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Understanding Bitcoin Acceptance in Darknet Markets
Cryptography plays a key role in securing and protecting this sensitive information. Here, we set out to find the main actors in the DWM ecosystem and assess their systemic impact on a dataset of 40 million Bitcoin transactions involving the 31 major markets in the period 2011–2021. Importantly, the algorithm returns reasonable estimates for the number of sellers when compared against a benchmark of nine DWMs where estimates exist.
The realm of darknet markets is a unique and often misunderstood segment of the internet. Transactions on these platforms typically utilize cryptocurrencies, with Bitcoins being one of the most common forms of payment. To grasp the nuances of transactions within these markets, it is essential to explore what bitcoins are accepted by darknet markets.
As an example, on September 19, 2012, ZHONG deposited 500 Bitcoin into a Silk Road wallet. Less than five seconds after making the initial deposit, ZHONG executed five withdrawals of 500 Bitcoin in rapid succession — i.e., within the same second — resulting in a net gain of 2,000 Bitcoin. As another example, a different Fraud Account made a single deposit and over 50 Bitcoin withdrawals before the account ceased its activity. ZHONG moved this Bitcoin out of Silk Road and, in a matter of days, consolidated them into two high-value amounts.
There are certain sites on the darknet (and on clearnet) which attempt to manually track and publish sites on the darknet, but common browsers do not link directly to darknet. Monero is the undisputed king of privacy coins, offering the very best layer of protection over transactional details, which is why the White House Market has selected it as its currency of choice. Although no one knows your identity when using TOR, some people like to add an additional layer of protection and connect to TOR via a Virtual Private Network (VPN). The reason for that is that even though you’re anonymous, you can still be identified as using TOR for “something”. When you access the pedestrian Internet, you are directly communicating with websites. But when you’re accessing a website through TOR it’s like asking another user to ask another user to ask another user to fetch the webpage information for you.
Why Do Darknet Markets Use Bitcoin?
- Some economists and investors, such as Warren Buffett, considered cryptocurrencies to be a speculative bubble.
- With the operation started by German and US law enforcement in 2021, Hydra’s Germany-based servers were taken down in April 2022.
- Bitcoin has been the de facto currency of the Dark Web – the ‘hidden’ Internet accessible only by Tor – since the pioneering marketplace Silk Road, the ‘eBay of drugs’, arrived in 2011.
- Global regulators have made it clear that crypto exchanges fall within the scope of anti-money laundering regulations.
- We observe that post-2015, when SDGs were adopted, publications and citations nearly doubled [51].
The dark web is an anonymized overlay of the internet accessible through networks such as Tor (“The Onion Router”), I2P and Riffle that utilize layered encryption to obscure the identities and locations of users. “I don’t know that I have an immediate aversion to privacy coins. I do, however, feel like there needs to be some regulation around it,” he said. The Monero site lists two directories which in total contain over 1,000 vendors where XMR is accepted. Some of the primary vendor types include those offering VPNs, cloud storage and web hosting, but other vendor types include gambling and cryptocurrency-themed merchandise. Sellers who deliver the goods on time receive higher ratings and a better reputation over time.
Bitcoin’s popularity in darknet markets can be attributed to several factors:
As mentioned earlier, all these strides in making a more anonymous internet were made possible by the advent of private browsers, particularly Tor. The private browsing network was launched in 2002, and it effectively unlocked a means for the average internet user to cloak their identities and activities online. As a result of today’s action, all property and interests in property of the individuals and entities described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.
“Undertaking this sort of enforcement action is made easier by the traceability of blockchains,” he said. A new report from blockchain analysis firm Chainalysis found that crypto related crimes decreased in 2023. While notable, findings also show that ransomware and darknet market activity involving cryptocurrency increased considerably. In light of such activities, U.S. regulators led by Secretary Antony Blinken are increasing scrutiny on virtual currency mixers exploited for money laundering. Tornado Cash, a leading crypto mixer sanctioned for aiding illicit entities like North Korea’s Lazarus Group, processed over $77 million in just the past month.
However, most of the deep web markets possess in-built wallets for their users’ accounts. The Crystal Blockchain analytics platform of Bitfury had scraped off data in the first quarter of 2019 (Q1). The report stated that the darknet vendors had scoured a total of $240 million in Bitcoin (BTC) as compared to the $87 million in 2017’s first quarter.
- Privacy: Bitcoin offers a level of anonymity that traditional payment methods do not.
- Decentralization: As a decentralized currency, Bitcoin operates independently of central banks or government control.
- Global Reach: Bitcoin can be transferred across borders without the complications of currency exchange.
Types of Bitcoins Accepted
Different darknet markets may have varying policies regarding accepted bitcoins. Here are the principal forms:
- Standard Bitcoin: The most widely accepted form, typically used for most transactions.
- Bitcoin Cash: While not as common, some markets accept this variant for its faster transaction speeds.
- Litecoin: Occasionally accepted in specific marketplaces, particularly those focusing on alternative cryptocurrencies.
Common Darknet Markets and Their Payment Policies
Hydra
Below are examples of notable darknet markets and the types of bitcoins they typically accept:
- Silk Road 3.0: Primarily accepts standard bitcoins but has been known to allow Bitcoin Cash.
- Dream Market: Focuses on Bitcoin but has given occasional support for Litecoin as an alternative.
- Wall Street Market: Generally accepts only Bitcoin for transactions.
Transaction Process in Darknet Markets
Understanding the transaction process is crucial for anyone looking to engage in these marketplaces:
- Create a Wallet: Users must first set up a cryptocurrency wallet to store their bitcoins securely.
- Choose a Marketplace: Select a darknet market that fits the desired goods or services.
- Conduct Transactions: Follow the specific market’s process, which usually involves making a Bitcoin payment directly from the wallet.
FAQs: Bitcoins and Darknet Markets
Q1: Are all bitcoins equal in darknet markets?
A: Yes, generally speaking, all bitcoins are treated equally, but some markets might promote specific types based on transaction speed or fees.
Q2: Can I use other cryptocurrencies in darknet markets?
A: While Bitcoin is the most common currency, some darknet markets do accept alternatives like Litecoin or Bitcoin Cash.
Q3: How secure is it to pay with bitcoins on darknet markets?
A: While using bitcoins provides anonymity, it’s important to engage in these transactions with caution to avoid scams and ensure personal security.
Conclusion
In summary, when discussing what bitcoins are accepted by darknet markets, it becomes evident that Bitcoin remains the primary currency due to its privacy, decentralization, and global nature. However, variations like Bitcoin Cash and Litecoin are occasionally accepted depending on the marketplace. Understanding these aspects is vital for anyone interested in exploring darknet markets safely and effectively.
