Bitcoin’s use in darknet marketplaces is reportedly growing, as a recent report shows that their users are on pace to spend $1 billion worth of the flagship cryptocurrency on them this year, despite crackdowns on top marketplaces over the last few years.
According to research conducted by blockchain analytics firm Chainalysis, reported on by Bloomberg, darknet markets are going to seemingly break a new record this year, as the firm noted about $515 million worth of bitcoin were spent so far this year on darknet marketplaces.
Bitcoin’s use on these marketplaces reportedly peaked in 2017, a year in which $872 million worth of BTC were spent on these. Last year, the figure dropped, along with bitcoin’s price which went from a near $20,000 all-time high to a $3,200 low before recovering. The total number of transactions conducted last year, however, doubled.
Darknet Market Takedowns
Notably, authorities have been cracking down on these marketplaces. In 2017, an international operation saw authorities take down two popular marketplaces: AlphaBay and Hansa, which were leading at the time, through Operation Bayonet.
Most darknet market users then went to the Dream Market, which became the number one marketplace that hadn’t been taken down. In June of 2018, however, dark web drug dealer Gal Vallerius was caught after failing to set up his tip jar on Dream Market. He was found to be the market’s administrator.
In March of this year, a banner claiming Dream Market was going to shut down and was going to be “transferring its services to a partner company.” The market has been offline since April 30, and some believe law enforcement was behind it. In May, authorities took down the Wall Street market, and Chemical Revolution went down last month.
Recently, the Financial Action Task Force, an inter-governmental organization fighting money laundering and terrorist financing, started mandating know-your-customer checks for cryptocurrency exchanges and custodians, aiding the battle against these markets.
Despite all of this they seem to be thriving. According to Chainalysis, the largest darknet marketplace right now is Hydra. While drugs are the most prominent category of goods being sold on these marketplaces, Chainalysis reportedly found child porn and stolen credit card information is in demand.
While BTC used on darknet markets is on pace to hit a new record, the proportion of transactions related to this type of activity has dropped to less than 1% of all bitcoin activity, from 7% in 2012. Other than bitcoin, monero (XMR) is also widely used on these markets.