ion per year. In Europe, the market is 24 billion euros on an annual basis.“While comparisons between such estimates and ours are imprecise for a number of reasons (and the illegal activity captured by our estimates is broader than just illegal drugs), they do provide a sense that the scale of the illegal activity involving bitcoin is not only meaningful as a proportion of bitcoin activity, but also in absolute dollar terms,” the paper says.More Takeaways from the PaperWhile the amount of illegal activity taking place on the Bitcoin network appears to be relatively large, the paper indicates that the prevalence of this sort of activity has been declining since 2015 as more mainstream users have entered the market due to the interest in bitcoin as a store of value or speculative asset.The paper notes that the illegal activity involving bitcoin is inversely correlated to the number of searches for “bitcoin” on Google.“Furthermore, while the proportion of illegal bitcoin activity has declined, the absolute amount of such activity has continued to increase, indicating that the declining proportion is due to rapid growth in legal bitcoin use,” says the paper.The paper also indicates that privacy-focused altcoins, such as Monero and Zcash, may be cutting into bitcoin’s role as the currency of the online black market.The paper notes that it’s currently unclear if bitcoin is leading to an increase in black market activity or if this is simply offline activity moving onto the internet.“By providing an anonymous, digital method of payment, bitcoin did for darknet marketplaces what PayPal did for [eBay] — provide a reliable, scalable, and convenient payment mechanism,” the paper adds.According to the paper, this use case is the underlying value of the bitcoin asset.“Our paper contributes to understanding the intrinsic value of bitcoin, highlighting that a significant component of its value as a payment system derives from its use in facilitating illegal trade.”In addition to implications the online black market could have on the valuation of the bitcoin asset (a claim that is highly speculative as the bitcoin price has continued to see tremendous gains in the face of declining use for illicit payments), the paper adds that this realization also has ethical implications: those who choose to speculate on the bitcoin price may question whether they wish to provide liquidity for a payment system that enables illegal online transactions.This article originally appeared on Bitcoin Magazine (https://bitcoinmagazine.com/).