Report: Just 1 Percent of Bitcoin Transactions Involve Illicit Dark Web Activity
A report by Chainalysis estimates that $1 billion dollars will be spent on illegal businesses on the dark web in 2019, but that the proportion of bitcoin transactions that involve illegal activity has declined.
This analysis was delivered in the form of a webinar, laying out some of the basic terminology, methodology and results of the study. Chainalysis, a company that analyzes broad developments in the crypto and blockchain sphere, claimed that the total dollar value of illegal bitcoin activity has gone back on the rise after a general decline in 2018.
In 2017, Chainalysis observed that a total of $872 million was spent on various illegal products over the dark web, using a variety of crypto assets. Six months into 2019, this figure is already over $500 million. Although Chainalysis noted that a variety of crypto assets were in use for these illicit deals, bitcoin itself has by far proven the most popular.
BITCOIN GROWS BEYOND THE DARK WEB
One significant finding in the Chainalysis report, however, is that the proportional amount of illegal bitcoin transactions has gone down even as the dollar value has risen dramatically. While criminal deals made up 7 percent of bitcoin transactions in 2012 when Silk Road was still fully operational; currently, this type of activity accounts for less than 1 percent of bitcoin transactions.
“We see a growth in the absolute value of dark net market activity in the last decade as well as a decrease in the percent of that activity as it relates to total cryptocurrency activity,” Chainalysis Senior Product Manager Hannah Curtis claimed. In other words, the value of bitcoin has risen so dramatically during this period that a tiny fraction of total crypto transactions is able to easily surpass the gross dollar amount from the same time period last year. It also shows that the utility of bitcoin has grown well beyond its use on dark markets.
Ever since the days of Silk Road, early in the space’s history, drug trafficking and other illicit activities have been favored usages of dark net marketplaces. This association with criminal activity has been met with a planned increase in scrutiny of crypto users. In late June 2019, the major world governments making up the G20 formally supported the Financial Action Task Force’s (FATF) plans to remove anonymity from the crypto space. Recommending mandates that crypto exchanges keep detailed information of all senders and receivers, possibly bound to give over this information to law enforcement, the FATF has the potential to widely impact all crypto users in the name of cutting down on criminal activity.