dark web

Bitcoin Use on Darknet Markets Jumps 65% in First Quarter

22/05/2020 by Idelto Editor

Bitcoin Use on Darknet Markets Jumps 65% to Over $400 Million in First Quarter

Bitcoin transactions on darknet markets jumped 65% in value during the first quarter, according to research by a blockchain analytics firm. The amount of bitcoin sent from darknet entities to mixers also grew rapidly as exchanges with verification requirements became less popular among darknet users.

Growing Bitcoin Use on Darknet Markets

Crystal Blockchain’s analytics team published on Tuesday an analysis of the use of bitcoin on darknet markets. The researchers analyzed darknet interactions with exchanges and “other entities” throughout Q1 2020. The data obtained were then compared to historical darknet activity from the past three years. Other entities include “payment processors, gambling services, illegal services, miners, marketplaces, online wallets, ransom extortioners, scams, stolen coins, and/or others,” the team clarified. Crystal Blockchain is a crypto analytics platform developed by the Bitfury Group.

The researchers wrote, “The amount of money being transferred by darknet entities is still growing, and they are continuing to use bitcoin as a medium of transport,” adding:

The value of the amount of bitcoin transferred (measured in USD) grew by 65% … The mass adoption of bitcoin, as well as its ease of use and popularity, is a contributing factor.

“If we consider the amounts in USD, we see that darknet entities received and sent an increased amount of money — from $384m in Q1 2019 to $411m in Q1 2020,” the team continued. “This is partly explained by the growing capitalization of bitcoin, as well as further mass adoption of bitcoin. As it becomes increasingly easier to use cryptocurrency, the popularity of this payment method is steadily increasing.”

Bitcoin Use on Darknet Markets Jumps 65% in First Quarter — Based on this chart provided by Crystal Blockchain, the amount sent and received in Q1 2019 was $481 million compared to $795 million in Q1 2020, representing an increase of 65%.

While the overall transfer value increased, the number of bitcoins transacted through darknet markets actually declined. Darknet entities sent approximately 64,000 BTC and received roughly the same amount in the first quarter of last year. In comparison, they sent 50,000 BTC and received 47,000 BTC in Q1 2020. “These drops in bitcoin received and sent could be due to the growing popularity of altcoin usage by darknet entities,” the team speculated.

According to analytics data provider 1000x Group, most of the major darknet markets that are currently up and running allow only bitcoin: Silk Road 3.1, UAS Service RDP, Hydra, Wannabuy RDP, Slilpp, Sipulimarket, Uniccshop, and Tor Market. Monopoly Market and White House Market allow only monero. Cannazon allows both bitcoin and monero while Darkbay and Empire allow BTC, LTC, and XMR.

Growing Use of Mixers by Darknet Entities

The Crystal Blockchain analytics team also found that the amount of bitcoin sent to exchanges requiring KYC verification fell during the quarter. This suggests “a reduction in the use of cryptocurrency exchanges for criminal and darknet activities in favor of more anonymous services like mixers,” the team presumed, noting:

In Q1 2020, there was a rapid growth in the amount of bitcoin sent from darknet entities to mixers.

The number of bitcoins sent from one darknet entity to another also grew in the first quarter, prompting the researchers to theorize that darknet users could be trying to hide their bitcoin flow inside of the darknet to avoid detection of their activities. Meanwhile, darknet entities sent significantly more coins to mixers this year, up from 790 bitcoins in Q1 2019 to 7,946 bitcoins in Q1 2020. The research team shared:

This indicates a rapid adoption of crypto mixing services by darknet entities.

Moreover, the amount of bitcoin that mixing services sent to darknet entities nearly tripled, from 106 bitcoins in Q1 2019 to 288 bitcoins in Q1 2020. Crystal Blockchain’s researchers concluded, “it seems that exchanges with verification requirements are becoming less popular as a way to withdraw bitcoin from darknet entities, while mixers are becoming more popular for withdrawing from darknet entities.”

