Darknet Markets and the Shadow Economy

I want to use economic theory as a means to abolish the use of coercion and agression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end.

The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort.

The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.

Ross Ulbricht 


The US declared the War on Drugs 47 years ago in 1971.

It spends $51 billion annually on the War on Drugs.

United States incarceration rate

Law Enforcement is making a lot of money from this. It’s a giant industry that channels money towards departments that wouldn’t exist if the war on drugs ended.

Civil asset forfeiture, a goldmine for those exploiting the system, increased dramatically with the war on drugs to the point where the amount taken is more than reported burglaries.

A lot of people have a vested interest in maintaining the status quo of the drug war.


People shouldn’t be put in cages for these excessive sentences. And I don’t think it’s solved anything.

It’s been over 45 years. It’s been over $1 trillion spent trying to stop drugs in the drug war. But people still do drugs, it doesn’t work. It’s very clear it doesn’t work. I think 45 years is long enough.

It’s not helping anyone for these people to be in prison. They’re not dangerous, they shouldn’t be there.

The punishment is so excessive. A friend of Ross in this prison named Tony has a life sentence for marijuana. He’s already done 15 years. The Federal Prison happens to be in Colorado where it’s legal.

It just doesn’t make sense. It doesn’t work, it’s costing a fortune, and it’s destroying lives. The drug war is a very destructive thing and it doesn’t work. It’s totally ineffective. Except it works at making a lot of money for a lot of people. Employing a lot of people, and expanding government intrusion. It’s definitely been a success with that.

We incarcerate 25% of the world’s prisoners and we only have 5% of the world’s population. We lead the world in caging our citizens. And this has only been since the drug war. Before the drug war it was a pretty steady 180,000 people in prison. And since the drug war it’s grown over 800%. It’s a huge amount.

Lyn Ulbricht


Darknet Markets Reduce Violence

The vast majority of transactions on darknet markets are for illegal drugs.

In 2017 The UN Office on Drugs and Crime stated “typical buyers are recreational users of cannabis, “ecstasy,” cocaine, hallucinogens and NPS. They are less likely to order heroin or methamphetamine.”

Multiple studies show that darknet markets reduce violence compared with in-person drug dealing. For example, a study done by Barratt, Ferris, and Winstock AR found “substantially less threats and violence than alternative market types”.

Drugs ordered online have found to be safer than offline channels as the products are purer. An FBI report stated, “Samples of these purchases [from Silk Road] have been laboratory-tested and have typically shown high purity levels of the drug the item was advertised to be on Silk Road”.


Moral Progress

I now believe we are at a tipping point in history, and we must decide what kind of world we want to live in as we move into the digital age. Are we going to move in the direction of freedom and innovation, or government control and intrusion?

That is what is at stake right now. Seeing up close and personal how the government operates, and how it is caging people in this country at an unprecedented rate, really opens your eyes.

Lyn Ulbricht

Will society morally evolve to tolerate and support new innovations (bitcoin, decentralized markets, monero) or will there be a cultural backlash against them from citizens and governments who attempt to capture and cage people looking to improve on the status quo.

Kristov Atlas describes a moral precedent of this in US history, comparing the vast size of the slave industry to today’s drug war industry.

He notes that in 1860 there were around 3.9 million slaves. Slave value was 3x all the money invested in banks, second only to real estate in the US, and in some southern states the value of slaves was actually more than real estate.

Yet despite an entrenched status quo making vast profits, the slave industry ceased to exist and isn’t morally tolerated in America today.


Products Traded on Darknet Markets

Trade is better considered as moral vs. immoral than legal vs. illegal.

Peaceful voluntary interactions vs. coercion/force.


Immoral Trade

Although things that defraud or harm (the red market) are often banned on darknet marketplaces, evil activity unfortunately does takes place (as it does across all sectors of human society).

Dream Market has around 55,000 listings for drugs and 50,000 for “digital services” including stolen credit card information and hacking tools.


Moral Trade

We don’t allow the sale of anything that’s main purpose is to harm innocent people, or that it was necessary to harm innocent people to bring it to market.

For example, anything stolen is forbidden, counterfeit money and coupons which are used to defraud people, hitmen aren’t allowed, and neither is child pornography. No substance on Silk Road falls under those guidelines.

We currently don’t allow the sale of any weaponry, but if we did I wouldn’t allow any weapons that are designed to be used on crowds of people or whole populations. We would only allow weapons that can be used for self-defense.

The Dread Pirate Roberts


Pharmaceutical Drugs

Darknet markets enable access to unapproved pharmaceuticals. Eric Meltzer explains, “My sister-in-law’s friend has leukemia, and a life-saving drug she needs is not approved in China, so her only option is to buy it on a black market.

Cheaper drugs are available for cancer patients and government regulations mean a pill that costs $750 from legal channels in the United States can be bought online for only 5 cents from an Indian supplier.

Ross Whittaker describes why he bought his wife’s inhaler on the dark net ($300 in the US, $30 on the dark net). “We just couldn’t afford the inhaler without falling behind on other necessities like utilities and groceries”.

He believes that darknet markets are, “a mostly positive force for making drug use safer, and providing an affordable way for people like me to obtain needed medicine”.

