A new study by Recorded Future has found that Bitcoin is losing its position as the number one currency on the Darknet markets. The Internet tech company analyzed 150 of the most active message boards, marketplaces, and illicit service providers and noticed that the Darknet communities sentiments toward Bitcoin have taken a turn.
The Darknet economy
The Darknet is an Internet that uses non-standard communication protocols and ports to make it a bit more difficult for the digital identities of users to be revealed. The Darknet requires users to run a special software, the most popular being TOR. to connect to the Internet. One of the main purposes of using the Darknet is to make the information provider and the person accessing the information difficult to trace. Because of this privacy feature, the Darknet has become famous for its Darknet markets like Silk Road that allowed users to effectively exchange anything, legal or illegal over an Amazon-like marketplace. The anonymous Internet is said to attract criminals and those interested in black market activities as well.
A backlogged network
In mid-2016, Recorded Future noticed that the 150 entities they were analyzing were all expressing concerns regarding the functionality, usability and security of Bitcoin in the Darknet economy. Although it was a relatively mild increase compared to the increase in interest in Bitcoin in the latter half of 2017, the Bitcoin network was beginning to become overloaded with traffic which resulted in higher transaction fees for those using the Darknet markets. On Dec. 23, 2017 transaction fees were $52.18.
Recorded Future found that the average transaction size on the Darknet is $50-$300. If an individual tried to transact on Dec. 23, 2017 – it could have been the case that the transaction fee was more costly than the amount being transacted.