This past week has had a mix of good and bad news for Bitcoin and cryptocurrency enthusiasts. For one, the Bitcoin price has gone up again, surprising quite a few people. On the other hand, multiple top darknet marketplaces have been shut down. Many people associate Bitcoin primarily with the darknet, though it seems the closure of these markets has not impacted the Bitcoin price in a negative manner.
Bitcoin Is so Much More Than a Darknet Currency
Most Bitcoin users will be well aware of how the world’s leading cryptocurrency has a bad reputation in the eyes of the general public. More specifically, Bitcoin is often associated with money laundering, drug usage, and the darknet. While it is true that virtually every darknet marketplace accepts Bitcoin as a form of payment, the cryptocurrency is used for many different and more legitimate purposes as well.
In fact, one could argue that Bitcoin has received a bit of competition as the preferred currency on the darknet. Because Bitcoin doesn’t provide any privacy or anonymity, darknet marketplace operators have been exploring alternative solutions. Both Monero and ZCash seem to be far more suited for this type of transaction, even though their adoption among darknet users remains to be determined. There was even a rumor of AlphaBay eventually integrating Ethereum payments due to its progress on zk-snarks, but the marketplace was shut down before that could even become a factor.
In the end, the top darknet marketplaces getting shut down by law enforcement does not come as a surprise. While it is true that AlphaBay and Hansa both generated a lot of transaction volume every single day, it did not influence the overall Bitcoin price all that much. It seems that most darknet users still must buy Bitcoin legally and then send it through one or multiple mixers in order to receive semi-anonymous currency. Then again, reports related to AlphaBay and Hansa indicate that a lot of users and operators were identified thanks to their Bitcoin transactions.
All of this goes to show that Bitcoin just isn’t suited for criminal activity. Unfortunately, the world’s leading cryptocurrency often makes headlines due to its passive involvement in criminal activity, such as ransomware attacks and exchange hacks. Then again, those stories seemingly only represent a fraction of what is going on with Bitcoin. More importantly, it seems that none of this news has had long-lasting negative effects on the Bitcoin price.
With the disappearance of AlphaBay, Hansa, and potentially Dream as well, one would expect the demand for Bitcoin to slow down — that is, assuming one believes that darknet users represent the majority of Bitcoin holders. Looking at the current Bitcoin price chart, it is obvious the opposite is true. The Bitcoin price started rallying as soon as the AlphaBay market disappeared, indicating a growing demand for cryptocurrency unrelated to darknet usage. It is certainly possible that some darknet users had to stock up on Bitcoin again after losing money to AlphaBay, but that momentum would not have warranted the current Bitcoin price trend.
One Bitcoin was worth around US$1,860 on July 16th, whereas it is worth US$2,666 at the time of writing. If the darknet had been the main reason to use Bitcoin, its price would have tanked immediately after the AlphaBay and Hansa news became public. Instead, this graphic shows an upward trend. It is safe to say the darknet news does not impact the Bitcoin price negatively, even if the top 3 marketplaces are now gone or under investigation by law enforcement.
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