While most of the drug commerce on the dark web is for recreational use, there is a healthy business in medicine for its intended purpose. You can buy a whole range of prescription medicine for things like depression, anxiety, high blood pressure, and even restless leg syndrome at a fraction of the usual cost.

Ross Whittaker


Other Products

In an investigation into the Silk Road, researcher Gwern wrote how a British user claimed he used the site while working in China to buy books censored for political reasons.

Other products for sale on darknet markets include modafinal, adderall, ritalin, xanax, steroids, cigarettes, and pirated games.

Even if you happen to agree with some drug laws, there are many other laws domestic & foreign one might disagree with (bans of Kinder eggs, extremely costly regulation of venison, sex toys etc).



Legal products on the Silk Road (the collectibles category).


At it’s core, Silk Road is a way to get around regulation from the state. If they say we can’t buy and sell certain things, we’ll do it anyway and suffer no abuse from them. But the state tries to control nearly every aspect of our lives, not just drug use. Anywhere they do that, theres is an opportunity to live your life as you see fit despite their efforts.

Any place the State places large tariffs or taxes, there is an opportunity to circumvent their blockades. Consumer electronics are much more expensive than they need to be in many parts of the world, for example.

The great thing about agorism is that it is a victory from a thousand battles. Every single transaction that takes place outside the nexus of state control is a victory for those individuals taking part in the transaction.

So there are thousands of victories here each week and each one makes a difference, strengthens the agora, and weakens the state.

The Dread Pirate Roberts


Darknet Markets Year-By-Year


Largest Darknet Market

Silk Road, the first darknet market, became popular in 2012. It had 13,000 drug listings by the time it was seized in October 2013.

The total amount traded on Silk Road in 2013 was estimated at around $300,000 per day ($90$100 million per year).

Over the course of its lifetime, the US Government estimates that $189 million of products were traded on the Silk Road.


Total Darknet Market Economy

Total listings across all sites in 2013 was about 18,000.



Largest Darknet Market

35 days after the Silk Road closed, Silk Road 2.0 was launched.

The darknet market economy rebounded impressively from the loss of Silk Road. In August 2014 Agora had 16,137 listings and Silk Road 2.0 had 15,925 listings, making both sites bigger than Silk Road at its peak.

Silk Road 2.0 then took the lead as the largest darknet market until owner Blake Benthall was arrested in November 2014 in Operation Onymous.

Silk Road 2.0 was thought to be clearing up to $400,000 a day ($140 – $150 million annualized).


Total Darknet Market Economy

A representative of Deepdotweb.com said, “The Silk Road bust was the best advertising the dark net markets could have hoped for”.

Pandora, Agora, and Evolution were launched and the darknet market economy grew rapidly. “By late January 2014, volumes far exceeded what was seen prior to the Silk Road take-down

In August 2014 there were a total of 65,595 listings on darknet marketplaces (more than triple 2013’s peak).



Largest Darknet Market

Evolution was the world’s largest darknet market in early 2015. It closed in March 2015 as operators exit scammed (stole customer payments stored in escrow) $12million worth of bitcoin.

Evolution had 34,147 listings shortly before it closed, making it the biggest darknet market ever at the time.

Agora replaced Evolution as the largest overall marketplace with more listings than the Silk Road at its peak.

Agora closed for security reasons in August 2015 with operators allowing users to withdraw funds.

Soon after, AlphaBay became the world’s largest darknet market site.


Total Darknet Market Economy

In May 2015 Ross Ulbricht was sentenced to life in prison for operating the Silk Road.

Isak Ladegaard found that within a 10 month timeframe during Ulbricht’s sentencing, activity on the darknet markets increased substantially.

Ladegaard said, “The timing suggests that people weren’t discouraged from buying and selling drugs. The data suggests that trade increased, and one likely explanation is that all the media coverage only made people more aware of the existence of the Silk Road and similar markets”.

Kyle Soska and Nicholas Christin conservatively estimated that total volumes reached as high as $650,000 daily and were generally stable around $300,000–$500.

Gwern estimated the total volume of the industry to be $800k/day or around $300m/year.

Around 2014/2015, the world’s largest bitcoin merchant processor Bitpay, facilitated around $160 million per year, meaning more bitcoin commerce was happening on the darknet markets than through Bitpay’s regulated merchants.



Largest Darknet Market

Alphabay was the largest darknet market throughout 2016.

Dream Market was the 2nd biggest.

This was a relatively peaceful year for the markets as the two biggest sites managed to survive the whole of 2016.


Total Darknet Market Economy

Rand Corporation estimated total revenue from illegal drug sales to be around $200 million per year, putting darknet markets at only a tiny percentage of the overall drug industry.

Gwern claimed that this number is “almost certainly an underestimate”.



Largest Darknet Market

In July 2017 the markets were devastated by Operation Bayonet.

Chainalysis estimated around 90% of darknet market activity was interrupted by the seizures of AlphaBay, Hansa Market, and RAMP

AlphaBay is by far the largest darknet market to have ever existed.

At the time of its demise, Alphabay had 369,000 listings (the Silk Road peaked at 13,000 listings) and facilitated USD$600,000-$800,000 of transactions per day (around $250 million per year).

