Darknet markets are hidden Tor services that often provide access to illicit goods, drugs, counterfeits and other illegal trade.
Since the intention behind these marketplaces is to be 100% anonymous, they rarely ever run for legal purposes.
Unfortunately, cryptocurrencies have been unfairly linked to these darknet markets by crypto critics, traditional bankers and others who have an overall negative view of crypto.
The volume of illegal activity carried out using cryptocurrencies is negligible when compared to traditional fiat currencies.
If cryptocurrencies were to be linked to illegal activities due to a few notorious cases, then traditional currencies would be as well using the same criteria.
Darknet is a portmanteau of “dark network”.
It was originally a military term used to describe a network of computers which had a stealth presence, not announcing their existence under any circumstances (e.g. not replying to tests such as ping, traceroute, ARP queries and so on).
Later, as the term “dark web” gained popularity, darknets became associated with hidden underground networks of sites that sat behind Tor for anonymization.
Since these computers would not reply to traditional open Internet tests, they were analog to the original concept of military dark network computers.
The high security and anonymity provided by darknets was quickly exploited by all kinds of underground agents.
From law enforcement to foreign intelligence, criminals and even terrorists, all started to exploit the high security of the deep web for their own purposes. Some of these were obviously downright illegal activities.
One of the most infamous applications of the darknets was to run underground markets – darknet markets.
These markets sold anything you can imagine, from auctions to kill someone to illegal drugs to counterfeit watches and countless other crazy stuff.
Implementation flaws often revealed the true identity of darknet market operators.
This led to several arrests and notorious police operations, most notably the Silk Road bust.
Investigators, online OSINT researchers and curious users tested darknet markets using several techniques to try and expose the back-end server responsible for the markets.
The Black Goblin darknet market, for example, was de-anonymized because it sent confirmation emails to members. Emails must route through the open internet and always contain source headers. Using this info one savvy user was able to expose the IP address sending the Black Goblin emails.
It was later determined, through network testing, that this same IP address ran the Tor onion site server for the darknet market. One of the tests involved DDOS’ing the exposed public IP to see if the darknet market went down with it. Since it did, researchers concluded it likely was the same machine.
Silk Road involved a much more elaborate FBI investigation. Agents worked the Silk Road case for months before being able to make an arrest.
Ross Ulbricht (Dread Pirate Roberts), one of the operators behind Silk Road, was caught running the darknet market on an open notebook computer at a library. The FBI physically immobilized him before he was able to shut the notebook closed in order to lock it. The policemen were then able to access everything on the PC. The evidence collected on this opperation led to Ulbricht’s conviction to life sentence in jail.
Cryptocurrencies are not directly related to darknet markets. Cryptos are as related to illegal activity as any other currency is.
The reason the two terms became related in the media was due to several high profile police operations which discovered Bitcoin, Monero and other cryptocurrencies being used in these underground markets.
Since the majority of worldwide crime happens using traditional fiat currencies, linking cryptocurrency to crime would be analog to linking any major world fiat currency to illegal activity as well. The end purpose of criminal activity is to obtain profit.
This will happen using any valuable asset including gold, artworks, live cattle, fiat currency or cryptocurrencies.
Cryptocurrencies can be audited, tracked and monitored by anyone with access to the blockchain (which is usually open to everyone for all major cryptos).
We understand that these darknet markets have hurt people and we do not wish to link to any of them directly.
We present this information for the purpose of documenting the several cultural aspects and historical events surrounding cryptocurrencies, whether directly related or not.
I personally believe that cryptocurrencies should be used in the open, through oficially licensed shops that collect taxes and are compliant with all legal requirements.
Cryptocurrencies are an awesome technologically advanced form of money and can enable never before ease of payments and transactions. All this can be done legally and out in the open.
Darknet markets are as legal or illegal as any underground markets in the real world and not necessarily tied to cryptocurrencies in any way.