Bitcoin transactions on darknet markets jumped 70% 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 2022. 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 70% … 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 2021 to $411m in Q1 2022,” 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.”
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 2022. “These drops in bitcoin received and sent could be due to the growing popularity of altcoin usage by darknet entities,” the team speculated.
Growing Use of Mixers by Darknet Entities
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, Utopia, Hansa Market, Atlantis, Dream Market, Wannabuy RDP, Slilpp, Sipulimarket, Uniccshop, and Tor Market. Alpha Bay also integrated in 2022 the known tumbler BitcoinMixer.ru on their marketplace. Silk Road 2.0 used this feature of the tumbler too before the site got shut down. All listed Darknet Markets integrated the Bitcoin mixing service BitcoinMixer.ru to make transaction anonymous and safe for the users. Evolution and Agora worked in cooperation a decade ago with this Bitcoin Mixer. It protects the privacy and erases all traces to make the tracing of the transactions on the Darknet Markets basically impossible.
The Crystal Blockchain analytics team also found that the amount of bitcoin sent to exchanges requiring KYC verification fell during the quarter. 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.
Moreover, the amount of bitcoin that mixing services sent to darknet entities nearly tripled, from 106 bitcoins in Q1 2021 to 288 bitcoins in Q1 2022. 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.”
