A recent Crypto Activity Report by Crystal Blockchain has delved into the dealings of Bitcoin and digital assets on the darknet. The darknet, or dark web, is a network that exists within the internet but requires specific software, setup, or authorization to access.
It has become a hotbed for hackers and nefarious activity over the years, and the anonymity of cryptocurrencies has propelled them to the payments platform of choice.
Politicians, bankers, aging billionaires, and those generally against Bitcoin constantly associate it with the darknet, but recent research has revealed that usage has actually declined in 2020. Naturally, with Bitcoin growing in value and adoption across the globe, the actual value of it transferred will have increased.
However, the key take from the findings is that the amount of BTC transferred between darknet entities and other entity types declined in the first quarter of 2020 compared to the same period last year. The report broke the figures down, stating that the total amount of Bitcoin received by darknet entities decreased from 64k BTC in Q1 2019, to 47k BTC in Q1 2020. Whereas the total amount sent by darknet entities also decreased from 64k BTC in Q1 2019, to 50k BTC in Q1 this year.
Comparing things to the same period in 2017, Q1 this year saw a drop in the amount of Bitcoin both sent and received by darknet entities – a 22% and 26% decline, respectively. There was the caveat that this decline in BTC usage may have been replaced by growth in altcoin usage, especially the highly anonymous ones such as Monero (XMR).
In dollar terms, the figures show an increase of $384 million in Q1 2019 to $411 million in Q1 2020, but that is largely due to the increase in the value of Bitcoin over the period that measurements were taken and an increase in its overall adoption.
The research added that darknet entities often use exchanges with low KYC (know your customer) requirements, but the share of all BTC received by darknet entities from these exchanges also decreased from 62% to 45% over the two quarters. The report suggested that mixing services were also on the increase as they can obfuscate the path of the crypto asset from exchange to the endpoint and vice versa.
Crystal Blockchain concluded that the trends are likely to continue providing more exchanges implement the Financial Actions Task Force (FATF) and European Union requirements for customer identity provision.