Time after time.

Headlines leak into the public sensationalizing hackers and ruthless breaches of mass data.

It happens time after time.

To where do all these emails, phone numbers, and credit card numbers wash away?

Do they float off to data heaven?

Enter the dark web.

First, the deep web is part of the Internet that is not indexed by search engines.

You won't be able to populate these sites on a regular Google search or Bing.com (Do people still use this?).

The dark web is a small part of the greater deep web.

The way to access this part of the hidden Internet is to use a VPN (virtual private network) to connect to a specific server that facilitates the access to the dark web.

The last step is to download a specific Linux browser as a graphic interface tool to surf these sites.

In a 2017 report based on 2015 data from the Digital Society, eight countries were found with heavy usage of more than 300 Tor users per 100,000 Internet users.

Tor is the aforementioned Linux browser used to access the dark web. These countries and one territory with elevated Tor activity were in no particular order: Moldova, Monaco, Iceland, Liechtenstein, Seychelles, Cayman Islands, Luxembourg and Andorra.

The common link tying seven of these locations is their reputation as a hub for offshore capital.

Small, island countries have the propensity to attract capital by loosening regulation and becoming international financial centers.

Moldova is the only outlier. The high usage of Tor is certainly due to its close proximity, set adjacent to Ukraine, which is still bogged down in an atrocious war against Russian separatists in the southeast of Ukraine.

No doubt, the average person would rather not know what illicit products and services are flowing through the Moldovan conduit leading to the borders and territories of Ukraine and Russia.

These offshore capital hotbeds are using the dark web for targeted reasons.

The main products sold on the dark web are not for the faint of heart.

Illegal drugs of any ilk, hacking services, adult-rated content, and fraudulent documents is on the a la carte menu.

Effectively, this mysterious marketplace offers incentives for hackers to commit heinous crimes in order to sell on the information they desire.

To maintain anonymity, products are mainly transacted in cryptocurrency.

Bitcoin has been the crypto of choice for dark web vendors. However, its exorbitant transaction costs have propelled other cryptocurrencies into the main light, with Litecoin currently being accepted by about 30% of dark web vendors.

Bitcoin is in the process of being undercut by its digital brethren.

The dark web is the economic backbone to the existence of cryptocurrency, and any regulation on the dark web would hammer the price of its main flagship currency bitcoin.

The billions in arms' sales and illicit drugs compromise a meaningful chunk of bitcoin volume, and the ease of use and speed of transaction are important to time-sensitive deals.

Litecoin has grown in popularity - even with its lax security protocols - in Eastern Europe. It could be estimated that Ukraine is a focal point for dark web activity particularly in weapons and other war-related services.

Dash is another cryptocurrency finding favor with cybercriminal inner circles as it is easy to use.

A spike in demand for alternative currencies would hurt the price of Bitcoin that spiked just below the $20,000 threshold in late December 2017, only to reverse back to reality crashing to the $6,700 level.

Bitcoin is ensnared by the speed of processing the transactions.

Cybercriminals cringe because of the sloth-like transactional speeds.

Usually, the processing time is a few hours.

This shift to more exotic digital tender could explain part of the reason of the bitcoin crash.

Bitcoin could turn out to be the victim of its own success.

The overwhelming popularity has alerted enforcement to target bitcoin transactions because of the large volume.

However, it could be game over for bitcoin as alternative currencies offer criminals an added layer of anonymity because law enforcement agencies do not have the expertise or the resources to track every type of cryptocurrency around the world.

As of April 2018, the world played host to 1,565 cryptocurrencies, and the number is growing by the day.

Particularly, Monero has caught fire in Asia where bitcoin volume is highest and is ground zero of the bitcoin movement.

North Korean state-sponsored hacking teams are especially fond of Monero.

Monero does not even crack the top 10 of cryptocurrencies aiding North Korean operations flying under the radar.

No doubt North Koreans have branched out into other undetectable crypto assets that have higher degrees of stealth elements.

Proprietary software created by the North Koreans saw infected code successfully mine Monero on South Korean computers that rerouted the proceeds back to North Korea.

Crypto mining is the process of solving complicated math problems resulting in the creation of new coins.

Developers have praised Monero for being "super anonymous" and is one of the best currencies to avoid capital controls.

Monero has given life to North Korean hackers and its blockchain is intentionally made to be obscure.

It obfuscates the wallet addresses from where people send Monero, rendering it more anonymous.

A Monero transaction only takes 21 minutes to complete, giving cybercriminals a fast way to smash and grab and move onto the next deal.

Japan, hoping to be the unequivocal leader of the fintech and blockchain revolution, officially recognized bitcoin as an official currency in April 2017.

The cryptocurrency tax windfall is predicted to mint the Japanese government coffers by up to $10 billion in the 2017 fiscal year.

If this digital currency revolution has legs, Japan wants to be the leader in the field and has positioned itself to reap the rewards.

And with most businesses in this world, the migration toward technology is forcing anything and everything to become fully or partially digitized.

Currency is no exception.

China has outright banned cryptocurrency on the mainland, but the use case for Chinese citizens is strong.

Each Chinese citizen is allowed to convert a yearly quota of $10,000 into U.S. dollars from Chinese local currency as a way for the government to control the currency price movements.

This is a paltry amount for a country that has seen its elite enriched and a burgeoning middle class that wants to park its assets overseas in safe Western financial systems.

Cryptocurrency proved wildly popular in China by locals circumnavigating capital controls before the ban and proves that many countries rich and poor have a use case for cryptocurrency.

In the future, expect the Asian region to take the lead in cryptocurrencies. The bitcoin crash could get worse as a result of the disruption caused by lesser known cryptocurrencies with better technology and faster transaction speeds.

Bitcoin could be on the verge of going to zero, and its economic pipeline from the dark web could be spread out into thousands of untraceable currencies of which people have never heard.

Let's face it, if law enforcement is setting traps for bitcoin transactions, it is probably better to use one of the other 1,564 currencies at your disposal.

It does not take a genius to figure this out.

As for the Mad Hedge Fund Trader, to go that far out on the risk curve with a highly unpredictable and highly volatile digital currency that is based on no fundamentals is not my cup of tea.

There are so many better things to buy right now.

 

 

 

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Quote of the Day

"It's probably rat poison squared," - said legendary investor Warren Buffett when asked about bitcoin.