Research conducted by blockchain analytics firm Chainalysis shows that Darknet markets sold over $790 million worth of cryptocurrency last year, making it the first year sales surpassed $600 million.
According to the firm’s new Crypto Crime Report, for the first time since 2015 Darknet markets increased their share of incoming cryptocurrency transactions, going from 0.04% in 2018 to 0.08% in 2019. While the figures still show Darknet market transactions make up a fraction of total cryptocurrency transactions, the market is seemingly growing.
Chainalysis’ report found that the “vast majority” of Darknet market transactions flow through cryptocurrency exchanges. These trading platforms are the most common service used to both send funds to vendors, and for vendors to cash out cryptocurrency obtained from sales.
The blockchain analytics firm noted that while these markets’ share of incoming cryptocurrency activity remains “extremely low” the volumes show how resilient they are, as they’ve been facing heightened law enforcement scrutiny. A total of eight Darknet markets shut down in 2019, but eight new ones opened up.
When law enforcement shuts down one market, another one moves to satisfy customer demand. Per the report, business was better for Darknet markets in 2019: “On average, each active market in 2019 collected more revenue than those active in any other year, apart from during the height of Silk Road’s heyday in 2012 and 2013.”
Chainalysis also points out that Darknet market transaction activity doesn’t appear to be heavily influenced by price movements. While transactions to exchanges, gambling sites, and merchants surged in July, transactions to Darknet markets only experienced a minor rise.
Similarly, transaction activity on Darknet markets was within a much narrower range throughout the rest of the year.