With Alphabay offline, users immediately migrated to Hansa and Dream Market.

Hansa turned out to be a honeypot, under control of the Dutch police as part of Operation Bayonet. Dream survived the chaos and was left standing as the world’s largest darknet market.


Total Darknet Market Economy

AlphaBay going offline spooked users and threw the darknet market into disarray.

In 2017 Bitpay merchants received over $1 billion in bitcoin payments, up from around $160million annually in the 2014 / 2015 period). With the fall of 90% of the darknet markets in Operation Bayonet, Bitpay retook the lead on Darknet markets for volume of bitcoin activity.

Despite the chaos, Chainalysis claims the surprisingly large amount of $660 million worth of Bitcoin was sent to darknet markets during the year (a more than 11-fold increase from the $57 million sent to darknet markets in 2012).



Largest Darknet Market

Darknet markets are in a recovery period after the disaster of 2017.

Dream Market has about 100,000 listings. This is multiples bigger than the original Silk Road, but a long way from catching up to AlphaBay’s size and popularity (although it has double the number of drug listings AlphaBay had when it became the market leader in late 2015).

Dream Market has been around since November 2013. It’s extremely rare for a darknet market to survive this long as most shutdown or exit scam soon after launch.

Dream is not as loved as AlphaBay was, with many complaints about poor user interface and customer service, a lack of community, and poor uptime. Dream also hasn’t integrated popular features such as multi-sig escrow and forced vendor PGP.


Notable Darknet Markets

Darkwebnews and Deepdotweb both list Dream Market, Tochka (also known as Point), and WallStreet Market as the three top darknet markets in the world.

A comprehensive list of darknet marketplaces can be found here: Updated: List of Darknet Markets (Tor and I2P).

Reviews of the top sites can be found here: Darknet Markets Comparison Chart


Total Darknet Market Economy

In March 2018 Gwern said “The DNMs do not appear to have grown terribly much since the last extrapolation of Soska & Christin of $200m/year AFAIK. So I would be comfortable guesstimating <$1b/year globally. Which is a minute fraction of global drug sales or Internet sales”.


Total Underground Economy

In 2017 Global Financial Integrity estimated the global drug industry added up to $652 billion of trade per year, making it the second biggest underground market after the $1.13 trillion of activity in the counterfeit and pirated goods market.

Darknet market volume is less than $1billion annually, making it at most 0.001% of the global drug trade.

Even state governments in the US collect far more revenue in the drug industry than darknet market operators. For example, Washington State collected a total of $319 million in legal marijuana tax and license fees in fiscal year 2017.

Online marketplaces charge about 3% commission, so that means all of the marketplaces put together earned about $7M revenue in 2016.

… During that same year of 2016, legal marijuana commerce in my home state of Colorado saw about $1B of transactions. The government of the State of Colorado took in $100M worth of taxes.

… Here’s another data point: the biggest Chinese retailer/marketplace, Alibaba, saw $485 B worth of transactions in 2016



Underground Trade Away from the Darknet Markets

Due to the relatively tiny reach of darknet markets, the majority of illegal trade on the internet takes place elsewhere.

Gwern notes this by saying trade happens on “vendor shops or direct dealing (often preferred by long-time high volume sellers who have established reputations, to avoid exposure to DNMs and commissions), the highest-value unlisted DNM listings, and all the Clearnet sites which sell quasi-legal or illegal-but-not-prosecuted things (modafinil, ‘research chemicals’, or simply nootropics vendors dropped by credit card processors such as Ceretropic)”.


Single Vendor Stores

Twitter user Χριστόφορος claims that “A lot of big-time dealers moved from markets to their own sites.

Deep Dot Web lists a few of these vendors who’ve set up their own stores.


Social Media / Messaging Apps

A British Lawmaker recently complained that, “Drugs are prolific. You can get them on Snapchat, WhatsApp”.

Former AlphaBay moderator Penissmith says, “People have moved off the darknet and to the Clearnet. For example, people are doing direct deals on wickr now, and multiple other chat apps”.

An OpenBazaar blogpost points out that, “Instagram has been a popular advertising service for drug dealers for years. Facebook, Craigslist, Snapchat, and basically all popular communications platforms online have been used for dealing drugs or other illicit activity”.

On Reddit, gpum1ner states, “All these people can tout that using Copperhead OS on your phone + Signal for messaging/Calling + VPN + whatever will hide your drug dealing. In reality, people would rather just make plain calls and SMS in whatever unencrypted communication channels is easiest. Don’t get me wrong, a lot of higher up crimes use encrypted channels but they make up a small amount in the sea of people who simply go and buy Bitcoin to buy weed online or a few pills.”


March 2018 Social Media Crackdown on Underground Trade

Reddit was a popular venue to discuss a wide range of underground and darknet market trade (particularly r/darknetmarkets).

However, a massive crackdown citing “Site-wide rules regarding the use of Reddit to conduct transactions” put an end to these forums. A list of the banned trade subreddits can be found here.

In the aftermath of the crackdown, Reddit user Spracck commented, “Clear market transactions are taking the real blow right now, especially the chunk of buyers/sellers that used reddit exclusively. They’ll probably be disrupted for about a week”.

