Overview
Cryptocurrencies are essential to darknet commerce. However, not all cryptocurrencies are equally private. Understanding their privacy properties is crucial for researchers analyzing darknet transactions.
Bitcoin: The First, But Not Private
Bitcoin was the original darknet currency (Silk Road launched with it), but it is pseudonymous, not anonymous. Every transaction is recorded on a public blockchain.
Bitcoin Traceability: Blockchain analysis companies like Chainalysis can trace Bitcoin transactions and have helped law enforcement in numerous darknet cases, including Silk Road.
Bitcoin Privacy Weaknesses
- All transactions visible on public blockchain
- Addresses can be linked to real identities via exchanges
- Clustering analysis can link multiple addresses to same user
- Transaction patterns reveal spending habits
Monero: Privacy by Default
Monero (XMR) is designed for privacy from the ground up. It uses three key technologies:
Ring Signatures
Mix your transaction with others, making it impossible to determine which input is the real one.
Stealth Addresses
One-time addresses generated for each transaction, so no two transactions link to the same address.
RingCT
Ring Confidential Transactions hide transaction amounts, not just the sender/receiver.
Comparison
| Feature | Bitcoin | Monero |
|---|---|---|
| Transaction Visibility | Public | Hidden |
| Amounts Visible | Yes | No |
| Address Reuse | Traceable | One-time |
| Darknet Market Use | Declining | Increasing |
Mixing Services & Tumblers
To enhance Bitcoin privacy, users employ mixing services (also called tumblers) that pool many users coins and redistribute them, breaking the transaction trail.
Legal Warning: Using mixers for money laundering is illegal. Several mixer operators have been prosecuted. This section is for educational understanding only.
The Shift to Monero
Since 2018, most darknet markets have shifted from Bitcoin to Monero, or at least offer it as an option. The privacy guarantees of Monero make transaction tracing significantly more difficult, though not impossible—metadata and human error still lead to arrests.