Darknet Chronicles Pt 4: How Money is Exchanged
This article is a continuation of the Darknet Chronicles, a series brought to you by Teramind. This collection of eight articles will focus on bridging the gap between stolen information, insider threats, and the darknet. You can expect to learn about the journey of information after it is stolen, how insiders help set up the breach, and what you can do to protect your company from darknet insiders.
You may be wondering as you read about hackers, darknet insiders, and vendors how exactly are they making so many transactions without getting caught? Isn’t there a paper trail? Well the answer is not so complex but may require some explanation if you’re not familiar with blockchain ledgers and decentralized currencies. Cryptocurrencies are the primary store of value and means of exchanging goods and services on the darknet. A cryptocurrency is a virtual currency that uses encryption for anonymity. These currencies operate on a blockchain which is a decentralized ledger and is mined by anyone instead of issued through a central bank or institution. Theoretically, this means that currency manipulation is not directly possible from governments. However, due to how people have treated cryptocurrencies many economists have been very quick to point out that people treat them as assets rather than true currencies. One of the first cryptocurrencies was the formerly notorious Bitcoin, whose name used to be married to the Darknet and crime. More on that later.
Always Remain Hidden
Keep in mind why people go on the Darknet, to be anonymous and untraceable. Money issued from central authorities are never really anonymous and often leaves a trail behind. The way in which people’s accounts are debited and credited leave little room for anonymity from larger institutions. Even when transacting in cash at times. This is where cryptocurrencies enter, on the Darknet the goal is to be anonymous which is what the promise of Bitcoin was when it came out. So naturally some of the first people who needed their financial transactions detached from their real life identities were drug dealers and other people in shady activities. Turning to the darknet to hide their traffic and to Bitcoin to hide their transactions they were essentially able to build their wealth in whatever manner they deemed necessary. The baseline rule of the darknet was upheld. Always remain hidden.
The Rise and Fall of Bitcoin
When you first heard of Bitcoin it was likely associated with shady dealings and illegal activities. This is largely because it was associated with a darknet marketplace called The Silk Road. This was one of the only darknet sites widely known to the general population. However the marketplace came to a close in 2014, and with it so has the negative perception of Bitcoin. Lately the idea of blockchain accounting has become very popular in mainstream business, and as a result Bitcoin is now considered just another cryptocurrency. You may have noticed that when a ransomware attack is carried out the criminals often demand the ransom in the form of Bitcoins. This is because Bitcoins are still very much in circulation on the Darknet. However that may not last for much longer though. People on the darknet have slowly caught on since 2015, after the fall of Silk Road, that Bitcoin is not as anonymous as it originally claimed to be. In many cases vendors unintentionally leak data about transactions and who it’s associated with by way of web trackers and cookies. Information collected often can deanonymize almost anyone who is using Bitcoins for payments. Additionally, on the Darknet when people order drugs or something online and pay with Bitcoin, the address that the vendor sends to goods to can compromise the identity of the buyer. Nodes are also able to be traced back to an origin wallet.
These security vulnerabilities have caused concern for buyers and sellers on the Darknet. So the search was on for a better alternative. Bitcoin may be replaced soon thanks to a hyper-privacy focused cryptocurrency called Monero. The new cryptocurrency goes far beyond relying on decentralization to keep users anonymous. It instead has always-on privacy built into the core of the cryptocurrency and solves the vulnerabilities that Bitcoin and Ethereum had. As a result it offers the number one thing users of the Darknet always seek, to remain hidden.
Insider Threats & Darknet Money
With the rise of Monero it is possible that if a well executed cyber attack were to happen on your organization, you would not be able to trace a paper trail back to an insider who may have assisted in the attack. Since you do not have control of all devices your insiders use, you are unable to see if they use Monero, or made a transaction to a hacker from the Darknet. How money is exchanged is important to understand since you cannot turn to traditional means of “following the money”. Cryptocurrencies are a whole world of their own, and operate as an asset. The behaviors of investing in an asset are entirely different than investing in a currency, and thus require different approaches towards identifying when transactions happen. Of course leading to the final cashout of the cryptocurrency into official currency.
Cryptocurrencies are here to stay when it comes to the Darknet. Vendors and buyers will always seek ways to ensure they remain anonymous and hidden from the world. With the rise of Monero to hide their transactions in a far more effective manner than Bitcoin it is safe to say that catching bad actors will only get harder from here. Stay tuned for more coming about how insiders navigate and use the Darknet.