Ongoing Clearnet crackdowns like this will inevitably push trade further underground with some of it finding its way onto the darknet markets.




Largest Site = Silk Road

Listings = 13,000

Total Darknet Market Volume = $100 – $140 million



Largest Sites = Silk Road 2 / Agora

Listings = Around 16,000 on both

Est Annual Volume Traded = Silk Road 2 had around $100 – $150 million per year

Total Darknet Market Volume = $200 – $300 million per year



Largest Sites = Evolution / Agora / AlphaBay

Listings = 34,000 on Evolution before the exit scam

Total Darknet Market Volume = Around $300 million



Largest Sites = AlphaBay

Total Darknet Market Volume = Around $300 million (probably more)



Largest Sites = AlphaBay / Dream Market

Est Annual Volume Traded = $250 million per year for AlphaBay

Total Darknet Market Volume = $300-$600 million per year



Largest Site = Dream Market

Total Darknet Market Volume = Around $300 million per year



Darknet Market Features


Darknet sites are accessed over Tor or I2P.


Multi-Sig Escrow

A huge problem for users of centralized darknet markets has been exit scams, where site operators are trusted with escrowed funds but then disappear.

Multi-sig escrow can prevent this theft as bad actors don’t have full control over the funds.

Notably the world’s largest darknet market Dream does not use multi-sig, still favoring regular 1:1 escrow.


PGP / Encrypted Messaging

Learn and use PGP encryption. It is by far the strongest security weapon we have, yet hardly anyone uses it.

– Eileen Ormsby

Researchers Judith Aldridge and Rebecca Askew found that on the Silk Road, “only 21% of the vendor listings in our sample of 600 provided PGP keys or requested that their customers use other encrypted communication methods”.

Kyle Soska and Nicolas Christin later found that PGP adoption on two marketplaces surged to about 90% after Operation Onymous rocked the markets in 2014.

Manual PGP encryption should be done by the user instead of trusting the built in auto-encrypt message service on the darknet site. This prevents a Hansa like catastrophe where law enforcement secretly controlled the servers and could see the messages before they were encrypted.


Law Enforcement Takedowns

In this cat and mouse game, the mice will win in the end but the cats will be well fed.

Bruce Schneier

The FBI recently doubled the resources it allocates to combat darknet markets.

“We’re not going to let those sites get so big again in the future,” Attorney General Jeff Sessions said in March 2018, referring to AlphaBay.

Sites tend to be taken out by simple opsec mistakes.


Silk Road

Ross Ulbricht used rossulbricht@gmail.com on bitcointalk.org under the username “Altoid”.

Altoid was the first person on the internet to write about and promote the Silk Road.


Silk Road 2

Operator Blake Benthall used his personal email address to register a Silk Road 2.0 server.

On a trip to Las Vegas, he connected to his server using the hotel’s internet. The hotel room was registered in his real name.



Owner Alex Cazes accidentally included the email address “pimp—alex-91@hotmail.com” in welcome messages to new users. Cazes also used this address to register his personal PayPal account.

In 2017 Thai police along with FBI and DEA agents broke into Cazes’ house in Bangkok and seized his unencrypted laptop which was connected to the server. Login credentials were found in plain text.



Police found IRC chat logs that mentioned a bitcoin address belonging to the suspected operator.

A payment from this bitcoin address to a hosting company in Lithuania was tracked using Chainalysis software.

The operators later had their homes raided and computers with unencrypted hard drives seized.



Shutdowns and arrests come with a lot of media attention, but are relatively rare.

The larger the site, the more resources are spent to bring it down. Smaller sites manage to evade arrest partly due to their irrelevance.

When SR1 went down, there were 146,000 users.

There were around 162 users arrested, world wide. That’s .11%.

A majority of them also were international orders. And that’s of all buyers, so the 162 arrested were most likely larger buyers.

– r/darknetmarkets

Out of 78 markets Gwern tracks (last updated April 2017), 24 were closed voluntarily by the operators, 36 ended as scams, and 11 were hacked. Only 7 were shut down as a result of law enforcement.




Tochka (also known as Point) is one of the oldest Darknet operations (founded in 2015). It claims “not one single security breach in 3 years”.

“Counter-economics” was the original vision for Silk Road, and Tochka seems to hold on to that legacy.

– Rasmus Munksgaard

Tochka has around 25,000 listings with the goal of becoming the leading darknet market in 2018.

The source code for Tochka Free Market was released in September 2017. A Tochka admin said this makes it “easier to hire new coders, and get us trust. Plus we get periodical audits, and inquiries”.


Tochka Features and Activities:

Tochka Foundation is an independent research organization in field of experimental countereconomics (Digital Shadow Economy).

Tochka Admin

Integrating Open-Source Software into the shadow economy.

Core Focus: Unregulated digital markets operating on encrypted networks utilizing cryptocurrency payments – DarkNet Markets (DNMs)

Built-in social platform to build a community

Open-Source Intelligence (OSINT) Research


Upcoming Tochka ICO

So, the #cryptomarket / #darknet market Tochka has launched an ICO. Tochka is the only currently running market with an explicit political agenda (counter-economics, agorism), and you can now buy a share in it            .

