Cryptocurrencies, especially privacy coins, conceal the flow of money. Similarly, the dark web obscures the flow of internet traffic, increasing anonymity. In this paper, I provide evidence that secondary market trading activity in privacy coins is linked to dark web traffic, although their pricing remains mostly unaffected. This finding holds after considering various controls and comparing similar privacy and non-privacy coins. However, when disentangling dark web traffic by country of origin, I find that privacy coin prices correlate positively with traffic from China, while trading volume is mainly driven by users from Russia and Iran.
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Stefan Scharnowski (2024) studied this question.
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