geographic flows involving darknet markets roughly match what we would expect to see. The United States, Russia, Ukraine, and China dominate in terms of value both sent to and received from darknet markets. Venezuela and Vietnam also rank high on both sides, with their activity skewed slightly more toward darknet market buying, which could be related to the drug manufacturing activity prominent in both countries.
Darknet markets often accept different forms of Bitcoin, as well as other cryptocurrencies. Here’s a breakdown of what is typically accepted:
- Standard Bitcoin (BTC): This is the original Bitcoin and the most commonly accepted currency on many darknet platforms.
- Bitcoin Cash (BCH): Some markets accept this fork of Bitcoin as an alternative, due to its lower transaction fees and faster processing times.
- Litecoin (LTC): Although not Bitcoin, Litecoin is often accepted because of its similar technology and faster transaction speeds.
- Monero (XMR): While not a form of Bitcoin, Monero is often favored for its enhanced privacy features and is widely accepted in many darknet markets.
- Dash (DASH): This cryptocurrency is sometimes accepted, known for its privacy-oriented features.
Why Bitcoin is Preferred
Bitcoin’s popularity in darknet markets can be attributed to several factors:
- Decentralization: Bitcoin is not regulated by any central authority, making it an appealing option for users seeking anonymity.
- Anonymity: While Bitcoin transactions are public, they do not directly link to personal identities, which provides a level of anonymity.
- Widespread Acceptance: Being the first and most widely used cryptocurrency, Bitcoin’s acceptance rate is generally higher than other cryptocurrencies.
- Liquidity: Bitcoin is more easily convertible to fiat currencies, making it a practical choice for transactions.
Transaction Process
The process of using Bitcoin on darknet markets typically involves the following steps:
- Purchase Bitcoin: Users create an account on a cryptocurrency exchange to purchase Bitcoin.
- Transfer to Wallet: Buyers transfer their Bitcoin to a private wallet, ensuring security against potential hacks on exchanges.
- Access Darknet Market: Navigate to the desired darknet marketplace using a Tor browser to maintain anonymity.
- Select Goods/Services: Choose items or services to purchase, and ensure they accept Bitcoin.
- Make Payment: Send the requested amount of Bitcoin to the seller’s wallet address provided in the marketplace.
- Confirm Transaction: Wait for the transaction to be confirmed on the Bitcoin network before considering the purchase complete.
Frequently Asked Questions (FAQs)
What is the advantage of using Bitcoin over other cryptocurrencies on darknet markets?
Bitcoin offers better liquidity, wider acceptance, and has a long-standing reputation, making it a safer choice for transactions.
Are all darknet markets the same in terms of accepted currencies?
No, various darknet markets may accept different cryptocurrencies. It’s vital to check the specific marketplace for its payment options.
Is it safe to use Bitcoin on darknet markets?
While Bitcoin transactions can provide a degree of anonymity, there are still risks involved, including potential scams and law enforcement surveillance. Users should proceed with caution.
Can I use a wallet that offers privacy features for Bitcoin transactions?
Yes, using a privacy-focused wallet can enhance the security and anonymity of Bitcoin transactions on darknet markets.
In conclusion, understanding what bitcoins are accepted by darknet markets is crucial for users interested in exploring these platforms. While Bitcoin remains the frontrunner, other cryptocurrencies are also gaining traction. Due diligence and awareness of the risks involved will help users navigate this unique online landscape safely.
