The demand for drugs on the darknet has increased by 27%, while the daily volume of Bitcoin used as payment has doubled.
According to a survey of 60,000 drug users across 35 countries, 27.1% of respondents used the darknet to buy drugs for the first time in 2018.
The 2019 Global Drug Survey found usage has increased year on year for the past six years, doubling in Australia between 2014 and 2018 from 7.6% to 14.9% and in England from 12.4% to 28.6%.
The only country with a higher percentage of respondents using the darknet to buy drugs was Finland on 45.2%, while in the US the figure was 11.9%.
Almost a third of respondents globally said the darknet allowed them to try a wider variety of drugs than otherwise.
The most popular drugs were MDMA, LSD, and Cannabis, followed by amphetamines, synthetics (NPS) and prescription pharmaceuticals.
Darknet purchases of DMT, ketamine, and 2C-B have increased over the last 5 years.
“These data confirm that darknet markets continue to attract new participants and they are an increasingly significant player in the sale and distribution of illicit and prescription drugs,” the report concluded.
Bitcoin is the most popular payment method
Bitcoin, of course, first became popular as an ‘anonymous’ way to buy drugs on the darknet – a network of untraceable, hidden websites accessed using software like TOR or I2P.
Estimates on the proportion of Bitcoin used as payment on the darknet range from less than 1% up to 10%.
In August 2018, the US Drug Enforcement Agency (DEA) estimated criminal activity was behind 10 percent of all Bitcoin transactions – down from a high of 90 percent in 2013 after famed darknet marketplace Silk Road was shut down.
A recent report by Chanalysis found that the use of Bitcoin as payment on darknet market sites more than doubled in 2018, with daily transaction volumes rising throughout the year to an average of $2 million.
Bitwise estimates that genuine Bitcoin trading volume is around $273 million a day.
If Chanalysis figures are correct then darknet activity contributes less than 1% of the price pressure on Bitcoin.
Bitcoin price doesn’t affect darknet activity (much)
Conversely, the price of Bitcoin also has relatively little impact on darknet activity – except that markets see slightly more activity when the BTC price goes down.
Despite a push to adopt privacy-focused alternatives like Monero, Bitcoin remains the most popular crypto payment method as it is the easiest to obtain and can be ‘can be ‘tumbled and laundered’ through crypto mixing services to help anonymize it.
Cyber intelligence firm CipherTrace CEO David Jevans said Bitcoin transaction volumes on the darknet are growing.
“In terms of gross volume the darknet is growing but not nearly as fast as the rest of crypto — so dark net transactions are a shrinking percentage of the overall,” he said.
$800 million in Bitcoin on one Russian site
Bitcoin transaction volume fell significantly following the closure of Alphabay in 2017 but has since surged after activity moved to alternatives such as the Russian marketplace Hydra, which has now taken in almost $800 million in Bitcoin.
Transactions are also reportedly moving to a ‘distributed’ model which relies on encrypted messaging apps like Telegram and WhatsApp to execute transactions without the need for a third party.
The UK’s National Crime Agency helped shut down several large darknet marketplaces in recent months.
One large site, Dream, shut down voluntarily, while another called Wall Street pulled off an exit scam, making off with millions in vendors’ funds.
As soon as one site shuts down, new ones emerge, including recent additions like Cryptonia, Empire, Nightmare and the Yellow Brick Road.
BBC investigation finds scams and blackmail
An investigation by BBC podcast The Next Episode found hundreds of people claiming to have been scammed or blackmailed when attempting to buy drugs on the darknet.
“I got a very angry and threatening message saying, ‘I’ve got your address’ and threatening to either release it, show up there, or send something nasty. This was someone who was a crack and heroin seller.” said ‘Leon’.
“Obviously I don’t have any consumer protections legally.”
As Micky has previously reported, it’s much easier for scammers to set up fake sites at spoof addresses on the darknet and steal your crypto.
One scammer made off with 200 BTC after setting up fake versions of AlphaBay, Hidden Answers, Valhalla, Grams, and Hansa Market.
Actually … darknet is ‘the safest way to buy drugs’?
Bitcoin.com’s resident dark net expert Kai Sedgwick argued that mainstream reporting had led the public to believe the darknet was the riskiest way to buy drugs, when the reverse was true due to their integrated reputational systems.
“For technically competent web users, DNMs (darknet marketplaces) are safer in almost every way than buying on the street,” he said.
The founder of the Global Drugs Survey, Professor Adam Woodstock, said the darknet was growing in popularity every year.
“I think the darknet is probably the biggest challenge to drug regulation, policy, and law enforcement that they’ve had in 50 years,” he told Dazed.
“I don’t see this going away which is why that figure globally is so important. This isn’t just a gradual trickle up of people who have always used the darknet, this is people who are coming into dark net drug markets for the first time.”