Gun to my head, I’d trust Tochka over 99% of ICOs out there.

Rasmus Munksgaard

Tochka Market Image


The ICO whitepaper can be found on Tor.

ICOs in regulated markets have legal difficulties selling ownership stakes.

Tochka’s ICO more closely resembles a traditional IPO that gives full equity rights to the buyers.

Tochka claims it will “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.”

A Tochka announcement further explains “To participate in this Initial Coin Offering, you need an Ethereum Wallet that supports ERC20-Tokens. A minimum amount of .0012 ETH is required as the smartcontract will reject smaller amounts. The sale will also accept BTC, LTC, XMR”.

Tochka states that buying a token gives holders a piece of the whole Tochka Foundation.


Darknet ICOs: A Sign of Things to Come?

The planned Tochka ICO could be the start of anonymous darknet organizations issuing ICOs that give investors an ownership stake with dividends.

Censorship resistant stock markets that route around regulations could develop and evolve into vibrant underground capital markets for entities operating within “System D”.


Currencies Used on Darknet Markets

Bitcoin’s early adoption on the darknet markets was a precursor to wider mainstream use of the currency.

Currencies that gain support on these markets demonstrate their utility in hostile conditions and give the coin a fundamental support level, making darknet market adoption a possible leading indicator of mainstream adoption.

The marketplace which accepts the most cryptocurrencies is Silk Road 3.1






Dream Market, the world’s largest, now accepts three currencies:



Bitcoin Cash


Empire Market also has three payment options





The now defunct AlphaBay accepted three and was in the process of adding a fourth (Zcash) at the time the site was seized.






All the big markets still use bitcoin, the dominant currency of the darknet markets.

Contrary to what we learned by observing the chatter between criminals during the past several weeks, Bitcoin remains the gold standard in the dark web.

Recorded Future


Privacy, Fungibility

A tumbler (also known as a mixer) gives you back different coins than you put in for a fee of about 3%.

For now, most darknet market users deem Bitcoin + mixing “good enough” for privacy.

Empire Market has a link to BitBlender on the site for its bitcoin using customers.

Deep Dot Web maintains a list of tumblers (last updated March 2018)

Grams Helix is a popular “Bitcoin cleaning service that doesn’t just mix your bitcoins it gives you brand new ones.”

Some markets offer their own custom mixing service. For example, AlphaBay integrated Alphabay Coin Tumbler into the site.

Several posts on r/darknetmarketnoobs recommend mixing bitcoin with monero to obfuscate ownership.

bitcoin > monero > bitcoin > electrum on tails > dnm


R/Monero user RDNtrader suggests bitcoin users can, “Churn BTC wallets a few times, then use a dex to swap for monero, churn monero wallets a couple times, then buy back BTC on a dex or shapeshift. No way any ratings agency or government agency will be able to keep up with it”.


Concerns About Bitcoin’s Privacy and Fungibility

Chainalysis and the like are rolling in money from governments which presents more problems for staying anonymous when using bitcoin. A bunch of people have been busted this year from blockchain analysis.

Air Bud

An example of this is OxyMonster, a vendor on Dream Market, who was arrested last year. Payments from the bitcoin address found on his vendor profile were traced to a LocalBitcoins account with the username “vallerius.”

Law enforcement arrested Gal Vallerius after searching social media users named “vallerius” and linked him to the incriminating LocalBitcoins account.

If Bitcoin is not safe for the drug dealers, then it is not safe for anyone


Former Darknet email service SIGAINT criticized the effectiveness of bitcoin mixing. Bitcoin Core contributor Luke-Jr also expressed this sentiment when he exclaimed “Only a fool would use Bitcoin as it is today for darknet”.

Higher bitcoin transaction fees makes it more costly to tumble coins.

It takes multiple mixers to put some distance between your name and your funds in Bitcoin, and most users will forego their privacy at $20 or even at $10 per mix.

Emin Gün Sirer

Privacy enthusiast nopara73 is optimistic about future improvements and speculates that in, “three to ten years we will get some kind of sound amount hiding, call it Confidential Transactions, Bulletproofs, MimbleZeroRingShuffleProofs or something else”.


Bitcoin Fees and Delays

The average product on the dark web costs between $50 and $300. In December 2017, Bitcoin median transaction fees hit over $30 and many transactions took days to confirm.

During this time, darknet markets rushed to add alternative cryptocurrency payments. For example, Dream Market added Bitcoin Cash and Silk Road 3.1 adopted Litecoin and Ethereum.

Recorded Future cited a Russian darknet market user who wrote “What’s happening at the moment is incomprehensible. Despite that I’ve used the recommended commission fees, my transactions have remained pending for the past three days, and my work has been paralyzed. Dear vendors, please implement alternative payment options; otherwise, I will miss out on this Christmas season. $18 Bitcoin payment requiring 40 percent commission fee”.

Network congestion has eased in the months since December resulting in fees subsiding. This has reduced the incentive for darknet markets to switch to alternative cryptocurrencies.

The expectation among Bitcoin users is that most transactions will be done on the Lightning network in the near future. However, securely and successfully integrating the Lightning Network into the darknet market economy is likely to be challenging.

