Dark Web Processes More Bitcoin Transactions Than BitPay, Study Shows

Darknet markets processed more bitcoin transactions than BitPay last year, according to a new study.

In a report published this week, Kyle Soska and Nicolas Christin of Carnegie Mellon University revealed that even by conservative estimates, six major dark web markets were selling as much as $650,000 worth of bitcoin per day in 2014.

According to the annual report released by BitPay last year, in 2014, BitPay processed $158.8 million in Bitcoin transactions throughout the year, averaging $435,000 per day.

The report states:

“In just four years since the emergence of Silk Road, the average daily volume of Bitcoin on darknet markets has reached $650,000 (data from the last 30 days), with more stable data of about $300,000-500,000 per day, exceeding previously reported data.”

Previous studies have relied on the total number of drug listings on each site, but Christin and Soska used sellers' scoring feedback to make their estimates, with each review counted as a product sale.

According to their own explanation, this is an important factor because popular drugs can have many feedback scores, and some drugs even have cumulative sales of over $1 million.

After two years of observation and research, the two researchers scraped and analyzed data from more than 35 different dark web sites and found that there are still large differences between sellers.

Only a small minority (the elite) made any significant profits. In contrast, most sellers (70%) would not sell more than $1,000 worth of drugs.

“In fact, 35 dark web merchants sold more than $1 million in products, with the top vendors responsible for 51.5% of that volume.”

This situation is similar to BitPay's industry data. Researcher Tim Swanson said that compared with small merchants accepting Bitcoin payments, a few large merchants account for the majority of transactions, and Bitcoin payments conform to 80/20法则.

In BitPay’s recent report, gift card sales accounted for 9% of total transactions. Given that there are not many merchants offering gift card services on the market, Swanson said that these transactions are likely to come from Gyft and e-Gifter, which have the largest market share.

If we follow this logic, the data in the rest of the BitPay chart points to a view that the vast majority of Bitcoin transactions in the market are actually driven by a few companies.

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