The cryptocurrency market is like the Wild West, where anything goes and crime is everywhere if you aren’t careful. While Bitcoin got its start on the dark web, its use across the underbelly of the internet has only increased in 2020.
Could the growth of Bitcoin revenue on the dark web be partly responsible for the recent bullish momentum?
Blockchain Analysis Reveals Growing Dark Web Bitcoin Revenues
Bitfury’s blockchain analysis product, Crystal, provides clear data about the inflow and outflow of BTC and other cryptocurrencies sent to and from exchanges and other wallets.
Thanks to the full transparency distributed ledger technology provides, details about these transactions, senders, and receivers aren’t difficult to come by.
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While Bitcoin does indeed add a layer of pseudo-anonymity through cryptographic addresses, behaviors, and accounts connected to exchanges can piece together a trace back to the original owner.
Data from Bitfury claims that although the overall number of Bitcoins being transacted across Q1 2020 is down year-over-year, the actual value being sent to dark web vendors is up 65%.
According to the data, dark web vendors were sent a cumulative 47,000 BTC in the first quarter of the year. The reason for the decline, Bitfury attributes to crypto users becoming savvier and switching to other altcoins such as Monero to further obfuscate their transaction details.
While altcoins are indeed gaining popularity with dark web users, Bitcoin still reigns supreme in terms of overall usage.
What OPSEC? Crypto Users Are Sending Fund To The Dark Web Directly From Exchanges
Users are said to be sending BTC directly from exchanges that required KYC at registration, defeating the point of using the dark web at all.
These types of transactions are highly traceable, as any exchange accounts with KYC are typically tied to a bank account or involved submitting identification at the time of signup.
More than half of the Bitcoin sent to the dark web came directly from exchanges.
Government entities and law enforcement are becoming increasingly superior at tracing blockchain transactions, or are turning to companies like Bitfury’s Crystal and other blockchain analytics firms such as Chainalysis to assist with tracking crypto users.
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Even the IRS has contacted this type of company in order to crack down on taxpayers not claiming their crypto earnings.
Things get even more complicated for law enforcement, however, once the BTC makes it into the hands of better-prepared criminals. These vendors are then sending their received Bitcoin to mixers, to further hide any trace of their activity.
It’s only those who are sending BTC from exchanges that are at risk of having their Bitcoin transaction traced.