According to a recent report by way of Reuters, Bitcoin-related transactions on darknet markets have increased greatly since January 2018.
An online black market, commonly called a darknet, is an illegal marketplace that sells things like fake IDs, illicit drugs like Marijuana, Cocaine, Heroin or over-the-counter pills, among other items of contraband. According to the data gathered by Chainalysis, a leading Blockchain data analytics firm, Bitcoin-related transactions on illicit online marketplaces rose sharply since January 2018.
This bullish behaviour came at a time when the cryptocurrency market experienced record lows in cryptocurrency values, as Bitcoin (BTC) fell by almost 90% from an all-time high price of $20,000 to a yearly low of around $3,150.
It isn’t clear how the analytics group, which is often employed by governmental agencies to weed out bad actors, discerned ‘normal’ transactions from those questionable, but Chainalysis revealed that $2 million per day worth of BTC were routed through the darknet’s peer-to-peer marketplaces.
In total, about $600 million in BTC was spent on darknet markets in 2018, as compared to $700 million in 2017. Although the numbers may make it seem like this is a negative change in transactions, a 14.3% drop in transactions is relatively negligible when considering that the price of Bitcoin fell by almost 70% in the same timeframe.
A senior Economist at Chainalysis, Kim Grauer, cited the closure of AlphaBay and Hansa as the reason for the slight decline in transactions in 2018. The two aforementioned were “major markets” and their closure apparently had a considerable impact on the community. She said,
“The reason for that drop is more law enforcement activity… It would be misleading to think that this year it (the volume) will go down.”
Although the use of Bitcoin for criminal activities cannot be supported, the strong numbers in BTC transactions even through the toughest bear market that the industry has ever seen is a sign that it is not just speculation that Bitcoin is still being used by a large number of people.
According to data compiled by Jameson Lopp, the Chief Technology Officer of Casa, accentuated that from a fundamental perspective, 2018 was Bitcoin’s best year yet. Hashrate doubled, while a cumulative $410 billion in value was transacted on the “world’s most secure transactional settlement layer.” SegWit, a short-term, ‘bandaid-esque’ solution that squeezes more transactions into blocks, saw use swell from 10% to 40% over 2018.
And while predictions for 2019 is are difficult to come by, the existing data indicates that the next 12 months are going to be favourable for Bitcoin and Bitcoin’s network.
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