Bitcoin’s congested blockchain and high transaction fees have claimed another casualty.
E-commerce vendors on the dark web, a place where the cryptocurrency remains unchallenged as the medium of transaction, have begun accepting other coins.
In a surprise of sorts, Litecoin has emerged as the second-most popular cryptocurrency for e-commerce transactions in the Internet’s underbelly. (See also: Bitcoin Vs. Litecoin: What's The Difference?)
According to a report by Recorded Future, a real-time cyber threat intelligence provider, Litecoin is used by 30% of all vendors who use alternate methods of payment. Dash, another cryptocurrency whose protocol is well-suited for daily transactions, is accepted at 20% of all stores on the dark web. Bitcoin is accepted at all e-commerce storefronts on the dark web. (See also: What Does Government Regulation Mean For Privacy-Focused Coins?)
But its share of the overall market may diminish in the future, given the mostly positive pronouncements about other currencies by vendors in Recorded Future’s report.
The firm surveyed vendors to determine which cryptocurrency should be adopted by vendors next. Dash and Monero, a cryptocurrency with strong privacy credentials, emerged as favorites, while bitcoin and its offshoot bitcoin cash were ranked last. (See also: The Rise Of Private Cryptocurrencies.).
Increased use on the dark web may push up transaction volume in these coins. But not all of them are enthusiastic about the association.
In fact, Dash disputes Recorded Future's report. "Numerous publicly available reports, even with Tor and VPN assisted searches, have indicated no adoption of Dash as an alternative payment method for these (Dark Net) transactions," Ryan Taylor, Dash CEO, stated in an email. Taylor says the cryptocurrency's PrivateSend feature, which mixes up the origin and recipient addresses of transactions, accounts for less than 1% of overall transactions on the Dash network. "We believe that privacy is an important feature for users to have access to....but that has not equated to Dash adoption, let alone use, on the Darknet," he said.
Why Did Dark Net Vendors Switch?
Bitcoin’s rising transaction fees are the primary reasons for the switch. The report’s authors claim that high fees have made it “economically unfeasible” for use on the dark web, where most daily transactions are usually in small amounts.
In a conversation with Fortune, one of the report’s authors, Andrei Barysevich, provided additional details. According to him, Litecoin is popular because it has faster processing times as compared to bitcoin and can be stored in offline wallets.
Cryptocurrencies are popular on the dark web because they provide a convenient method of obfuscating identities and transaction details. In August 2017, it was reported that bitcoin, monero, and ethereum were the preferred coins to conduct dark web transactions. (See also: What Is the Dark Net?) But federal authorities have increasingly begun cracking down on e-commerce sites there.
For example, they closed Alphabay, a site that reportedly transacted business worth $1 billion since 2014, last year. The cumulative effect has been a sharp decline in the number of illegal transactions conducted using bitcoin. In August 2017, Shone Anstey, co-founder and president of Blockchain Intelligence Group, estimated a decline of 20 percent in illegal transactions using bitcoin.
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