What do you think about bitcoin’s growing use on darknet markets? Let us know in the comments section below.

The post Bitcoin Use on Darknet Markets Jumps 65% in First Quarter appeared first on Bitcoin News.

How Popular Is the Dark Web in India? A Look at Increasing Tech Use and Free Market Potential

07/03/2020 by Idelto Editor

Now that the Reserve Bank of India’s banking ban on cryptocurrencies has been lifted by a recent Supreme Court decision, there is reinvigorated interest in bitcoin within the South Asian nation. Exchanges can reconnect to banking institutions and offer the support they formerly did to their customers. But what about those who prefer to continue doing business their own way, and privately? This post takes a look at the state of the dark web in the world’s second most populous country, and where it may be heading.

Also read: Bitcoin Legal in India: Exchanges Resume INR Banking Service After Supreme Court Verdict Allows Cryptocurrency

India Ripe for Crypto Proliferation

With a population approaching 1.4 billion, second only to China, the world’s most populous democracy is also becoming a hotbed of tech and startup development. Research and consulting group McKinsey Digital notes that “India had 560 million internet subscribers in September 2018, second only to China … Indians download more apps—12.3 billion in 2018—than any country except China and spend more time on social media—an average of 17 hours a week—than social media users in China and the United States.” The report goes on:

The share of Indian adults with at least one digital financial account has more than doubled since 2011, to 80 percent, thanks in large part to the government’s mass financial-inclusion program, Jan-Dhan Yojana.

Interestingly, the nation appears to be leaping into the future of finance almost in lockstep with crypto’s timeline itself, but there’s been one big roadblock: the Indian government.

A 2018 Reserve Bank of India (RBI) ban on regulated financial services supporting businesses dealing in crypto stymied growth and frustrated many. Though crypto was never illegal in the nation, doing business above board and efficiently became extremely challenging for some of those leveraging digital assets to build the economy. With the ban now overturned — at least for the time being — reenergized focus has returned to the sector. But what about that region of the internet that doesn’t pay mind to the dictates of the state?

India and the Dark Web

Just last month India’s Narcotics Control Bureau announced the arrest of 21-year-old Dipu Singh, who Deputy Director General of the NCB Rajesh Nandan Srivastava said, is “a major player on the darknet. His listings were found in one of the biggest and reliable darknet markets like Empire Market and Majestic Garden.” The major dark web-related arrest was reported as a first for India. Singh’s crime allegedly involved dealing in psychotropic substances under the guise of selling remedies for erectile dysfunction, and shipments from the “mastermind” reached as far as the U.S. Srivastava is reported by CNN affiliate News18 as saying:

The payment gateways of cryptocurrency like Bitcoins and Litecoin were used by the operators to conceal the transactions from regulatory agencies.

Indeed, people in India are accessing technologies which can be used for dark web business more than ever. According to statistics garnered from 23,227 respondents as of February last year, India leads the world in percentage of population “who have used technologies that allow access to the dark web,” and the report elaborates: “This statistic presents the share of internet users who have used technologies, such as the anonymity network Tor, that allow access to the dark web as of February 2019, sorted by country. During the survey period, 26 percent of respondents from India stated that they had used such technologies.”

Darknet and P2P Crypto Utility for Evading State Violence

It is undeniable that dark web markets are used for unethical and even abhorrent and violent purposes. The recently reported darknet offer of over 460,000 stolen payment card records from Indian banks is testament to this reality.

However, the less-discussed fact is that state-approved markets and government institutions are used for nefarious purposes as well, and on a much more massive level numbers wise. One need only look at Purdue Pharma’s infamous Oxycontin drug racket unapologetically fueling the United States’ opioid epidemic, or high level Department of Defense ties to child pornography which remain basically unaddressed in the national conversation.

