According to a study conducted by data firm Chainalysis, during 2018, bitcoin was used as a mode of payment on the darknet market sites in double the amount that it was used a year earlier. The darknet is a place on the internet where anything – from illegal drugs to fake Ids, can be purchased by users. This trend was found in the study despite the crashing of the price of the cryptocurrency.,
The Chainalysis study claimed that during 2018, there was an increase in the volume of transactions using bitcoin on darknet markets throughout the year with an average usage of about $2 million every day. This number was almost double the activity that was measured by the research firm at the beginning of the year.
However, Chainalysis found that one the overall, there was a fall from $700 million in 2017 to $600 million in the amount of bitcoin flowing into darknet markets in 2018. According to the research, Kim Grauer, senior economist at Chainalysis, said in an interview, that this drop was primarily because of the closing down of major markets AlphaBay and Hansa in mid-2017 which resulted in creating hindrances to the flow of bitcoin till about the beginning of last year when transaction volumes started to steadily grow again.
“The reason for that drop is more law enforcement activity,” Grauer said. “It would be misleading to think that this year it (the volume) will go down.”
Bitcoin is the largest cryptocurrency in the world and is preferred to be a mode of payment on the darknet markets as users making payment in bitcoins are not required to furnish their identities and can conduct the transactions anonymously.
Bitcoin had gained quite a bit of popularity in 2017 among investors and speculators who are used to trading in with it online against other virtual currencies as well as hard currencies such as the U.S. dollar. In December of 2017, the price of bitcoin against the dollar reached its historic high at $20000 for a bitcoin but its value now is well below 80 per cent of that high reached back then.
The inherent volatility in the price of bitcoin has been a cause for attracting investors and speculators but at the same time, the cryptocurrency has not been accepted as a widespread form of payment for trading in the main stream because of this very volatility. Earlier data from Chainalysis showed that the value of bitcoins handled by major payment processors shriveled nearly 80 percent in the year to September.
Grauer however said that the darknet users have not been dissuaded by the wild price swings.
“For someone who wants to buy something on a dark marketplace, the fact that bitcoin price is fluctuating doesn’t really matter,” Grauer said.
However, this year, the flow of bitcoin into these markets can be disrupted because of a number of factors. Grauer said that such factors include the further closures of more dark market by various governments and law enforcement agencies and the movement of activity from these dark markets to encrypted messaging apps to avoid detection.
(Adapted from News.Bitcoin.com)