While Bitcoin has gained mainstream popularity in recent months, it’s lost favor with a certain group of users: criminals. People paying for illicit services are moving to alternative cryptocurrencies.
According to a study conducted by cybersecurity firm Recorded Future, users of the dark web are starting to move away from Bitcoin and opting for options that improve upon Bitcoin’s functionality. Litecoin and Dash have emerged as two of the biggest competitors.
The study found cyber criminals began growing frustrated with Bitcoin in 2016 as the digital currency started to gain value and in turn saw its transaction fees increase and processing speed slow down.
“Bitcoin payments have become economically infeasible, because the subsequent cost of transaction increased ten-fold, sometimes as much as 30 percent of the smaller payment amounts,” researchers at Recorded Future wrote.
According to tracking data from BitInfoCharts , the current average transaction fee sits at about $5. That fee has spiked as high as $60 at times.
Recorded Future found the average transaction made on the dark web typically ranges between $50 and $300. When paid with Bitcoin, there is a premium placed on the transaction with the processing fee. Some buyers have grown increasingly unwilling to pay that additional fee, especially for smaller or frequent transactions.
In addition to the high transaction fees, there is also the challenge of processing purchases made with Bitcoin. According to Blockchain.info , there are nearly 8,000 Bitcoin transactions waiting to be processed. At its peak, that figure spiked to over 200,000 unprocessed transactions.
Bitcoin’s blockchain infrastructure has long struggled with processing large amounts of transactions. It currently can handle about 65 transactions per second, but the popularity of the cryptocurrency can lead to a massive backlog.
The fact that transactions are often processed at a snail’s pace has been the cause of great frustration for dark web users. According to researchers, “the prospect of having to wait up to 24 hours to confirm their transactions, in addition to exuberant payment fees, has rendered Bitcoin payment unusable for a large group of bad guys.”
In favor of the once-preferred cryptocurrency of the dark web, criminals are turning to alternatives like Litecoin and Dash, which provide improved infrastructure that offer faster transaction processing and lower fees.
Litecoin—currently the sixth-most traded digital currency with nearly $8.7 billion in market capitalization—is already accepted by nearly one third of all dark web vendors. Dash, with a market cap of nearly $5 billion, is accepted by one in five vendors.
“The same class of power users who helped to establish Bitcoin as a unified payment instrument across the dark web, spurring the underground economy and plaguing the world with never-ending ransomware attacks, illicit drugs, and weaponry, now see it as a roadblock to proliferating criminal business,” the researchers wrote. “Litecoin and Dash will take their place next to Bitcoin as the everyday payment currencies of the dark web.”