Darknet Markets Account For Only 0.08% of All Incoming Crypto Transactions: Chainalysis
- In 2019, darknet sales increased by 70% and for the first time, it surpassed $700 million
- Active markets collected more revenue than ever, except in 2012 and 2013
- Chainalysis expects more darknet markets to accept privacy coins like Monero in 2020
In 2019, cryptocurrency prices weren’t the only ones that saw an increase but the darknet market also grew. Its transaction activity actually hasn’t been influenced by the ebbs and flows of the crypto markets and other seasonalities.
According to Chainalysis, after a decline in 2018, the total darknet sales increased by 70% in 2019 to more than $790 million worth of cryptocurrency.
This has been the first time that the sales surpassed $600 million and for the first time since 2015, darknet market share of overall incoming transactions increased, doubling from 0.04% in 2018 to 0.08% in 2019.
Darknet markets total share of incoming activity remains “extremely low” but Chainalysis states,
“recent increased volume speaks to the resilience of darknet markets in the face of heightened law enforcement scrutiny.”
The trend that remained intact was that the vast majority of these transactions flow through exchanges. Exchanges are the most common service customers use to send cryptos to vendors and then sending these funding to cash out.
Active Darknet Markets Collected Huge Revenues
In 2019, eight of the darknet markets closed but eight new ones took their place, keeping the total number of active markets steady at 49. Each of these active markets also collected more revenue than ever, except during the height of Silk Road’s heyday in 2012 and 2013.
This revenue was driven by more purchases rather than larger ones. While the median purchase size remained constant in USD value, the number of transfers jumped yet again from 9 million to 12 million.
“This suggests that either more customers bought from darknet markets in 2019, or that old customers are making more purchases.”
Darknet Markets Implement Safety Features
In the darknet markets, drugs remains a popular choice. Markets specializing in other illicit goods also bring in sizable funds.
Chainalysis report finds that some of these darknet markets have begun implementing user safety features such as multi-signature technology and wallet-less escrow also knowns as direct deposit. Some are even adopting new infrastructure to avoid shutdowns by law enforcement.
Going forward, Chainalysis expects more darknet markets to accept or mandate the usage of privacy coins like Monero as used by Empire which it says “could change in 2020.”