Darknet Markets Made More Money Than Ever in 2020

In letter

  • According to a chain analysis report, the number of darknet markets is decreasing but revenue is increasing.
  • The chain analysis suggests that COVID-19 wasn’t the biggest factor in this trend.
  • However, the pandemic has put pressure on providers in the darknet market due to the tense supply chains and shipping routes.

According to a report, darknet markets exceeded their 2019 sales by a month this year published by Chainalysis yesterday.

Darknet markets have always aroused great interest in the crypto community, which was first triggered by the infamous Silk Road that plagued Bitcoin’s reputation in the early years. The Silk Road seems a distant memory by now, but the darknet markets have continued. And while the number of markets appears to be in decline, the remaining markets are making more money than ever before.

“While the total sales of the darknet market have already exceeded the total number of 2019, the total number of purchases and probably also the customers have decreased significantly, although the remaining purchases are for higher values,” said Chainalsys.

Darknet market providers – like legitimate providers – have suffered from a strained postage and shipping network due to COVID-19. However, according to Chainalysis, the driving force behind these revenues is a combination of increased competition and law enforcement efforts to fight the markets themselves.

As a result, the darknet market industry has consolidated into a smaller number of larger players.

Supporting this trend is the data showing a sharp decrease in the number of remittances sent to darknet markets but an increase in total sales. The following graphic contains the currencies Bitcoin, Bitcoin Cash, Litecoin and Tether.

Darknet’s total revenue has increased despite a decline in total transfers. Image: chain analysis

These figures show that Darknet customers make fewer purchases overall, but that they make purchases on average for larger amounts. According to Chainalysis, this indicates two possible situations.

First, occasional drug buyers move away from the darknet to make their purchases, while larger buyers simply buy more per purchase. Second, casual shoppers make larger purchases in response to uncertainty.

However, according to Ingo Fiedler, co-founder of the Blockchain Research Lab, this trend is primarily the result of an increasing focus of law enforcement on the darknet market industry.

“Only the most demanding can now cover up their tracks. This prevents small traders from participating in the market and there is a natural tendency towards fewer but larger traders in these markets, ”said Fiedler Decrypt.

Supporting this theory is the fact that the number of active darknet markets themselves is also declining.

According to Chainalysis, the total number of active markets in November 2020 (37) is the lowest since November 2017.

Number of active dark markets between 2015 and 2020. Image: chain analysis

However, law enforcement success is only one possible explanation for this decline. “Administrators often pull exit scams where the market goes out of business but still appears to be publicly active so administrators can continue to raise money from purchases that are never fulfilled,” Chainalysis said.

Inevitably, COVID-19 has also had an impact on this trend.

COVID-19 and the darknet market industry

While Chainalysis said COVID-19 wasn’t the biggest factor in this year’s darknet market trends, it has had some impact.

In particular, interruptions in supply chains and shipping routes have led to delays in the darknet market and triggered complaints from frustrated customers.

Speaking at a darknet market forum, a Canada-based cocaine operator said, “With COVID-19 causing massive disruptions across the country, I am still trying my best to keep prices reasonable but competitive.” Canadian Post is not guaranteeing two stores a day delivery for now. ”

It can be difficult to run an illegal online business.

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