According to the Chainalysis report, this year darknet markets already went beyond their 2019 revenue. Chainalysis also noticed that there are fewer darknet markets than a couple of years ago, but their profits are constantly growing.
Bitcoin in the darknet
Darknet markets have always aroused great interest in the cryptocurrency industry. First was Silk Road, which undermined the reputation of Bitcoin at a time it was in active development.
The notorious Silk Road is far in the past now, but darknet markets are not. In addition, they have managed to hit a record profit this year. Of course, the number of markets went down significantly, but their revenues are higher than ever before.
“While total darknet market revenue has already surpassed 2019 totals, the overall number of purchases, and likely customers as well, has fallen significantly, though the remaining purchases are for higher values,” Chainalsys said in the report.
However, amidst coronavirus pandemic Darknet market merchants, just like everyone else, experienced hard times with postage and shipping services. Chainalysis noted two main factors that led the darknet to prosperity - growing competition and law effort to combat these markets.
Big players in the markets
The most commonly used coins in the darknet are Bitcoin, Bitcoin Cash, Litecoin, and Tether. Chainalysis shared the data, which indicates a strong decrease in the number of transfers sent to the darknet, but strong growth in total profits.
This means that darknet clients make less purchase in total, but most of the purchases are for way bigger amounts.
Law and Darknet
Ingo Fiedler, a co-founder of Blockchain Research Lab, believes that the law enforcement focus on the darknet is the main factor of this tendency.
“Only the most sophisticated can obfuscate their traces by now. That prevents small dealers from participating in the market and a natural tendency towards fewer but larger dealers on those markets,” said Fiedler.
The fact that the number of darknet markets was significantly decreased is backing his opinion. The total number of active darknet markets in November 2020 is 37, which is the lowest mark since November 2017.
But Chainalysis offered another possible scenario:
“Administrators often pull exit scams, in which the market ceases operations but publicly appears to still be active so that administrators can continue collecting money from purchases that will never be fulfilled”.
Darknet in the time of COVID-19
The coronavirus pandemic left a lot of complaints from customers not only in legal markets. The weak supply chains and shipping services cause delays on the darknet too, making unsatisfied customers complain of forums.
Canada-based cocaine seller wrote in the darknet forum “With COVID-19 causing massive interruptions across the nation, I am still trying my best to keep prices reasonable but competitive. Canada post is not guaranteeing two business day delivery for the time being.”
Well, it seems having an illegal online business is not always easy.