Marketplaces on the dark web frequently processed more bitcoin transactions than BitPay last year, new research has found.
In a paper released this week, Kyle Soska and Nicolas Christin from Carnegie Mellon University revealed that, even by conservative estimates, the daily sales volume of six large-scale dark markets reached up to $650,000 in 2014.
The bitcoin merchant processor's self-reported annual total, $158.8m, would produce a daily average of around $435,000.
The chosen few
The researchers, who spent over two years scraping and analysing data from more than 35 different sites, also found a large discrepancy between their sellers.
A very small fraction – the elite – generated a significant profit. By contrast, the majority of sellers (70%) would never sell more than $1,000-worth of items.
Mixers, gamblers, thievesSwanson came out with his best guess at the flow of money through the bitcoin ecosystem in April. What it showed was merchants sales – illicit or otherwise – make up only a slice of transactions.
In actuality, bitcoin transaction volume that takes place 'on-chain' is dominated by a whole host of other services. The network is a test bed for many things – stress tests included – and it costs very little to spam the network with tiny 'dust' transactions, for example.
The popularity of gambling sites such as Satoshi Dice, which at one point accounted for 50% of transactions on the network, continue.
"In terms of on-chain transactions we know gambling transactions as a whole are likely the largest component of transaction volume," Swanson said.
The same goes for bitcoin mixing services – of which there are at least seven in popular use. A study from Kristov Atlas released last September found that 2.6% of the 20,000 bitcoin transactions in his sample fitted the profile of SharedCoin transactions....
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