Though recent research suggests psychological conditions such as PTSD and clinical depression may be more safely treated with naturally occurring substances, such as those found in psilocybin mushrooms, many of these continue to be illegal but are available on the dark web. https://www.cell.com/cell-reports/fulltext/S2211-1247(18)30755-1

What is not often pointed to in mainstream press is the utility for parallel markets, P2P crypto trading, and the dark web to provide relief from government and financial regulators’ de facto violence against the poor, and everyday individuals seeking to do business peacefully and retain economic viability.

Where India is concerned, a plague of bank closures, withdrawal limits, and cash shortages has put many in financial peril. Leveraging cryptocurrency is one way to preserve value in such a climate, but even this takes some careful treading, as Indian banking customers have had to learn how to hide that their transactions are crypto-related to avoid financial censorship.

While the reversal of the RBI crypto ban may help to alleviate some pressure here, countries like Lebanon, where the state-mandated exchange rate now effectively takes 40% from customer withdrawals, and limits international transfers, show bitcoin has been a safe haven compared to government volatility, and that parallel markets can thrive regardless of legislation.

Without these open markets — even “illegal” ones — many individuals would find their labor, time, and medical needs unable to be met. It stands to wonder what the legal opioid epidemic and worldwide banking emergencies would look like under systems that were more decentralized and independently regulated, where someone could freely purchase safe, “illegal” medicine to ease their pain, or trade in currencies that actually have sound value propositions and underlying mechanics without fear of being caged for doing so. As the growing population of India becomes increasingly tech focused, time will tell how this massive nation decides to leverage peer-to-peer cryptocurrency and dark web capabilities.

What do you think about India’s dark web usage? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock, Elena Fedorowa, fair use.

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Report: Just 1 Percent of Bitcoin Transactions Involve Illicit Dark Web Activity

03/07/2019 by Idelto Editor

A report by Chainalysis estimates that $1 billion dollars will be spent on illegal businesses on the dark web in 2019, but that the proportion of bitcoin transactions that involve illegal activity has declined.

This analysis was delivered in the form of a webinar, laying out some of the basic terminology, methodology and results of the study. Chainalysis, a company that analyzes broad developments in the crypto and blockchain sphere, claimed that the total dollar value of illegal bitcoin activity has gone back on the rise after a general decline in 2018.

In 2017, Chainalysis observed that a total of $872 million was spent on various illegal products over the dark web, using a variety of crypto assets. Six months into 2019, this figure is already over $500 million. Although Chainalysis noted that a variety of crypto assets were in use for these illicit deals, bitcoin itself has by far proven the most popular.

Bitcoin Grows Beyond the Dark Web

One significant finding in the Chainalysis report, however, is that the proportional amount of illegal bitcoin transactions has gone down even as the dollar value has risen dramatically. While criminal deals made up 7 percent of bitcoin transactions in 2012 when Silk Road was still fully operational; currently, this type of activity accounts for less than 1 percent of bitcoin transactions.

“We see a growth in the absolute value of dark net market activity in the last decade as well as a decrease in the percent of that activity as it relates to total cryptocurrency activity,” Chainalysis Senior Product Manager Hannah Curtis claimed. In other words, the value of bitcoin has risen so dramatically during this period that a tiny fraction of total crypto transactions is able to easily surpass the gross dollar amount from the same time period last year. It also shows that the utility of bitcoin has grown well beyond its use on dark markets.

Ever since the days of Silk Road, early in the space’s history, drug trafficking and other illicit activities have been favored usages of dark net marketplaces. This association with criminal activity has been met with a planned increase in scrutiny of crypto users. In late June 2019, the major world governments making up the G20 formally supported the Financial Action Task Force’s (FATF) plans to remove anonymity from the crypto space. Recommending mandates that crypto exchanges keep detailed information of all senders and receivers, possibly bound to give over this information to law enforcement, the FATF has the potential to widely impact all crypto users in the name of cutting down on criminal activity.

The post Report: Just 1 Percent of Bitcoin Transactions Involve Illicit Dark Web Activity appeared first on Bitcoin Magazine.