For example, Chris Pacia explains that Lightning currently does not do multi-sig, a key feature for safe escrow on the darknet markets. “In theory lightning payments could use 2 out of 3 hashes in the HTLC, but no software currently supports this functionality and doing so introduces dramatically more complexity on top of an already dramatically complex protocol. And it would require the moderators to remain online at all times else escrowed payments could not be made”.



Monero is a privacy favorite.

Notable Markets That Support Monero

Dream Market

Silk Road 3.1

Wall Street Market


Olympus Market

Empire Market

Zion Market

Dutchdrugz (single-vendor shop, not a marketplace)


Transactions Only in Monero

Libertas Market

We strongly believe that Monero is the future for all dark-net purchases, and the only real way to make anonymous transactions online. We believe the time has come to move away from Bitcoin and to embrace the more advanced Monero technology.

Libertas Market


Under Development (Monero Only)

Annularis Marketplace Software.

Annularis plans to be a “rebranded, updated and actively being developed fork of Bitwasp that is going to exclusively use monero mulitsignature transactions”.

Bitwasp was a popular open source software project that enabled users to quickly and easily deploy bitcoin marketplaces.


Closed Services that Supported Monero

AlphaBay Market, the largest darknet market in history, accepted Monero before its 2017 seizure.

Trade Route supported Monero transactions before it exit scammed.

SIGAINT was a popular darknet email service (now shutdown) with around 370,000 users that supported Monero.


Multi-Sig Transactions Recently Merged (Enables Safer Escrow)

Multi-sig was merged in December 2017, although it wasn’t immediately integrated into wallets and marketplaces.

This is a crucial development for darknet market use as it reduces the possibility of an exit scam.

Multi-sig support and wallets aren’t ready yet. Once they are, DNMs will be Monero only.

Derek Hsue


Growing Enthusiasm for Monero in Darknet Markets

The world’s largest darknet market Dream added Monero in February 2018.

There is a good chance that XMR will finally “make it” on the darknet now, with Dream. If/when the BTC fees skyrocket again, I think that’ll be the moment. BTC is so entrenched that it takes a massive kick up the arse for people to change.


Vocal support for Monero is common on darknet market forums. For example, Monero is one of the most popular discussion topics on r/DarkNetMarketsNoobs

In February 2018 an OpenBazaar developer said that Monero integration is on the way. OpenBazaar has some darknet market vendors. 

“We want to integrate XMR, but it only recently got multisig, which is a requirement. It’s also significantly different enough from Bitcoin that it’s not a simple task … It’s coming. We do have someone from the XMR community helping us with XMR integration now.”

Darknet market veteran of AlphaBay fame, Penissmith, is frustrated that darknet markets haven’t fully adopted Monero yet.

“Those who knew me knew that I was an avid supporter of Monero. I’m also a supporter of other privacy-centered cryptocurrencies. Not only have I made an enormous amount of money from simply holding Monero, but I’ve also been pushing for its acceptance on the darknet. It boggles my mind that our marketplaces are still using Bitcoin as their mainpayment backbone. This is ridiculous, and this alone will kill the marketplaces.”


Downsides of Monero

Monero is not widely used yet, seeing only 6,000 transactions per day compared to Bitcoin’s 200,000, Litecoin’s 30,000, and Bitcoin Cash’s 20,000.

Monero is perceived to be less user-friendly than other coins.

It is expected to have high fees at some point. Twitter user Matthew expects that upcoming bulletproofs integration will reduce this fee pressure by 80%.



Recorded Future analyzed 150 of the most prominent message boards, marketplaces, and illicit services.

Litecoin emerged as the second most popular currency, with 30 percent of all vendors who implemented alternative payment methods willing to accept it.

Recorded Future

Skepticism has been voiced about the above claim of Litecoin’s significance on the darknet markets.

Twitter user storms says, “This simply isn’t true. Bitcoin still dominated the dark net markets – with some using Monero”.

Silk Road 3.1 is a large market that accepts Litecoin.

AlphaBay clone Empire Market also accepts Litecoin, explaining “We initially planned to use Litecoin solely, because Bitcoin’s fees were horrible. But, we also knew that Bitcoin was here to stay, and the #1 cryptocurrency. So we decided to implement both, along with XMR.”

Empire Market provides a link for its customers to the Litecoin tumbling service PrivCoin.


Bitcoin Cash

In Recorded Future’s analysis of the dark web they found “Bitcoin Cash was the third most common cryptocurrency”.

Dream Market, the world’s largest, integrated Bitcoin Cash in December 2017.

Bitcoin still dominates these markets. A bunch of them use Bitcoin Cash.

Maxim Lott

OpenBazaar enables vendors to receive 3 currencies (Bitcoin, Bitcoin Cash, and Zcash). There are some darknet market vendors trading on OpenBazaar.



In October 2017, Europol reported that although Bitcoin is currently the dominant currency, a gradual transition is taking place. They claim that Ethereum is increasingly growing in popularity in underground markets.

Europol pointed out a decentralized darknet market that’s intended to run on the Ethereum Blockchain.

Silk Road 3.1 accepts Ethereum.

AlphaBay accepted Ethereum before it was shutdown.

