Recent analysis conducted by Crystal Blockchain – the analytics unit of Bitfury – has revealed that the use of Bitcoin and other altcoins on the darknet is on the rise.
These same stats also show that the use of mixers to conceal BTC transactions has grown from 1% to 20% in the first quarter of 2020 compared to the same quarter last year.
This market research dubbed ‘Darknet Use and Bitcoin' highlights some key segments in which users transfer or receive digital assets via the darknet.
Notably, the value of BTC transacted between darknet entities grew by 65% despite a plunge in the number of Bitcoins transferred. As per the report, there was a 22% and 26% drop in the number of Bitcoins sent and received through darknet channels.
Source; Crystal Blockchain
The BTC Darknet Market Outlook
Bitcoin launched about a decade ago and has been gaining popularity over the years. It is noteworthy that the darknet is among the major adoption drivers of this market.
However, recent developments in regulation by entities like the FATF aim at changing some dynamics of the darknet's BTC operations. Most notably, more players have opted to use mixers in a bid to conceal their identities.
This has shift has caused a drop in the use of exchanges with strict KYC requirements. Stats by Crystal Blockchain show that the BTC market share of such ecosystems decreased to 13% compared to 24% back in Q1, 2019. The report reads:
“While more exchanges implement the FATF requirements, darknet users are trying to avoid the risk of unveiling of their activity by those exchanges. To veil darknet activities, they started to prefer mixing services to exchanges for withdrawal of cryptocurrency.”
Based on this market shift, there was a total of 7,496 BTC transferred through mixers compared to 790 Bitcoins last year. This translated to a surge in USD value from $3 million to $67 million in Q1, 2020.
Though BTC remains dominant, the report noted that other altcoins are now competing for the darknet market share.
Private coins like Monero have actually found themselves in trouble with authorities for facilitating illegal activities via its private coin. Crystal blockchain is, however, optimistic that darknet crypto usage will be reduced with advanced tech and regulations.
“What is reassuring, however, is that these activities are easy to monitor and identify with analytical tools like Crystal. As a result, the impact of the strong regulations enacted by the FATF and the European Union to fight these illicit activities is already apparent.”