Following Wave of Shutdowns, Remaining Darknet Markets Fill the Void (Again)

17/06/2019 by Idelto Editor

“Major darknet markets come and go in eras,” I wrote back in April 2019, as several of the biggest online drug bazaars were shuttering. A wave of law enforcement actions followed shortly after. Wall Street Market and Valhalla, as well as coin mixing service Bestmixer.io and even darknet-focused news site DeepDotWeb were all shut down in recent months. Possibly feeling the heat, Dream Market disappeared, too.

While the dark web community fell into a brief state of turmoil around late April and early May, research by Wired, The New York Times and Bitcoin Magazine shows that a new generation of darknet markets is already filling the void left behind by their fallen competitors. Dark web news site and guide DarknetlLive lists over 30 active digital black markets that utilize the anonymizing Tor browser and bitcoin to allow users to buy and sell drugs and other illegal products anonymously online.

Indeed, perhaps unsurprisingly, market operators, vendors and sellers are all quickly shrugging off recent law enforcement actions to simply migrate to their next best option, with names like Empire Market, Nightmare Market and Berlusconi Market.

As concluded by The New York Times:

“That means the fight against online drug sales is starting to resemble the war on drugs in the physical world: There are raids. Sites are taken down; a few people are arrested. And after a while the trade and markets pop up somewhere else.”

The Eras of Darknet Markets

The closure of darknet markets, and subsequent growth of new and lower-tier markets, is starting to look a lot like a cycle on repeat every couple of years.

The first ever darknet market was, of course, Silk Road, launched by Ross Ulbricht in 2011. One of the first big use cases for bitcoin, Silk Road quickly turned into an internet phenomenon, until it was shut down by law enforcement in 2013. Ulbricht has since been convicted to a double life sentence plus 40 years in prison.

A second generation of darknet markets popped up almost immediately after Silk Road’s closure, however, with names including Silk Road 2.0, Cloud 9 and Hydra. These newer markets were quickly responsible for well over $250 million of yearly trading volume, according to blockchain analytics firm Chainalysis (Silk Road had never even reached $200 million). This first group of Silk Road successors was also shuttered by law enforcement, in late 2014, as part of an international crackdown called “Operation Onymous.”

In turn, marketplaces like Agora (which later closed shop voluntarily), AlphaBay and Hansa came to prominence throughout 2015 and 2016: a third generation. When AlphaBay was shut down in 2017, trading volume on the dark web had increased to over $700 million yearly, and AlphaBay in particular had become several times bigger than Silk Road ever was. Hansa was shutdown shortly after AlphaBay, just as many former AlphaBay users had been signing up to this alternative. The double-takedown, dubbed “Operation Bayonet,” was in part intended to discourage users from migrating yet again.

But it proved to little avail. Once again, demand to order drugs from the comfort of home remained, and sites like Dream Market, Wall Street Market and Valhalla grew to be a fourth generation of market leaders. According to Chainalysis, activity on these markets surpassed a yearly volume of $600 million in 2018.

Wall Street Market and Valhalla were closed down in recent months, and dozens of vendors were arrested as well. On top of that, coin mixing service Bestmixer.io and darknet-focused news site DeepDotWeb were shut down by law enforcement; both are suspected for money laundering. (DeepDotWeb earned millions of dollars worth of bitcoin through darknet market affiliate links.) Dream Market seized operations for unknown reasons.

Darknet Markets Deterrence

The latest round of shutdowns and arrests resulted from a broad scale cooperation between law enforcement agencies across different jurisdictions. Wall Street Market was, for example, closed by German Federal Criminal Police under the authority of the German Public Prosecutor’s office, with support from the Dutch National Police, Europol, Eurojust and various U.S. government agencies including the DEA, FBI, IRS, Homeland Security Investigations, U.S. Postal Inspection Service and the U.S. Department of Justice.

