https://wildsnow2d9.substack.com/p/why-is-bitcoin-losing-the-dark-net +wildsnow2D9's SubscribeSign in Share this post Why is Bitcoin losing the dark-net markets? wildsnow2d9.substack.com Copy link Twitter Facebook Email Why is Bitcoin losing the dark-net markets? [https] +wildsnow2D9 15 hr ago Share this post Why is Bitcoin losing the dark-net markets? wildsnow2d9.substack.com Copy link Twitter Facebook Email If you wanted to buy contraband online in the last 5 years or so, you may have noticed that the option to pay in Bitcoin - once the most popular form of payment on the dark-net markets, is slowly disappearing. [https] You may ask why it matters to you or the average Bitcoin enthusiast - you're presumably an excellent, law abiding citizen - good for you, but it's irrelevant. Allow me to explain: The first major milestone of Bitcoin was to be accepted as a form of money, this happened with small obscure merchants at the early stages of Bitcoin, but as the word spread Bitcoin found itself as the "official" currency of the dark-net, and allowed the creation of a market called the "Silk Road". [https] The Silk Road Silk Road was a revolutionary market, merchants from all around the world could transact at the comfort of their own home - whenever they want, and to sell and buy whatever they want, all with a new form of uncensorable & decentralized & easy to use form of money - Bitcoin. You may still be confused about why this is of any importance to you, I'll try to clarify: Bitcoin's adoption depended on markets like Silk Road to pioneer it, and what was special about Silk Road is that it was an almost completely free (as in freedom) market - those are excellent for adoption because they don't require bureaucracy, permits, regulations, or any other form of permission to run. The less permission required, the better a market can function, and therefore more adoption, more merchants, and more Bitcoin use. Without markets like Silk Road, Bitcoin's adoption is limited, at risk, and is not as efficient as it could be. The importance of Silk Road in Bitcoin's history is without a doubt massive. Bitcoin's privacy issues And now that you have a decent idea on why such markets are so important - I'll do my best to explain why Bitcoin is not used in them anymore. In such markets, it's obvious that privacy is of high importance. Sellers & buyers want to protect their privacy in order to guarantee their safety when transacting. Law enforcement is not too kind on those type of markets and their participants, and constantly monitors markets & merchants for privacy leaks. [https] There have been tons of busts, warrants, and cases that relied on Bitcoin's lack of privacy-by-default as evidence. Transaction ID's, Bitcoin addresses, and IP addresses can be linked together to form solid evidence against a defendant in court and outside of it. Naturally, dark-net markets were looking for solutions to this problem, there are multiple, and I'll do my best to list them all: Custodial mixers/tumblers: Custodial mixers were an early solution to Bitcoin's lack of privacy. There will usually be a centralized server that gathers Bitcoin from customers and dispenses them randomly to un-link the customer from the Bitcoin he sent. Those have multiple flaws and massive third-party risks, they are also usually honeypots setup by law enforcement to catch dirty Bitcoin. [https] CoinJoin: A CoinJoin is a collaborative transaction that combines users' UTXOs is order to create a large anonymity set for them. This increases the privacy of all participants. This is by far the most effective method for privacy on Bitcoin. [https] [https] BIP47: BIP47 introduced a way to have a reusable address that only disclosed the real address of the user when a transaction was already made (a notification transaction). This was never widely used in DNMs, but it's decent tech nonetheless. [https] Custodian tumbling: This is a long process where the user will send funds to exchanges, online casinos, and other sites that hold a large amount of Bitcoin to mix in their Bitcoin with other users' Bitcoin. This has the same flaws as custodial mixers. And finally, there's Monero: Monero is by far the most used privacy tool in dark-net markets today (05/2022). Monero is an alternative cryptocurrency designed for hardcore privacy-by-default, it does not require any third-party tools and is very simple to use. It is currently the most popular coin in dark-net markets, and for a good reason. Bitcoin's privacy flaws made dark-net markets completely ditch it for Monero. [https] So what can we do to fix this? There are multiple app-level privacy upgrades that can be standardized to improve overall privacy, those have some consequences and limitations, but are by far the best method that is currently available. Bitcoin's culture is the only bottleneck in its adoption of privacy-by-default tech. If Bitcoin ceases to exist in dark-net markets, other markets will likely follow, and the value proposition and the specialty of Bitcoin may be destroyed. 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