Darknet markets’ cryptocurrency revenue topped $1.5 billion in 2020

Even without December, darknet-market revenue in cryptocurrencies surpassed the previous year’s figure, reaching a new high of over $1.5 billion, according to a Chainalysis report.

Darknet markets have already surpassed their 2019 revenue, but with fewer individual purchases and a declining number of active markets. Is Covid to blame? We say not likely. https://t.co/qkfLDWLfAN pic.twitter.com/GyHo95Wyaq

— Chainalysis (@chainalysis) December 3, 2020

Analysts at Chainalysis account for transactions in Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC) and Tether (USDT).

Total volume and number of transactions by year. Data: Chainalysis.

Despite the growth in overall transaction volumes in digital currencies, analysts at Chainalysis believe darknet markets may face rough times ahead.

They pointed to two trends: a shrinking number of marketplaces and fewer transactions. At the start of the year Chainalysis counted 57 active darknet markets; by December, this had fallen to 37—the lowest figure since November 2017. In this category, analysts count markets with a monthly turnover of at least $100 in crypto.

Number of active markets year over year. Data: Chainalysis.

Last year their users conducted more than 12 million transactions in digital currencies; in 2020 the figure barely exceeded 9 million. The average cost of a single purchase rose. Chainalysis specialists say this can be explained by higher demand for illicit goods for resale and by the exit of those who bought for personal use from the markets.

The company attributes the shrinking number of platforms to law-enforcement actions and rising competition, which is driving consolidation in the space.

“We also saw more darknet-market closures in 2020, including the well-known Flugsvamp 2.0 and Empire,” said Chainalysis.

Main reasons for darknet-market shutdowns, according to analysts, include operators implementing fraud schemes and DoS attacks by competitors. Another factor is the ongoing COVID-19 pandemic, which causes delays in supply chains.

Earlier, Chainalysis noted that the drop in Bitcoin price in spring 2020 amid global panic over the coronavirus reduced activity on darknet markets.

Subscribe to Forklog news on Facebook!