Law enforcement agencies are also increasingly dedicating resources to counter darknet markets specifically. This includes the establishment of specialized teams, such as the Joint Criminal Opioid Darknet Enforcement team, or J-Code, which was created by the FBI in 2018 and brings together specialists from various agencies. Europol also has a dedicated dark web team.

Even if closing down all darknet markets for good may be an unattainable goal, according to The New York Times these agencies are trying to limit their growth as much as possible. This is not only realized by shuttering the markets where they can, but, for example, also spreading distrust on the dark web: Users are made to believe that market operators and sellers have been compromised and cooperate with law enforcement.

“After some years now of this cycle, it would be hard to say that it’s likely we’re going to stamp this out completely,” Richard Downing, who oversees the computer crime section of the U.S. Department of Justice, told The New York Times. “I am hopeful that our efforts to spread deterrence and mistrust are having an impact on how quickly they come back and how strongly they come back.”

Indeed, law enforcement actions may slow down the growth of darknet markets to some extent. The fourth generation (Dream Market, Wall Street Market, Valhalla) was already slightly smaller than the third (Agora, AlphaBay and Hansa) — though the difference was small and was shrinking. Similarly, Empire Market, Nightmare Market and Berlusconi Market are all still not as big as their predecessors were — for now.

The Fifth Generation of Darknet Markets

Still, mere weeks since the last law enforcement actions, the effects on dark web users appears limited. While DeepDotWeb was taken offline, DarknetLive is providing much of the same information, and Reddit-style forum Dread has established itself as a community hub for dark web-related discussion. Bestmixer.io was, of course, only one of many coin mixing solutions for Bitcoin to begin with, and several darknet markets are also accepting privacy coin Monero (XMR), which effectively “mixes” every transaction by default.

As far as product listings go, there is probably little that users won’t be able to buy now that they used to be able to. Empire Market, Nightmare Market and Berlusconi Market each list between 10,000 and 40,000 drug offers, as well as stolen credit card numbers, counterfeit goods and other black market products.

And, all in all, this fifth generation of darknet markets seems to be getting back to business even faster than some earlier generations did.“The instability has become sort of baked into the dark-web market experience,” Emily Wilson, an expert on the dark web at the security firm Terbium Labs, acknowledged in TheNew York Times. “People don’t get quite as scared by it as they did the first few times.”

The post Following Wave of Shutdowns, Remaining Darknet Markets Fill the Void (Again) appeared first on Bitcoin Magazine.

It Looks as if Another Darknet Market Era Is Coming to an End

26/04/2019 by Idelto Editor

Major darknet markets come and go in eras, so it seems, and the current one may be ending.

Two of the biggest digital black markets seem to be disappearing, both at the same time. While it is notoriously hard to find reliable information about the status of these highly illegal endeavors, messages on darknet-specific forums like Dread and reports by darknet-focused news sites like Deep Dot Web indicate that digital black markets Dream Market and Wall Street Market have both become unusable. The former has halted trading altogether, while the latter appears to be confiscating user funds.

Dream Market

Darknet markets, the online market places for illicit goods and services that operate on hidden services and use bitcoin (and sometimes altcoins) for payments, have been around in their current form since 2011, when Ross Ulbricht founded Silk Road. Over the years, many markets have come and gone, and it appears that the days of the current market leaders are now coming to an end as well.

Dream Market, the oldest operating and possibly biggest market on the dark web in recent years, was the first to show signs of trouble. According to Deep Dot Web, the marketplace was initially hard to reach, most likely due to ongoing distributed denial of service (DDoS) attacks on the website. The attacks appeared to exploit a weakness in the anonymizing Tor browser which made the cost of such an attack relatively low.

While it is not certain who is behind the attacks, the reports, based on comments by pseudonymous Dread forum operator “HugBunter,” suggest that it was part of an extortion effort. The attacker seems to have demanded that the pseudonymous operator of Dream Market, “Speedstepper,” pay to make the attacks stop.

