Are Cryptocurrencies Criminals Best Friends? Examining the Co-Evolution of Bitcoin and Darknet Markets

Janze, Christian (2017) Are Cryptocurrencies Criminals Best Friends? Examining the Co-Evolution of Bitcoin and Darknet Markets. Americas Conference on Information Systems (AMCIS).

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Abstract

While public and private entities question the utility of privacy preserving means of electronic payments for individuals other than criminals, discussions are primarily based on anecdotal evidence. Thus, we address the overall research question of whether pseudonymous cryptocurrencies are primarily used by criminals. Based on Rational Choice Theory and darknet market design, we build a dynamic research model. Utilizing panel data of 296,875 unique product and service listings that were available on 19 darknet markets from June 2014 to July 2015 as well as Bitcoin blockchain transactions, we provide evidence for the co-evolution of Bitcoin and darknet markets. We find that transactions within the Bitcoin blockchain and the usage of transaction obfuscation services can be related to previous sales on darknet markets. The temporal lag can be attributed to escrow mechanisms. We contribute to the research stream of cryptocurrency usage behavior and discussions of regulators, governments and financial services firms.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
T Technology > T Technology (General)
Divisions: Faculty of Industrial Engineering and Informatics > Information System
Depositing User: staff repository 1
Date Deposited: 10 Aug 2018 20:28
Last Modified: 10 Aug 2018 20:28
URI: http://repository.ittelkom-pwt.ac.id/id/eprint/3013

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