In April 2018, an Empire Market operator commented, “We think that Bitcoin, Litecoin, and Monero are good for now. Perhaps we will add a few more in the future. ETH would probably be the next one that we add”.



Chainalysis recently claimed that the share of Zcash used in darknet markets is increasing.

This was challenged by Zcash founder Zooko: “Ok folks, I got to the bottom of this claim by Chainalysis about “The growing use of alternative cryptocurrencies on darknet markets; such as…Zcash”. The answer is that it is fake news, there is no reason to believe that Zcash is being used (yet) on darknet markets. …”

AlphaBay was in the process of adding Zcash when it was shutdown. OpenBazaar enables vendors to receive 3 currencies (Bitcoin, Bitcoin Cash, and Zcash). There are some dark market vendors trading on OpenBazaar.

With Zcash, mixing is opt-in (unlike with Monero). This has raised concerns about the effectiveness of Zcash’s privacy.

Zcash is currently frowned upon in the “communities.” No market staff I have spoken to have mentioned Zcash implementation. It is used on a small scale by vendors who accept transactions via Bitmessage, etc. No market I’m aware of will ever support it, IMO.




None of the well-known darknet markets accept Dash.

SIGAINT was a popular darknet email service (now shutdown) with around 370,000 users. They considered supporting Dash but were concerned about the possible collusion of Dash supernodes.



Decentralized Markets

Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.

Satoshi Nakamoto


Benefits of Decentralized Markets

Can’t be seized and shut down.

Censorship resistant trade.

Users keep control of their own money so giant exit scams aren’t possible.

Resilient to DoS (Denial of Service) attacks as there’s no single target to hit.

Trade is p2p so there’s no third party to take a cut. In contrast, commissions range from 2-10% on centralized marketplaces.

Law Enforcement resources are forced into attacking vast numbers of decentralized individual users instead of a few centralized site operators. This raises the cost of attack and lowers the impact of successful attacks as arresting users one-by-one incriminates far less people than gaining control of the whole market.


List of Decentralized Markets

The breakthrough moment has yet to occur for decentralized marketplaces, but several projects are working towards a solution.


Launched the decentralized marketplace BlockMarket.



An up and running decentralized marketplace.



An active community building the decentralized marketplace Particl Market.

r/Monero user travis criticizes the market saying “Its garbage. Particl holders can vote on what they find acceptable to sell on the market meaning you can wake up one day and they’ve voted to stop selling whatever you sell.”



District is “a network of decentralized marketplaces and communities. Powered by Ethereum, Aragon, and IPFS”.



In 2016 leading darknet market researchers Kyle Soska and Nicolas Christin contributed to the Beaver whitepaper, “A Decentralized Anonymous Marketplace with Secure Reputation”.

Currently, Beaver looks like an abandoned project since not much information can be found about it since the whitepaper was released.


Other Decentralized Marketplaces

John Light maintains a list of decentralized marketplaces and protocols on GitHub.



OpenBazaar is the world’s largest decentralized marketplace.

OpenBazaar 2.0 was launched in November 2017.

Darknet vendors trade on OpenBazaar

2.0 has IPFS for offline ordering, Tor support for privacy, Segwit wallet, no fees, no censorship, and thousands of users.

– Sam Patterson


Is OpenBazaar a Dead Project?

OB1, the company developing Open Bazaar, raised $5million in March and has published their Roadmap for 2018.

I would be fascinated to know how you define a dead project.

OpenBazaar is among the larger fully distributed networks (by node count) outside of the cryptocurrency networks themselves.

Also under very active development: 6,000+ commits on client and server repos.


…. Since 2.0 launched we’ve seen more than 42,000 unique nodes.

There are currently 22,000+ listings for sale on the network.

Which of those stats makes OB in a “bleak state”?


… There are nearly a thousand vendors currently offering products now. Which is awesome.

Is there another cryptocurrency focused marketplace with more than 1,000 vendors? Send me a link and I’ll check it out.

Sam Patterson


Why Hasn’t OpenBazaar Taken Over Yet?

Privacy Only Added Recently

OB only enabled people to connect with Tor in November 2017 with the launch of OB2.



Centralized darknet markets have been around for a while and people tend to like what they already know and are used to.

Popular vendors with high demand for their products are already established on centralized marketplaces.


User Experience

OpenBazaar only recently abandoned the requirement to run a full node.

OpenBazaar stores no longer need to be online, that was fixed in 2.0 by using IPFS.

Sam Patterson


Users Want Web and Mobile Platforms

OpenBazaar has always been a desktop-only experience. Being able to run OpenBazaar in a browser and on a smartphone is essential to further reduce the barriers to entry into the network.

Building the web-based version is a significant task, and we believe it will take us into early 2019.

The initial web-based client will allow buyers to make purchases without needing to download anything.

OpenBazaar 2018 Roadmap


Reputation Systems Are Easier to Sybil Attack in Decentralized Markets

Angel Leon explains why a star-based rating system is easier to deploy in a centralized marketplace:

“Centralized marketplaces can afford this system, because they can refactor it and censor users at will if they gauge that people are misbehaving. They can also employ secret heuristic mechanisms to detect and punish wrongdoing.

