Drugs and bitcoins: What role do bitcoins play in the darknet market? A preliminary study

Abstract

Copyright © 2018 by Association for Information Science and Technology Darknet markets (DNM) and bitcoins are two emergent topics in the information field and have attracted much attention. However, few has explored them together. This study aims at understanding the relation between them. It is investigated that whether the bitcoin exchange value and the public interest in it are predictable of the daily sales in the darknet markets in the future. By applying the Granger-causality analysis, we find that the daily bitcoin exchange value with one day lag are Granger causative of the sales, so does the daily searching frequency in Google with one, two, and three-day(s) lags. From the linear regressions, we find that the increasing bitcoin price reduces the daily DNM sales, while the increasing public interest in bitcoins facilitate the sales. By understanding relation between the DNM sales and bitcoins, two emergent topics in information science, we can get some insights on how to monitor the activities in the DNM, especially those illegal transactions and can further extend to how to regulate the DNM.