Bitcoin is largely considered the first decentralized cryptocurrency created. It was published as an invention by Satoshi Nakamoto in 2008 and it was released as open-source software in 2009. While there were systems similar to it before it was published, Bitcoin has brought about a revolution in online economy and has inspired the creation of multiple other cryptocurrencies.
What makes Bitcoin one of the favorite means of payment online is the fact that while today’s economy largely relies on big banks, Bitcoin does not, since it is a completely decentralized system to begin with. This means that no single person, corporation or country has control over the Bitcoin market and nobody can claim them unlawfully. This is possible due to Bitcoin system’s design, making it essentially one big, virtual ledger. Everybody can access it through specialized software and since it is open-source, everybody can check it out to make sure that it does exactly what its creators said it would.
The primary way one can get a hold of Bitcoin is through mining them. While normal currencies are based on gold or silver reserves, Bitcoin are based on mathematical algorithms. By allowing your computer to be used for solving complex mathematical calculations using the Bitcoin software you are carrying out an action known as “mining”. Your computer is essentially helping in finalizing transactions which are part of Bitcoin block-chain earning you a small part of transaction fees which are translated into Bitcoin of value equal to the amount of your contribution. As its name suggest the block-chain is a structure made of Bitcoin blocks, lists of transactions happening all over the world. The block is updated regularly and its updates are sent to all miners working on it.
The way miners work on a block is by applying a set mathematical algorithm to it and gaining a so-called “hash” out of it. It is very easy to create a hash out of a block and computers can perform this task very rapidly. To make sure that the amount of available Bitcoin does not become too large, developers designed a way to make mining more difficult the more coins are mined out. This is done by prompting the miners’ computers to create a hash with specific properties which differ for every hash needed. Another important thing when mining for Bitcoin is “nonce”. When Bitcoin block is hashed along with a “nonce” it should give a set output and unless one does not get that exact output, the “nonce” is incorrect and searched for again. Since “nonce” is checked in order from 0 upwards, it takes a considerable amount of time to find the right one.
A thing to note about Bitcoin is the anonymity involved with making transactions with them. To store Bitcoin, one needs only a personal address of their wallet. While everybody can tell how much Bitcoin there are on a certain address, no one is able to tell who the address belongs to. If one uses different Bitcoin addresses constantly and never deposit Bitcoin from different addresses into a single one, there is virtually no way to trace who the Bitcoin belong to.
It is for this reason that Bitcoin have become the primary currency when doing any form of business on Darknet. Due to illicit nature of many actions conducted on darknet markets it is vital that its users remain anonymous. There are multiple ways to protect one’s Bitcoin when dealing with unknown vendors, but one should always make sure to deal with reputable people before giving away their personal information. It is also important to note that there are numerous phishing sites around darknet, praying on inexperienced people and their Bitcoin wallets.
The most important thing is not to use the same account information twice and to make sure that the information you give does not link to any of your personal information. More than 80% of reported scams on darknet are nothing more than inexperienced users giving away their information to phishing sites, just to find their Bitcoin taken away by somebody.
The second thing needs a little bit more explanation. It is obvious that for those looking to hide something, it is the best option to increase possible suspects as much as possible. If there is only information that the suspect is using Bitcoin to conduct business it is not too helpful since millions of people are doing so just to buy a coffee at a local coffee shop or order something over the internet. The amount of people using other, more anonymous cryptocurencies is much lower, meaning less people to sift through if one was to look for you. So, essentially the decreased anonymity of Bitcoin has made it much safer and less suspicious to use than other, safer cryptocurrency options.
The only real problem that users of Bitcoin face, which greatly affects small vendors on darknet is its volatility or constantly changing value. For a small business, a single Bitcoin, with its value changing by tens or hundreds of dollars on a weekly basis can make a difference between making a profit and losing money. This is the primary reason why people are looking into alternative payment options, but so far none has offered the benefits that Bitcoin does.
If we sum it all up it is clear that Bitcoin will remain the currency of choice for darknet market users as long as its benefits outweigh the risks, but if a good alternative appears in the future, there is no doubt that it will be accepted with open arms.