The total number of bitcoin (BTC) transactions on the darknet reportedly doubled in 2018 (versus 2017), according to a recent report from blockchain analysis firm Chainalysis.
$600 Million In Bitcoin Transactions Conducted On Dark Web
Despite the prolonged crypto bear market, which has seen the BTC price drop from nearly $20,000 in December of 2017 to less than $4,000, there have been an increasing number of bitcoin transactions on darknet markets. These underground websites are used to secretly purchase controlled substances, fake IDs, among other things.
Chainalysis’ research revealed the total value of all bitcoin transactions on the darknet was around $600 million in 2018. In 2017, the combined value of all BTC transactions tracked on the darkweb were of about $700 million. According to the firm’s findings, the significant decrease in the total value of all underground bitcoin transactions was due to the closure of large markets like Hansa and AlphaBay, which were taken down in mid-2017.
BTC Transactions Handled By Payment Processors Decreased 80%
Kim Grauer, a senior economist at Chainalysis, explained in an interview with Reuters:
The reason for that drop is more law enforcement activity. It would be misleading to think that this year it (the volume) will go down.
Significantly, data compiled earlier by Chainalysis showed that the total value of bitcoin transactions handled by crypto payment processors decreased by nearly 80% between September 2017 and September 2018. This can be largely attributed to the sharp decline incryptocurrency prices.
However, buyers and sellers on the darknet appear to continue using pseudonymous cryptocurrencies for transactions, even as their prices decline. Commenting on why she thinks bitcoin payments still occur frequently on the darkweb, Grauer remarked:
For someone who wants to buy something on a dark marketplace, the fact that bitcoin price is fluctuating doesn’t really matter.
However, Grauer mentioned that there could potentially be several reasons why bitcoin-related transactions on underground sites could decrease this year. She believes law enforcement may shut down more markets, which may reduce the number of crypto-related purchases via the darkweb. In order to avoid detection, some users may start using encrypted messaging apps (such as Telegram) for conducting illicit crypto transactions, Grauer stated.
As CryptoGlobe reported in mid-October 2018, Malta-based digital currency exchange, Binance revealed it was using know-your-customer (KYC) / anti-money laundering (AML) software from Chainalysis to help prevent illicit transactions. Chainalysis’ proprietary blockchain analysis software helps companies conduct investigations related to financial transactions. The software is also used for compliance purposes by the security firm’s institutional clients.