Bitcoins and the Dark Web: A Match Made in Cybercrime Heaven

The dark web has long been associated with criminal activity, and one of the most popular forms of payment on this hidden corner of the internet is bitcoins. The anonymity and decentralization of bitcoins make it the perfect currency for illegal transactions, and the dark web provides the perfect platform for buying and selling illicit goods and services.

Darknet Interactions With Other Darknet Entities

What are Bitcoins?

The most popular items sold on these underground marketplaces are drugs – both illicit drugs (eg, heroin, methamphetamines and cocaine) and prescription pharmaceuticals. Think of something illegal and it is most likely available on darknet marketplaces. On mint.com, one can monitor their account and be notified via email when deposits are made. Acknowledging the automatic fraud detection mechanism employed by banks and bitcoin exchange services, the site suggests to keep the first withdrawal low (around $50). It also states that the “chances that Coinbase will flag your transaction will be VERY low. After a successful first transaction, feel free to bump up the withdrawal to $100 and keep bumping it up after every successful transfer”.

Bitcoins are a digital currency that uses cryptography for security and is not controlled by any government or financial institution. Transactions are recorded on a public ledger called the blockchain, but the identities of the parties involved are not revealed. This makes bitcoins ideal for those who want to keep their financial transactions private.

Bitcoin In The Deep Web (Onion Links

Dark web marketplaces have been a significant outlet for illicit trade, serving millions of users worldwide for over a decade. This paper aims to identify the key players in Bitcoin transaction networks linked to dark markets and assess their role by analysing a dataset of 40 million Bitcoin transactions involving the 31 major markets in the period 2011–2021. First, we propose an algorithm that categorizes users either as buyers or sellers, and show that a large fraction of the trading volume is concentrated in a small group of elite market participants. We find that the dominance of markets is reflected in trading properties of buyers and sellers. Then, we investigate both market star-graphs and user-to-user networks, and highlight the importance of a new class of users, namely ‘multihomers’, who operate on multiple marketplaces concurrently. Specifically, we show how the networks of multihomers and seller-to-seller interactions can shed light on the resilience of the dark market ecosystem against external shocks.

The Dark Web and Illicit Activities

Identifying Key Players In Dark Web Marketplaces Through Bitcoin Transaction Networks

“Numerous publicly available reports, even with Tor and VPN assisted searches, have indicated no adoption of Dash as an alternative payment method for these (Dark Net) transactions,” Ryan Taylor, Dash CEO, stated in an email. Taylor says the cryptocurrency’s PrivateSend feature, which mixes up the origin and recipient addresses of transactions, accounts for less than 1% of overall transactions on the Dash network. “We believe that privacy is an important feature for users to have access to….but that has not equated to Dash adoption, let alone use, on the Darknet,” he said. Standard crypto exchanges, peer-to-peer (P2P) exchanges, high-risk exchanges, and other darknet markets account for nearly all of the cryptocurrency sent to darknet markets. Interestingly, 2020 has seen standard exchanges send a larger share of total darknet market revenue — about 46% in 2020 versus 30% in 2019 — while P2P exchanges’ share has declined significantly.

The dark web is a part of the internet that is not indexed by search engines and is only accessible through special software, such as the Tor browser. It is often used for illegal activities, such as buying and selling drugs, weapons, and stolen data. The anonymity provided by the dark web makes it a popular platform for cybercriminals.

Navigating Through The Darknet / Dark Web

Marketplaces exist that are dedicated to (among other items) pirated software, child pornography, luxury goods, pharmaceuticals and counterfeits. The ‘Surface Web’ is composed of regular websites that are indexed and searched with standard search engines. This is comprised of websites that are not indexed by any search engines. In other words, a standard search engine will not access the content of 96% of the Internet – as with an iceberg, most of the content is hidden below the surface, on un-indexed websites. When you browse the Internet, you are really just floating on the surface. Underneath the surface, trillions of pages exist that the search engines never see.

• Then, we reveal a concentration of activity around an elite group of participants, where a large fraction of the trading volume is driven by a small number of players.
• They define and characterize the Darknet, compare it to other monitoring systems, and report on case studies.
• Since their inception in 2009, it has become a medium for all kinds of black market activities online.

Bitcoins and the Dark Web: A Perfect Match

Bitcoins and the dark web are a match made in cybercrime heaven. The anonymity provided by both makes it easy for criminals to conduct illegal transactions without fear of being caught. Bitcoins can be used to purchase a wide range of illicit goods and services on the dark web, from drugs and weapons to hacking tools and stolen data.

The Risks of Using Bitcoins on the Dark Web

An ambition of many open-source intelligence analysts is to be able to identify and track the financial networks of far-right actors. Certainly, open-source intelligence analysts have been highly successful at identifying traditional transactional networks and, recently, crypto transactional networks. John Bambenek, an open-source intelligence researcher and professor of cybersecurity at the iSchool in Illinois, does just that [5]. Specifically, Bambenek tracks the donations received by white nationalist BTC wallets, the amount spent, and their balance, which he records in a daily wallet summary report via his Twitter account called Neonazi BTC Tracker (@NeonaziWallets) [6].

While bitcoins offer a level of anonymity, they are not completely untraceable. Law enforcement agencies have developed sophisticated tools to track bitcoin transactions, and there have been several high-profile cases of dark web marketplaces being shut down and their operators arrested. Additionally, the value of bitcoins is highly volatile, and users may lose their investments if the value of bitcoins drops.

Conclusion

Bitcoins and the dark web have created a new frontier for cybercrime. While the anonymity provided by both makes it easier for criminals to conduct illegal transactions, it also increases the risks for users. As law enforcement agencies continue to develop tools to track bitcoin transactions, the use of bitcoins on the dark web may become more dangerous. Users should be aware of the risks and take appropriate precautions to protect themselves.