However, a decentralized market does not have such an option, as the code and exact inner workings must be open. The rules for deciding which ratings are good and which ones are bad must be published in the open source code of the project.

This opens up a star-based system to Sybil attacks (create multiple fake “buyer” accounts which perform transactions with the vendor). Subsequently, the malicious vendor can make sure they bypass such rules”.


Darknet Markets and the Shadow Economy

The underground/shadow economy could be as much as 75% of the world’s economy. It can be seen from the vibrant streets of South East Asia to the Shanzhai economy of Shenzhen that shuns intellectual property.

Although only a tiny part of this giant underground economy, darknet markets are a symbolic reminder of the state’s limits to enforce economic censorship.

Let us remind ourselves that the informal economy is, in fact, the larger part of the world’s total economy.

When you add in the domestic and household economy of the world’s households, the subsistence economy, the barter economy, the volunteer economy, the “under the table” economy, the criminal economy and a few other smaller players, you get something that adds up to 3/4 of the world’s total economic activity.

The formal economy – the territory of professional and paid work, of tax statements and GDP – is only 1/4 of the world’s total economic activity.

Sharon Astyk


Cody Wilson went into further detail in an interview with the BBC’s Stephen Sacker:

Cody Wilson: Most human activity, and this is an OECD assertion, most human activity in commerce happens outside … the all seeing eye of the state, and will continue to, to the point where two-thirds of of all human activity by 2020 will be black market activity.

That’s what has to get done. That’s what has to happen in this world. And I want these people to be able to use digital cash. I want them to be able to use it anonymously, or as anonymously as possible.

And everything else is just a kind of illusion. Everyone is trying to tell a competing story about the history of technology, their place as subjects to power. Everyone is trying to brush up bitcoin, put a suit and tie on it and say, “Oh no, it’s part of this story of the history of money and of nation states”. We’re saying no, it represents the fundamental question mark.

Will criminals use it? Yes of course, they use cash too.

Stephen Sacker: Everything you say and point to suggests a fundamentally different world within 10/20 years. You say what we call the black market, the shadow economy, is going to explode?

Cody Wilson: It’s already the largest…. If we took the entire global shadow economy, it’s the largest economy in the world, it’s bigger than the US.

Necessarily so right, especially as the regulatory state becomes so byzantine, it’s impossible to even get anything done. People have to eat. People have to live in the world.


Justus Ranvier added to this line of thought with his article Only the Black Market Matters, stating:

Every single person who has been beating the drums of regulation, compliance, and conformity is proposing that we change Bitcoin’s fundamental value proposition in order to cater to a segment of the economy that is predicted to shrink from less than 1⁄2 of the global workforce to less than 1/3 over the next six years.

… For everyone else who wants Bitcoin to succeed, these facts suggest an easy way to evaluate every innovation in the general cryptocurrency space. Every time a new startup launches, or a new software project announces, ask one question: “Does this new thing improve the black market?“

… If we have a choice of focusing on two customer bases, one which is projected to grow by 50% over the next six years while the other is projected to shrink by 33%, which one should we choose?

… So bring on the money laundering, tax evasion, drug marketplace, and unregulated taxi service software. Anyone who isn’t actively working to expand and empower the informal economy is wasting their time.

The shadow economy is so large governments are pushing for a digital cashless society so they can track, tax, and control it on their databases.

In this interview, Andreas Antonopoulos describes the danger of governments completing this transition over the next decade and managing to stamp out the shadow economy.

A private, fungible, p2p, digital currency is needed to prevent this totalitarian scenario occurring.

Underground and darknet market use of Monero has a good chance of increasing as government persecution of “non-compliant” cryptocurrency currency users intensifies with blacklists of “tainted” coins and more scrutiny at centralized fiat-crypto exchanges leading to tax inspections.

Very few things are as powerful in regards to brand and adoption than “Monero’s privacy and fungibility are good enough for criminals, so they’re good enough for you”.


Rob Wainwright, former Executive Director of Europol, also expects the underground economy will shift more and more to privacy coins. Earlier this year, he tweeted “We’ll see a progressive shift in 2018 towards criminal use of cryptocurrencies other than Bitcoin, making it generally more challenging for law enforcement to counter”.

This makes Monero a compelling investment as the leading privacy coin and potentially the dominant darknet market currency in the years ahead.


Overall, Darknet Markets should have a bright future if they can evolve into something that successfully integrates the following features:

Decentralized marketplaces like OpenBazaar

Private cryptocurrencies like Monero

Strong encryption like PGP/Bitmessage


Follow me on Twitter @leebanfield1

Bitcoin: 38hiAWKyEszwt76aAreKjKRNye7u9KZgME




  1. Anthony Fiorentino · · Reply

    The reason the govt wont allow drugs to be or darknet markets to be legal? What would all the dea judges c.o’s lawyers do or the companies who supply food linens all products to the institutions? Those people would be out of work and have to find a new carear
    …no way the govt allows that even though you save lives and put the dangerous cartels out of buisness

  2. […] Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here. […]

  3. […] Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here. […]

  4. […] Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here. […]

  5. […] Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here. […]

  6. […] Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here. […]

  7. […] Lee Banfield gives a great overview of the history and current state of dark net markets; the post can be found here. […]

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