A report published on May 19 by Crypto Blockchain revealed that the use of Bitcoin on the darknet had risen by 65% in Q1 2020. Besides that, the report found that the amount of BTC being sent to Bitcoin mixers from the dark web had risen significantly as more crypto exchanges enforce strict KYC rules.
BTC Use on the Dark Web Has Increased Significantly
Crystal Blockchain researchers analyzed the movement of BTC from the darknet into crypto exchanges and other entities in Q1 2020. They then compared the data with activity from the darknet since 2017. Besides crypto exchanges, they analyzed the BTC flowing from the dark web and its interaction with gambling services, miners, marketplaces, payment processors, online wallets, extortionists, stolen coins, and others. The researchers noted that the amount of BTC flowing from dark web entities was growing and the main mode of interaction was still BTC.
They found that the amount transacted had grown from $384 million in Q1 2019 to $411 million in Q1 2020. The researchers said that the growing market cap of BTC could partly explain the increase. Additionally, the increased mass adoption of BTC was behind the growth. They said that as transacting BTC was becoming easier, its use as a payment vehicle on the dark web had grown.
While the value of BTC transactions on the dark web had grown, the researchers found that the number of BTC flowing through the darknet had fallen. The researchers found that around 64,000 BTC was sent and received in the darknet in Q1 2019. In Q1 2020, the figure had dropped with 50,000 BTC being sent and 47,000 BTC was received from the darknet. They speculated that the drop could be explained by the growing popularity of altcoins on the darknet.
Most Major Darknet Market Places Only Accept BTC
The researchers also found that most of the major darknet markets only accept BTC. They include Hydra, Wannabuy RDP, Sipulimarket, Tor Market, Uniccshop, UAS Service RDP, and Silk Road 3.1. Other market places such as White House Market and Monopoly Market only accept Monero. On Cannazon, they found that participants could use BTC and Monero while Empire and Darkbay accept LTC, BTC, and XMR.
The Increased Use of Mixers
Crystal Blockchain researchers discovered that the amount of BTC going to crypto exchanges with KYC requirements had fallen in Q1 2020. It would indicate that there was growing popularity of the use of anonymous services such as crypto mixers. People use Bitcoin mixers to enhance their privacy. Despite what you hear, Bitcoin transactions can actually be tracked by assessing the blockchain. This is why users engage in “mixing services.” Mixing services essentially break the connections between a user's sending and receiving address, making it extremely difficult to track. At the end of the process, a user is provided with “fresh coins” that can’t be tracked to any specific wallet. The process is not much different than traditional money laundering.
They found that the BTC sent to mixers had grown to 7,946 in Q1 2020 compared to just 790 BTC sent to mixers in 2019. The researchers also discovered that the BTC from mixers to the dark web had nearly tripled from 106 BTC in Q1 2019 to 288 BTC in Q1 2020.
Besides that, they found that BTC flowing between darknet entities had grown. They hypothesized that users could be trying to conceal their activities by keeping the BTC inside the markets.
COVID-19 Sales Could be Behind the Increase
In recent weeks, many people have been looking for N95 masks and other PPE. As a result, some people have turned to the dark web to buy N95 masks. It could help to explain the huge jump in the number of BTC transactions on the dark web.
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