With the rise of cryptocurrency and particularly coins like Monero, the Darkweb is increasingly becoming a place where criminal activity thrives. What steps are being and can be taken to regulate it and will they be effective?
What is the Darknet?
The Darknet is a hidden part of the internet, with one needing specialized software to access it. It can be used as a marketplace for illegal goods and services, such as drugs, weapons and hacking services. The development of cryptocurrencies have galvanized the use of the Darknet and created a hidden economy.
One can access the network using the Tor protocol, which hides users’ IP addresses. This means that network traffic on the Darknet is encrypted and cannot be easily traced. To access the Darknet, a user must first install Tor and configure it to connect to the network.
On the Darknet you can also find many valuable resources and it’s being used in countries where free speech is in danger or where there is none. Journalists are given the possibility to express their opinion about current situations and crises in the world freely. The Darknet plays such an important role when it comes to liberal principles, because it can’t be regulated and governments or big companies can’t limit our free speech.
Why are cryptocurrencies so important to the Darknet’s Economy?
It’s very difficult to use normal bank transfers for illegal transactions, because there are many laws and restrictions that prevent it. Nearly every country has laws and rules that prohibit illegal transactions. Furthermore, transactions aren’t anonymous so authorities can easily track down criminals. This is why blockchain technology is a very popular route for those who wish to remain unknown. It’s decentralized so nobody can block the transaction and if the authority tracking you doesn’t know your private key, they won’t have access to, or control over your money. You can also remain anonymous. Cryptocurrencies are the answer to all these problems.
We’ve all probably heard of Bitcoin, the most popular cryptocurrency, but when it comes to illegal transactions Monero seems to be most popular, because of its technology and encryption method. These are the advantages of Monero:
- Ring Signatures: it’s virtually impossible to identify the source of funds as the sender’s identity during the transaction is mixed with a group of others.
- Stealth Addresses: these create a unique one-time address for each transaction, further hiding the recipients identity.
- Fungibility: this prevents blacklisting of specific coins that have fungibility with Monero and that have been used for illicit activities.
Thanks to Bitcoin’s blockchain technology, it’s very easy for everyone to track every transaction and also the amount of money that each wallet contains. Blockchain technology is very useful, yet its transparency can lead to many problems. If someone knows the exact amount of money you have, they may try to steal it from you in real life. The upside of Monero is that it can provide safety for crypto users, especially important if you consider Monero is used for many legal transactions. Thanks to Monero you can hide your transaction history so people can’t see how much money you have. Those aware of the dangers of blockchain already use it for this purpose.
How does the economy on the Darknet work?
The economy on the darknet is overwhelmingly based on cryptocurrencies, such as Bitcoin and Monero. Cryptocurrencies offer several key benefits to Darknet participants:
- Privacy: encrypted transactions cannot easily be linked to specific individuals.
- Transnationality: worldwide transfers without government interference.
- Ease of use: access to crypto and transaction process is user friendly.
This is why crypto is the preferred medium on the Darknet. In 2022, the value of crypto transactions on the darknet was estimated to be over $20 billion.
Business models on the Darknet
A variety of business models operate on the Darknet. The sale of illegal goods and services rank as the most popular. In addition, the Darknet is also used to launder money from illegal activities. Cryptocurrencies are then easily exchanged for fiat, such as US dollars, without criminals needing to reveal their identity.
How to fight crime on the Darknet?
There are no excellent solutions for this problem, but we can make life for criminals more difficult. We can ban some private coins like Monero or Zcash. In fact, it has already been done in Dubai and in Japan, and it’s interesting to note that Dubai seems to be the most crypto friendly environment in the world. There are already some restrictions in place that were made by Binance in European countries like Poland and Italy, the biggest exchange in the world delisted private coins from the exchange. Moreover, we should make withdrawing crypto harder worldwide, the UK has already banned Bitcoin ATMs. Currently, it’s very easy to withdraw up to 1000 Euro without any verification. In my opinion, we should have such ATMs but you should have to verify yourself during each transaction no matter the amount. Some restrictions are already in place in some countries where Monero wallets do require verification. Your wallet address is connected with your ID, so there is no longer anonymity. Furthermore, the US government has a reward on offer for people who can hack the Monero blockchain, the idea may seem great but right now it seems to be impossible, because of Monero’s complex encryption. Perhaps the possession of private coins should become illegal, it would make the market smaller, but because it’s decentralized, it’s impossible to delete the blockchains that already exist from the network. There’s also no ruling out that criminal syndicates would move fast to find an alternative solution if these rules were put in place. The informal nature of organized crime would keep them steps ahead of the labored updates to government legislation.
Conclusion:
The illegal market on the Darknet is expanding and everyone can access it. I think this problem will only get bigger and much more difficult to solve. That’s why we urgently need to think about how to make the Darknet more difficult to use and limit its accessibility. Cryptocurrencies are a really great and useful technology and financially innovative, but we need to impose some restrictions now to reduce crime and its exponential growth.
https://blockworks.co/news/privacy-coins-banned-in-dubai
https://cointelegraph.com/news/binance-wrong-monero-zcash-privacy-coins
https://bitcoin.pl/bitcoin-vs-monero-ktora-kryptowalute-wola-hakerzy
https://www.idagent.com/blog/the-thriving-dark-web-economy-is-bad-news-for-businesses
https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs-will-pay-up-to-625000-if-you-c
It;s great that someone is thinking about the safety in the internet
I look at these issues very similarly. Rightly selected examples of methods to combat this type of activity on Darknet.