/How Bitcoin Fuels the Dark Web | Blockchain Central

How Bitcoin Fuels the Dark Web | Blockchain Central

Video: How Bitcoin Fuels the Dark Web | Blockchain Central

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Hey everybody, welcome to a new episode on BLOCKCHAIN CENTRAL! Today I will take you on a tour through the underbelly of the Internet! I’m sure you’ve heard that there exists a dark side with no regulations, no central control. It is called the Dark Web and we’ll see how it takes advantage of blockchain technologies. The darknet is basically a second Internet. It does not have normal URLs or links as we are used to in our browsers. Instead, websites are available via onion addresses. These look something like that: …and they are not available on your regular browser. Instead, you need to download a Tor browser.

The Tor browser is a particular, privacy-focused browser, that can resolve onion addresses. The darknet itself is also more privacy-focused. It has the reputation of being less monitored than the regular internet. But, since the Tor project has been mostly financed by the U.S government, there are controversies regarding the Tor browser being actually traced by U.S authorities. Tor browsers and services are still seen by most people as the area outside of government control. That is why, all sorts of different things can happen there. Big newspapers, for example, can have whistleblowing sites. Those are addresses where anyone can anonymously tip a big story. There are also news sites that are too controversial to be even present on the regular Internet. But the main difference is in the marketplaces. Anything that is in demand, can be found there: porn, guns, contract killers… But the most significant form of a market has to do with drugs. A search engine called Grams not only delivers links to many such marketplaces across the dark web, but also looks very much like Google.

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So, let’s compare the darknet to a regular marketplace. Take a regular service like Amazon. You have an account there under your real name. When you want to buy something, your search for it and Amazon shows you the item. You decide on a product and pay with a credit card or PayPal. Theoretically, there are only two parties involved: you and Amazon, but it’s not that simple. The system only works because the government enforces the law. There are quality checks for products, laws for purchases and laws for banks. There are patents protecting successful products. All of these laws have the goal to create trust and certainty. When purchasing anything online, you heavily rely on a functional government. And how would this work on the darknet? It has to be different, right? Well, there are no laws. That is why, people need other ways of building trust. Darknet markets do not have copyright laws. If one product sells well, anyone can sell it under the same name and design. There are no trade laws: whether you actually ship your product or not is uncertain.

And, of course, there is no quality control. So, how can it work? Product and merchant quality are assessed via reviews and payments are made via Bitcoin escrows. An escrow works like this: a darknet marketplace has a drug seller. If you want to purchase something, the money goes into an escrow wallet. Basically, you pay the Bitcoins to the marketplace. Only after the product was received the money is released to the seller. All of this typically works with Bitcoin. For years darknet drug markets have been the only real use case for Bitcoin. Obviously, these marketplaces are highly illegal, and eventually, they caught the attention of organizations like the CIA. Today, the all early marketplaces are gone. The biggest of all of them was the “Silk Road”, which primarily used Bitcoin to manage its transactions.

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They boasted billion dollar annual revenues before Bitcoin was even crossing the 500$ line. Today, it’s founder, Ross Ulbricht, is in prison; he was caught in a public San Francisco library. The site is down, and a banner by the FBI greets the curious visitor ever since. What have we learned today? The darknet is the Wild West of the Internet. It features a variety of marketplaces. These marketplaces have to find solutions that work without enforced laws. Hiding from the government is also obligatory. That is why, payments are exclusively made in cryptocurrencies. As the first cryptocurrency, Bitcoin became the standard method of payment. For years now, this has been the most widespread real-world use case of Bitcoin and cryptocurrencies. Fortunately, the potential for blockchain technology in most industries has been discovered in the recent years, with many new real-world use cases to come. Before you go, please note that this content neither represents financial, legal, or tax advice, nor is it supposed to be understood or interpreted as solicitation to buy or sell any securities, coins or tokens.

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