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Proliferation of darknets: The deep, mysterious places of the Internet

Darknets cast a web of crime and other illegal activities on the Internet, and there’s no stopping them.

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Quantumrun Foresight
June 2, 2023

Darknets are the black holes of the Internet. They are bottomless, and profiles and activities are shrouded in secrecy and layers of security. The risks are endless in these unknown online spaces, but regulation is impossible as of 2022.

Proliferation of darknets context

A darknet is a network comprising specialized software, configurations, or authorization and is often designed to conceal traffic or activity from someone. In other words, it’s a private network between trusted peers. Transactions within these platforms are often illegal, and the anonymity afforded by these networks makes them attractive to criminals. Some consider darknets underground e-commerce, also known as Deep Web. Search engines can’t index them, and several layers of encryption protect their data. There are several ways to set up a darknet. One popular method is The Onion Router (TOR), a free software that enables anonymous communication. When using TOR, the Internet traffic is routed through a worldwide network of servers to conceal the user’s location and identity.

Another standard method is to create a virtual private network (VPN), which encrypts Internet traffic and routes it through a server in multiple locations. The most common transactions on darknets are sales of drugs, weapons, or child pornography. Harassments, copyright infringement, fraud, subversion, sabotage, and terrorist propaganda are examples of cybercriminal activities performed on these platforms. However, there are also many legitimate uses for darknets, such as allowing journalists to communicate with sources securely or enabling people living under repressive regimes to access the Internet without fear of being tracked or censored.

Disruptive impact

Darknets pose several challenges for law enforcement and governments. Ironically, TOR was created by the US government to hide their operatives, but now not even their best agents can fully identify what goes on in these places. First, it’s hard to track down criminal activity due to the anonymous nature of these networks. Second, even if law enforcement can identify individuals, prosecuting them can be tricky since many countries do not have laws specifically addressing online crimes. Finally, shutting down darknets is also difficult, as there are many ways to access them, and they can quickly re-emerge in another form. These darknet characteristics also have implications for businesses, which may need to take steps to protect their intellectual property from being leaked or stolen on these platforms.

In April 2022, the US Department of Treasury sanctioned Russia-based Hydra Market, the world’s largest darknet at the time and among the most notorious due to the increasing number of cybercrime services and illicit drugs sold on this platform. The Department of Treasury collaborated with the German Federal Criminal Police, who shut down Hydra servers in Germany and confiscated USD $25 million worth of Bitcoin. The US Office of Foreign Assets Control (OFAC) identified about USD $8 million in ransomware revenue in Hydra, including proceeds from hacking services, stolen personal information, counterfeit currency, and illicit drugs. The US government declared that it would continue to work with foreign allies to identify cybercriminal havens like Hydra and impose penalties.

Implications of the proliferation of darknets

Wider implications of darknet proliferation may include:

The global illegal drugs and firearms industry continuing to thrive inside darknets, where they can trade goods through cryptocurrency.

The application of next-generation artificial intelligence systems to fortify darknet platforms to defend against government intrusion.

Governments increasingly monitoring crypto exchanges for possible cybercrime transactions linked to darknets.

Financial institutions investing in more sophisticated fraud identification systems (especially tracking crypto and other virtual currency accounts) to detect potential money laundering and terrorism financing wired through darknets.

Journalists continuing to source whistleblowers and subject matter experts inside darknets.

Citizens of authoritarian regimes using darknets to communicate with the outside world and get updated, accurate information on current events. Governments of these regimes might implement heavier online censorship mechanisms.