Not the first in a series of bitcoin copycats, darkcoin was launched earlier this year with the promise of more advanced privacy protection than what bitcoin has to offer. Although launched with the best of intentions – consumer privacy – this promise has attracted the attention of online peddlers of illegal drugs, some of which now offer payments in the digital currency.
Though bitcoin is essentially an anonymous currency, comparable in some ways to cash, transactions in bitcoin can be traced through certain channels. Bitcoin accounting is kept on a public ledger known as the blockchain, which can be accessed by anyone to trace transactions to a public key or bitcoin address, often associated with a pseudonym. Users must work hard to protect their pseudonyms, making illegal transactions in bitcoin somewhat problematic for those engaging in illicit behavior. Darkcoin scrambles traces through the blockchain protecting names and pseudonyms. Users can exchange darkcoin through CoinJoin which encrypts transactions making outside tracing nearly impossible.
Yes, it was accepted and implemented by these two markets. I can’t really control that,” says darkcoin creator Evan Duffield. “The goal has always been to make a currency that’s privacy-centric and is more for mass consumer base types of things. It’s not just for buying drugs online.”
Despite Duffield’s innocent intentions, he admits darkcoin’s popularity among illegal markets indicates its relevance and staying power. Duffield highlights bitcoin’s early history in the underbelly of internet activity. Duffield and others, like cryptocurrency consultant and privacy advocate Kristov Atlas, say the adoption of darkcoin in online black markets is a good sign for the future of the currency.
Early on with bitcoin the only thing you could do with it was gamble and buy drugs. Then it got past that and was accepted on many sites all over the internet,” says Duffield. “The same thing is happening with darkcoin.”
Read More – Online Drug Dealers Are Now Accepting Darkcoin, Bitcoin’s Stealthier Cousin (Wired, Andy Greenberg)