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Using Cryptocurrencies To Regulate The Deep Web

The dark web represents an encrypted part of the internet that is hosted on hidden servers, whereas the deep web refers to all web services that can’t be indexed by traditional search engines such as Google and Yahoo. The dark web includes various players such as privacy advocates, whistle blowers and investigative reporters along with drug dealers, computer hackers, child pornography distributors and other forms of illegal and illicit activities. In many instances, the dark web has been used by anti-social individuals in various illegal activities. The dark web has been reported to facilitate drug smuggling, recruitment to terrorist organizations such as ISIS, gun trafficking, money laundering, human trafficking and the sale of blood diamonds and other forms of illegal merchandise.

A recently published paper proposed a method for regulating and monitoring the dark web via cryptocurrencies. The author of the paper utilizes the concept of Regulated and Sovereign Backed Cryptocurrencies (RSBCs) as basic means to track payments across the dark web. He proposed a situation where RSBCs become the main currency for exchange for most of the world’s countries.

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Regulated and Sovereign Backed Cryptocurrencies RSBCs and Controlled Blockchains:

RSBCs represent cryptocurrencies that are issued and backed by the government similarly to fiat currency, but in a digital form. Such coins, known as NationCoins, will be backed up by sovereign guarantee. NationCoins run on extremely secure controlled blockchains CBCs, that promote hassle-free cryptocurrency transactions. PRSBCs rely on the K-Y protocol which is a group of instructions and rules for the implementation of PRSBCs.

A controlled blockchain CBC is different from a conventional blockchain. While a conventional blockchain is a permissionless public ledger, a CBC is a permission based blockchain. Access permission will be granted by the sovereign authority. A CBC can be used in monetary and non-monetary applications. When completely designed, a controlled blockchain can have a myriad of applications including banking, automation, taxation, contracting to space research and public services. Moreover, it can be used to regulate the deep web efficiently.

How Can RSBCs Regulate The Deep Web?

Illegal merchandise and services are sold on the dark web for cryptocurrencies mainly bitcoin, monero, DASH and ethereum. Even though bitcoin is well known for its high level of anonymity, bitcoin payments can be traced via means of blockchain analysis and internet traffic analysis. However, monero is a cryptocurrency that relies on ring cryptographic signatures and is completely anonymous. Sellers on the dark web are now increasingly shifting to monero which renders it almost impossible to track payments and regulate various activities on the deep web.

This can dramatically change via the usage of RSBCs. Technically speaking, governments can regulate activities on the dark web if governments deployed the K-Y protocol.

Let’s propose a scenario where RSBCs are in vogue, so bitcoin is not exchanged to dollars but to USCoins, which is the RSBC of the US Dollar. These USCoins will be deposited onto a wallet which is registered under a legally verified name. As such, individuals sending and receiving bitcoins that have been earned via illegal activities will be easily traced back via de-anonymization. When anonymous cryptocurrencies such as monero are considered, the sender and receiver of a transaction can be traced at the point where there is an exchange transaction between monero and USCoins. The system will be able to identify the origin of each and every transaction. Via pattern analysis and tracing transactions, the government can identify individuals funding terrorist activities and those engaging in drug smuggling.

The author of the paper proposed a scenario where 200 countries issue their own NationCoins. Paper money transactions will be minimized as people will mostly have to use RSBCs. Practically, there will be insufficient paper money to fund illegal activities, according to the author of the paper, as there will be almost no unaccounted money. Illegal activities will be easily identified because the identities of involved parties will be revealed via their NationCoin wallets. On the other hand, the quantum of money that circulates on various sites on the dark web will be available to government officials which will enable the government to successfully tax and regulate various activities on the dark web.


  1. You can easily keep the Monero anonymous buy moving it between a few different wallets before sending it to the exchange.

  2. This makes it sound like governments will be inclined to penalize citizens for simply using Monero at all…
    but who knows

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