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Bitcoin’s Big-Little Dark Web Problem

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Bitcoin was first created as a reaction to a failing banking system after the 2008 financial collapse. It was supposed to free people from the tyranny of banks and offer financial freedom. However, with not much uptake in the mainstream, it remained very niche, until it got its first big break. 

Bitcoin famously became a tool of the dark web. The cryptocurrency only made it into mainstream media when stories of Silk Road and dark web drug deals emerged. People don’t know much about Bitcoin, but they knew people were using this magical internet money to buy illegal good. 

Today, Bitcoin is a very different thing. The cryptocurrency has made it far into the mainstream spotlight and has become a prospect of the future of money and something that major enterprises and even governments are looking at.

However, it has not lost its dark web roots. A new analysis from Chainanalysis titled 2020 Crypto Crime Report shows a significant increase in the volume of cryptocurrency flowing to the darknet. However, that stat alone only tells a small part of the story.

More money, low share

According to the Chainanalysis study, the market sales of cryptocurrency grew as much as 70 percent in 2019. This represents nearly $800 million going to these illicit activities, and is a big spike as last year was only just over $400 million.

On face value, this would be a cause for concern and it could be seen as damaging to Bitcoin’s reputation if the coin was again being used as a primary source of dark web funding. However, what is more important to note is the share of cryptocurrency value on the dark web.

The report also shows that the total share of crypto payments on the darknet remaining quite low – it currently represents 0.08 percent of all Bitcoin transactions. However, there has been a big growth in this from the year before as the share of transactions was half this at 0.04 percent. 

A growing industry

It is good and bad news for the reputation of Bitcoin. There is indeed more money flowing to the dark web that comes from Bitcoin, and this is not good to note as it means this nefarious side of the web is being funded by Bitcoin.

However, the share of Bitcoin being used to fund criminal activity on the dark web is very, very small. This is good news for the coin as for those, like Elon Musk, who are concerned about its use for criminal activities, are slightly misguided. 

Yet, there is a growth in the amount of crypto being transacted on the dark web – a 50 percent increase in share is significant, even if it is still a small figure overall.

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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