There is an interesting shift in the online economy currently playing out in the #Darknet, a corner of the deep web that does not show up in Google search and has become the preferred marketplace for drug sales, #Ransomware peddlers, and just about anything illegal that demands anonymity. It is worth watching because recent Darknet activity is quietly re-shaping the future of digital currencies like #Bitcoin and others as law enforcement agencies around the globe become more sophisticated in tracking online criminal activity.

The Darknet is only accessible through router services (such as TOR) that protect anonymity. This guarantees that users in this hidden area of the Internet run the gamut from good (journalists and political activists fighting government censorship) to evil (a criminal marketplace where hacked user accounts, fake passports and drugs are readily available for sale).

Advertisements
Advertisements

Ransomware fuels big profits for criminals.

At the IAPP Privacy Conference held in San Jose, California last week, much of the discussion was focused on recent Darknet activity and the dramatic rise of ransomware, where hackers access company networks and lock out valuable files until payment is made to release them. McAfee Labs recently reported that one enterprising group of hackers received $121 million from ransomware breaches just in the first half of 2016.

“The amount of breaches has skyrocketed and the ransoms themselves have changed significantly,” said Brenda Sharton, a senior partner with the Goodwin law firm. According to Sharton, the FBI has seen a 300 percent increase in ransomware attacks since the start of this year, including a single payment of $500,000.

In the Darknet criminal world, the engine that drives activity has been Bitcoin, the digital currency that originally allowed transactions to remain largely anonymous.

Advertisements

Sharton told conference attendees that many of her corporate clients have even opened Bitcoin accounts in anticipation of future ransomware payments.

However, law enforcement agencies and security firms have found new ways to track Bitcoin transactions. This is now forcing criminals to seek other cryptocurrencies that will protect anonymity and they may have found it in the digital product offered by Monero.

Cryptocurrency provides new option for Darknet users.

Monero has promoted their cryptocurrency as being untraceable. It uses stealth addresses and masks most of the transaction data, unlike Bitcoin where payments are logged on a public ledger known as the blockchain. Two of the more popular Darknet marketplaces, AlphaBay and Oasis, recently announced acceptance of Monero for deposits and withdrawals and this has spiked further interest as criminals begin to shift away from Bitcoin.

The outcomes behind this evolving transition inside the Darknet marketplace are significant. Bitcoin has always been on shaky ground as a secure digital currency for the long term and many law enforcement groups believe that if Bitcoin were to fail it would close off a great deal of online criminal activity.

Advertisements

Now, the shift to new digital forms of anonymous payment may take that option off the table.

In addition, the adoption of new currencies like Monero offers a glimpse into the future reshaping of the global marketplace as a whole. Bitcoin’s blockchain technology has already been eagerly embraced by mainstream companies such as IBM and Accenture. It will be interesting to see how the emergence of new currencies in the Darknet and elsewhere may affect this model.

During the IAPP event, Gerard Eschelbeck, Google’s head of security and privacy, described the current state of the online world as one where “the bad guys are becoming very well-organized.” Recent moves inside the Darknet provide further proof that criminals are adopting new tools for their own economic engine.