Despite the bankruptcies, Bitcoin use on the darknet persists

Published on: February 28, 2019 / Updated on: February 28, 2019 – Author: Konrad Wolfenstein

The darknet, the shadowy side of the internet where goods are illegally bought and sold using cryptocurrency, has proven remarkably resilient in recent years. Law enforcement agencies are struggling to stop the flow of illicit funds to these marketplaces.

The amount of Bitcoin flowing into darknet markets has steadily increased over the past six years, with a slight dip between 2017 and 2018. The currency's presence on the darknet also saw a slight decrease in 2018, coinciding with the closure of AlphaBay and Hansa Market in mid-2017. Despite this setback, the total amount of money flowing into other parts of the darknet remained relatively constant.

Chainalysis, which conducted this study, estimates that the closure of AlphaBay caused an increase in Bitcoin traffic to Hydra, a Russian-language marketplace. This realignment of traffic is the reason why, despite the closure of illegal marketplaces, Bitcoin movements on the darknet remained relatively constant from 2017 to 2018 compared to the previous five years of growth. Between 2017 and 2018, Bitcoin's presence on the darknet grew by 14,040 percent, while the currency's presence on the marketplace after the closures only decreased by 14 percent. This poses a problem for regulators attempting to track money flows and shut down darknet marketplaces.

 

[fvplayer src="https://vimeo.com/320448358" splash="https://i.vimeocdn.com/video/762877432_1920x1082.jpg?r=pad" caption="The use of Bitcoin in the darknet persists despite the bankruptcies"]

The darknet, the shadowy parts of the internet where goods are bought and sold illegally with cryptocurrency, has proven to be remarkably resilient over the past few years. Law enforcement agencies have struggled to shut down illegal money flows to these market places.

The amount of bitcoin flowing to darknet markets has experienced a steady rise over the past six years, with a minor setback between 2017 and 2018. The currency's presence on the darknet saw a slight dip in 2018 when AlphaBay and Hansa Market closed in the middle of 2017. Despite that setback, the amount of money flowing to other parts of the darknet remained relatively consistent.

Chainalysis, which conducted this study, estimates that AlphaBay's closing caused an uptick in bitcoin traffic to Hydra, a Russian language market. This redirection of traffic is why despite closing illegal market places, bitcoin movements to the darknet remained relatively flat from 2017 to 2018 compared to the previous five years of growth. Between 2017 and 2018, bitcoin's presence on the darknet grew by 14,040 percent, while the currency's presence on the market shrunk by just 14 percent after the closures. This presents a problem for regulators who are trying to track money movements and close down darknet market places.

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