The use of Bitcoin in conducting transactions on the darknet markets was up by 65% in the first quarter of the year.
Growing BTC Use on Darknet Markets
The analytics team at Crystal Blockchain, a blockchain analytics firm developed by the Bitfury Group, published a report that looks into the use of Bitcoin on the darknet. According to the report, Bitcoin transactions on the darknet markets are currently up by 65% during the first quarter of 2020. The research also shows that the amount of BTC sent from darknet entities to mixers surged massively as darknet users have stopped using cryptocurrency exchanges with verification requirements.
The study looked into the darknet interactions with cryptocurrency exchanges and other entities, including payment processors, illegal services, miners, gambling services, scams, marketplaces, online wallets, ransom extortioners, stolen coins, and others.
The researchers noted that the amount of money transferred by darknet entities is on the rise, and they continue to use BTC as a medium of exchange. They added that “The value of the amount of Bitcoin transferred (measured in USD) grew by 65% … The mass adoption of Bitcoin, as well as its ease of use and popularity, is a contributing factor.”
The report highlighted that if we look at the amount in US dollars, the money sent and received by darknet entities in the first quarter of the year was valued at $411 million, which is higher than the $384 million recorded in the same quarter of 2019. The surge in the use of Bitcoin is partly because of the increased capitalization of the leading cryptocurrency and also the mass adoption of Bitcoin. As it becomes increasingly easier to use and store cryptocurrencies, the popularity of Bitcoin as a payment method on the darknet steadily rises.
A Shift in Pattern
Although the overall value went up, the number of BTCs transacted through the darknet markets decreased. In the first quarter of 2019, darknet entities sent around 64,000 BTC and received almost the same amount. However, the figure dropped to 50,000 BTC for sent funds and received 47,000 BTC in the first quarter of 2020. The research team speculated that the decrease in the use of Bitcoin could be due to the increasing popularity of altcoins within the darknet markets.
The analytics data provided by 1000x Group shows that most of the leading darknet markets still allow the use of Bitcoin only. Some of these markets include Silk Road 3.1, Uniccshop, UAS Service RDP, Wannabuy RDP, Hydra, Sipulimarket, Slilpp, and Tor Market. Meanwhile, Monopoly Market and White House Market accept Monero transactions only.
The research team at Crystal Blockchain found out that the amount of BTC sent to exchanges that require KYC verifications dropped in the first quarter of the year. This clearly suggests a decline in the use of cryptocurrency exchanges for criminal and darknet activities, with the darknet entities now turning to anonymous services like mixers.
In the first quarter of 2020, there was a rapid surge in the amount of BTC sent from darknet entities to mixers, the report added. In Q1 2019, darknet users sent 790 BTCs to mixers, but the figure surged to 7,946 BTC in Q1 2020, thus, indicating a rapid adoption of mixer services in the darknet markets. Also, the number of BTCs sent to darknet entities from mixers nearly tripled over the past year. The first quarter of 2019 saw 106 BTCs sent from cryptocurrency mixer services to darknet markets, but the amount reached 288 BTC in Q1 2020.
Furthermore, the number of BTCs sent between darknet markets also grew massively in the first quarter. This led the researchers to assume that the darknet users are now trying to hide their BTC flow inside the darknet to make it harder to detect their activities.