Is Bitcoin Losing Its Place On The Darknet?

When the Silk Road introduced Bitcoin payments as the primary way for users to pay for their items, it was revolutionary. That moment plays a vital role in what cryptocurrency is today, and it’s why Ross Ulbricht is seen as the father of Bitcoin. However, fast forward a decade and various Darknet Markets say no to Bitcoin. Now it seems that vendors have thrown down their hands aswell. So is Bitcoin losing its place on the Darknet?

Darknet Markets and Vendors Drop Bitcoin Payments

In the past few years, we’ve seen numerous darknet markets stop using Bitcoin as their payment options, almost all markets allow for Monero payments, and some no longer allow Bitcoin at all. But how did the staple of the darknet lose it’s place?

There are various reasons, but it primarily comes down to two points. In the last few months, Bitcoin fees have skyrocketed, and Bitcoin has proven to be an issue when it comes to OpSec as seen with multiple vendor arrests over the years. 

Once primary changing point came with the return of AlphaBay. The Darknet market would reclaim it’s place as the largest darknet market despite it’s choice to only accept XMR payments as a safety precaution. At this point a few smaller Darknet markets had chosen to only accept XMR, but DeSnakes choice to only accept XMR was turning point and caused a snow ball among Darknet Vendors and markets. 

In the last few weeks, we’ve seen a flurry of vendors announce that they will no longer be accepting the good old Bitcoin. So what makes Bitcoin so bad? And why is XMR a better payment option?

It’s Traceable

Bitcoin is often misunderstood as an anonymous currency, but in reality, it is a traceable cryptocurrency. While Bitcoin transactions are recorded on a public ledger called the blockchain, which uses pseudonymous addresses instead of personal information, it is still possible to trace and analyze these transactions.

The traceability of Bitcoin played a significant factor in law enforcement successfully identifying and apprehending criminals involved in illegal activities. As a result, multiple Darknet markets seizures were linked due to Bitcoins open ledger. 

The go to method of keeping your Bitcoin private is the use of Bitcoin Mixers. One notable case involves the arrest of Shaun Bridges, a former Secret Service agent involved in the investigation of the Silk Road marketplace. Bridges was found guilty of stealing Bitcoin from the Silk Road and attempting to cover his tracks.

During an investigation of the stolen Bitcoin, law enforcement agencies analyzed the blockchain and traced transactions associated with the theft. The open ledger allowed them to follow the movement of funds from the Silk Road to different Bitcoin addresses. Even though Shaun Bridges used mixing services, LE found him guilty. 

Blockchain analysis has improved drastically over the past few years. So why use a token that is traceable when one like Monero exists?

Monero has many advantages overf Bitcoin baked into it’s platform:

• Ring Signatures: Monero uses ring signatures to mix transaction inputs and outputs, making it difficult to trace the exact origin of funds. Ring signatures combine the spender’s transaction with others in a group, making it challenging to attribute a specific transaction to a particular user. 
• Stealth Addresses: Monero utilizes stealth addresses, which generate unique addresses for each transaction. This feature ensures that the recipient’s address remains hidden, enhancing privacy and making it harder to link transactions to specific individuals.
• Confidential Transactions: Monero employs confidential transactions to obfuscate transaction amounts. This cryptographic technique encrypts the transaction value, preventing external observers from determining the exact amount being transferred.
• Unlinkable Transactions: Monero’s protocol breaks the transaction linkability by using one-time addresses and stealth addresses. This helps to prevent the tracing of funds back to the sender or receiver.

Fees Are Too High

However, Monero has been around since April 2014, so why is there a major shift in the Darknet Market only taking place now?

It’s boiling down to a few major issues. OpSec nightmares come with Bitcoin, and recently over 288 vendors were arrested… all linked to Bitcoin payments. Couple that with a time where Bitcoin fees are reaching all-time-highs, and nobody wants to use the token anymore. 

Last week, Bitcoin fees hit average transaction fee of more than $30. Which is only half it’s ATH of $60 (in 2017), but still beyond an acceptable level for your average user pay with. 

BTC fees can be high due to several factors. This particular situation boils down to network congestion: The limited block size of the Bitcoin blockchain creates a scarcity of available space for transactions. Currently, Bitcoin only has an average of 5 transactions per second. When there’s an increased network congestion, there is high demand or a surge in transaction volume, fees tend to rise.

Although the price has since dropped back down to ±$4.5, it simply does not compare to Monero’s average $0.50 fee price.

Almost all Markets that do still accept both BTC and XMR have urged their users to switch to Monero payments.

[ALERT !!!] High Bitcoin Transaction Fee

Dear Users, Bitcoin (BTC) fees spike to the highest level since May 2021 It’s time to switch to Monero (XMR)

=== Bitcoin Deposit ===

If you insist to pay in Bitcoin, make sure you are paying higher fee approximately 31USD++(Network Fee) to get confirmation faster. Any fee lower than that would need to wait at least a day or up to a week. Always check on blockchain confirmation before creating a ticket.

ASAP Admin

Additionally, Darknet Vendors have made the choice to disable all Bitcoin payments going forwards due to both Opsec and Fees. 

Hello,

Hope all is well with everyone, we are making this post to let all of our present & future customers know! For OPSEC reasons & these transaction fees, We are taking BITCOIN off the table for a way of payment when purchasing from us it will be MONERO ONLY from here on out, we are so sorry if this is and inconvenience BUT we have lost a significant amount of money in the last few weeks due to transaction fees and we CAN NOT keep going on losing this much money, once again we are sorry, Thanks for your understanding.

Vendor ChemicalsInChains

With so many complaining about Bitcoin, why would markets still use Bitcoin?

Bitcoin is Necessary as an Entry Point

While it’s clearly not the most practical payment system when it comes to Darknet usage, it’s a necessary option for those who are new to the darknet. Darknet markets will do their best to push users, new or old to use the much safer options, but limiting your customers usually means fewer customers. 

Another reason boils down to customer service. Since Monero payments are extremely private, it’s impossible for staff and admins to determine whether payments were genuinely made during support tickets. This is why Vice City Market only accepts Bitcoin, though we’d urge them to change this. But, I think it’s an irony that Monero wins the cryptocurrency battle.

Additionally, many darknet users prefer traditional methods and refuse to move forwards. People are habitual and change isn’t often accepted. But this sort of stubborn approach to OpSec could land them in big trouble.