Cryptocurrency Darknets Continue To Thrive – Chainalysis Report

Blockchain, Crime, Investing, News | January 18, 2019 By:

Blockchain analysis company  Chainalysis has released a research report on darknet market activity in cryptocurrency.

Some of the report highlights:

  • Despite crackdown from law enforcement to curb illicit behavior, darknet markets continue to thrive and adapt to gaps left by closed markets
  • In 2018, $600M of bitcoin flowed through known darknet markets, according to Chainalysis research, and transaction volumes are steadily rising. By December, it reached an average around $2M worth of bitcoin every day, nearly double the activity measured in January 2018.
  • Law enforcement tell Chainalysis criminals are migrating to encrypted and distributed messaging apps like Telegram and WhatsApp to execute illegal peer-to-peer transactions and mitigate risks of action against a centralized market

“Darknet market activity has been remarkably resilient over the last few years, despite continued efforts by law enforcement to shut down illicit activities. When one darknet market closes, others pop up to take its place.

“Volumes going to identified darknet marketplaces peaked in 2017, hitting nearly $700 million USD. Darknet market activity fell by 60% after AlphaBay closed in mid-2017, but the slowdown was short-lived.

“Much of the activity that once went to AlphaBay has now been redirected to another popular darknet market which now dominates this space and was four times the size of AlphaBay at its peak. This brings up a fundamental problem with darknet markets: closing one darknet market often just leads people to use other platforms.

“Darknet market activity is relatively price inelastic; that is, you don’t see a drop in this type of activity when cryptocurrency prices fall. In fact, in 2018, darknet market activity and overall market performance had an inverse relationship.”