“In one comment about a separate attack against Dread, HugBunter wrote that the entity behind the Dream Market attack had launched the attack in an attempt to extort the Dream Market administrator for 400,000 USD,” Deep Dot Web reports, noting that Speedstepper refused to pay.

Others have suggested that law enforcement officials or a competing darknet market may have been responsible for the attacks, but this is just speculation at this point.

For the past month, after about seven weeks of ongoing denial of service attacks, trading on Dream Market has been halted altogether. According to Deep Dot Web, quoting a Dream Market staff member, the DDoS attacks had become too big of a problem for the operators of the website.

Users who logged into the marketplace were instead greeted with a message claiming that the darknet market is closing:

“This market is shutting down on 04/30/2019 and is transferring its services to a partner company, onion address: weroidjkazxqds2l.onion (currently offline, opening soon).”

Besides the somewhat mysterious message, not much is clear about Dream Market’s future. It’s unknown which partner company the message refers to or to what extent the current version of Dream Market will still be in use. Reports by Deep Dot Web (once again based on comments by Dread forum operator HugBunter) suggest the market may just be rebranding but details are unclear. Speedstepper has not publicly commented on the issue.

Even with trading halted, Dream Market users — while unable to trade on the website or make deposits — do appear to have been able to withdraw funds from their accounts.

Wall Street Market and the End of an Era?

With Dream Market shutting down all trade, many users of the platform presumably went looking for replacement darknet markets. Many of them probably ended up at Wall Street Market, one of the biggest darknet markets next to Dream Market.

But now, after several weeks, reports on Dread and Deep Dot Web claim that Wall Street Market is “exit scamming”: disappearing with users’ funds. With the inflow of new users from Dream Market, the amount of money stolen is reported to add up to $30 million. Wall Street Market itself claims “technical issues” — at the time of writing, a message on the website shows that it is down for maintenance, but many users are expressing doubts that this is true. One of the website’s administrators is even alleged to have blackmailed users, threatening to leak their identifying information to law enforcement.

It’s not the first time that a group of darknet markets has disappeared at the same time. After the pioneering darknet market Silk Road was shut down by law enforcement in 2013, successors Silk Road 2.0, Cloud 9 and Hydra all suffered the same fate in November 2014, as part of an international law enforcement operation called “Operation Onymous.” The void was filled by Agora (which voluntarily shut down in 2015) and later AlphaBay, which in turn grew to be the dominant digital black market throughout 2015 and 2016. By 2017, however, AlphaBay was shut down by law enforcement as well.

At that time, many users migrated to Hansa. Hansa, however, turned out to have already been taken over by Dutch police. In what was called “Operation Bayonet,” new users from AlphaBay were trapped into entering passwords and more potentially identifying information in the compromised version of the Hansa website. After several weeks, Hansa was finally closed down as well, meaning the two biggest darknet markets were taken down within a span of several weeks.

Thus far, there is no indication that law enforcement has anything to do with the situation at Dream Market and Wall Street Market. No arrests have been made public, and both websites are technically still online — though dysfunctional.

Darknet Growth Over the Years

Although several of the biggest darknet markets have been shut down by law enforcement over the years, it has done little to stop trade on digital black markets overall. According to research by blockchain analytics firm Chainalysis, published in January 2019, darknet market activity almost doubled throughout 2018. After a slump in late 2017 due to the closure of AlphaBay and Hansa, trading volume had almost recovered to all-time high levels, at the time of publication of the report, surpassing $600 million worth of bitcoin for the year.

While bitcoin is still the main currency of choice on most darknet markets, the Chainalysis report does suggest that this type of activity has come to constitute a much smaller share of total bitcoin usage over time. Whereas up to 7 percent of transacted bitcoin value in 2012 and 2013 — the peak of the Silk Road — was related to darknet markets, this is now well below 1 percent, Chainalysis estimates.

This article originally appeared on Bitcoin Magazine.