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Unphased By the Bear Market, Bitcoin Use Soars On the Darknet

Reading Time: 2 minutes by on January 25, 2019 Adoption, Bitcoin, Blockchain, Crime, Exchange, News, Platform
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A January 18, 2019, report from Chainalysis has revealed that the amount of bitcoin spent daily on the darknet doubled in 2018 despite the crash in crypto markets.

The Crypto Dealings of the Darknet

Many internet users are familiar with or have at least heard of the darknet. The darknet is a section of the Internet that is difficult to trace and can only be accessed by the use of special browsers that aren’t readily available in the open market.

On the dark web, many illegal activities take place seemingly in the open. There has been speculation of the sale of weapons, drugs, and even reports of human trafficking. Naturally, because there is so much illegal activity going on, the payments that take place on these platforms need to be done discreetly. One method of payment that has caught on in recent times, however, is the use of bitcoin which doubled in 2018.

Chainanalysis Graph

(Source: Chainanalysis)

This information comes via a report form Chainalysis, a blockchain analysis firm, which states that by the end of 2018, the daily bitcoin transaction on the darknet was $2 million, twice what it was at the beginning of the year. Even more interesting is that the volume of bitcoin usage was largely unaffected by the late-2018 crash in price.

The Effects of Law Enforcement

While the daily transaction volume of bitcoin to the darknet increased, there was a noticeable decrease in the total amount of bitcoin that entered these websites that year.

In 2017, the total amount spent in BTC on the darknet was $700 million. However, this figure dropped to $600 million by 2018. Despite this, the analysis clarifies that the reason for the drop is not the bitcoin price but the effects of law enforcement. In 2017, AlphaBay and Hansa, two prominent marketplaces on the darknet, were closed down which affected users’ ability to make purchases overall.

“The reason for that drop is more law enforcement activity,” Kim Grauer, a senior economist at Chainalysis said. “It would be misleading to think that this year it will go down.”

Generally, cryptocurrency is a tool of choice for darknet users who want to make payment because they are largely untraceable. This doesn’t apply only to online crime as cryptocurrency has steadily become a more preferred method of ransom demands by criminals.

As a result, the price of bitcoin has little effect on the level of activity.“For someone who wants to buy something on a dark marketplace, the fact that bitcoin price is fluctuating doesn’t really matter,” Grauer said.

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