Dark net markets (DNMs), better known as online marketplaces for drugs and other contraband items, are on the rise. These markets are commonly used to trade items of dubious, and often, illegal nature in exchange for digital currencies such as bitcoin, ether, litecoin, and monero. In a surprising twist though, one DNM Tochka announced the launch of a digital currency and initial coin offering.
First Darknet Market ICO
While initial coin offerings have become a popular way of crowdfunding in the cryptocurrency world, this would be the first time that an anonymous entity on the dark web has launched such an initiative.
Unlike most traditional ICOs, Tochka proposes to treat its investors as shareholders, going as far as promising dividends. The Foundation stated that it would “issue Tochka Coins to raise funds and distribute organization profits. Coin owners receive dividends according to number of their shares, ICO strategy, number of shares, initial offering percent to be determined.”
While DNMs are commonly thought of as clandestine operations available only to a select group of people, the truth is actually far from that. Most websites on the darknet can be accessed by anybody, provided they use the relevant privacy protocol, typically Tor. The Tochka Foundation has published a white paper for its coin that can be accessed via this method.
Preferred Cryptocurrencies on the Dark Web
Even though the original cryptocurrency, bitcoin, can no longer be considered to be completely private and untraceable, it is accepted by perhaps every single major darknet market currently in existence. Despite its shortcomings, bitcoin remains the gold standard primarily because of its long-standing reputation in the domain.
A newer option that has also been rapidly gaining ground amongst DNMs is Monero (XMR). As a fungible cryptocurrency, XMR offers these platforms everything that bitcoin failed to deliver, especially concerning security. Zcash, on the other hand, is not widely supported and one researcher believes that “No market I’m aware of will ever support it, IMO,” but did say that smaller vendors are using the altcoin. Zcash was in the process of being added to AlphaBay as the site was taken down and is compatible with OpenBazaar, a peer-to-peer decentralized marketaplace.
In the time since the first privacy-centric cryptocurrencies hit the market, many more are now being developed and released. However, most continue to use a mixer, which works as a bitcoin laundering machine to give users back different, untracked coins in exchange for a three percent fee.
The largest DNM at present is Dream, with approximately 100,000 listings, but has not yet reached the popularity that AlphaBay managed to achieve. Nevertheless, it is strange that Dream has lasted so long, as it launched in November 2013, and most DNM’s have succumbed to exit scams or the heavy hand of authorities.
A Brief History of Darknet Markets
Not long after bitcoin was launched in 2009, darknet markets were actually among the first websites to accept it as a payment method. The plethora of advantages offered by cryptocurrencies, including the ability to obfuscate one’s identity and throw law enforcement off the trail, has resulted in them going mainstream on such websites.
One of the earliest websites on the dark web to accept bitcoin was the infamous Silk Road, an online black market that came about to be the “first modern darknet market.” The platform was mostly used to facilitate drug trade between strangers. When the FBI ultimately caught up with the operation and seized all assets, it was found that a total of 9,519,664 bitcoin had been exchanged on the platform. The founder of Silk Road, Ross Ulbricht, collected 614,305 bitcoin in commission.
At current exchange rates, the total amount of bitcoin traded on Silk Road amounts to around $80 billion.
Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here.