Released just shy of 5 months ago, darkcoin has quickly ascended the ranks of the cryptocurrency world, securing the #4 spot on coinmarketcap. Boasting what appears to be an impressive suite of anonymity features, darkcoin has successfully marketed itself as the rare breed of substantive altcoin. Is it, though? Peer beyond the surface, and you’ll quickly discover that darkcoin is not dark in name only.

Darksend Drama

Overhyped and misunderstood, darksend is touted as the killer feature that’ll send darkcoin’s price to the moon. What is darksend? In short, a protocol that groups transactions in such a way that the source and destination of the coins are muddied. As previously mentioned, darksend is not a comprehensive anonymity solution. At best, it provides pseudonymity. In spite of that, the people promoting this coin still use misleading buzzwords like anonymous payments and hailing the feature as something totally unique and groundbreaking, and perhaps the greatest thing since bitcoin itself. The reality of it all couldn’t be farther from that.

Darksend itself is not even a unique feature, nor was it created by Evan Duffield, Darkcoin’s lead developer. Darksend is merely an implementation of the CoinJoin specification originally created by Greg Maxwell, one of the bitcoin core developers. Still, Duffield does his best to avoid giving any credit to Maxwell. Take a look through his posts, you’ll not see a mention of CoinJoin or Maxwell.

To make matters worse, darksend is closed source. Take a moment to reflect upon how ridiculous it is to take open source software (bitcoin), layer an open source specification on top of it (coinjoin), and then keep the result (darksend) closed source. It goes against the fundamental principles of the cryptocurrency movement, and is reflective of the motives of the developer.

Amusingly enough, Maxwell himself is on the record stating that CoinJoin is inferior to other anonymizing protocols that are already available. Put simply, Darksend does not live up to the hype that surrounds it. It can not ensure anonymization of payments.

Darkcoin makes use of so-called ‘masternodes’ that assist with darksend transactions. Last week, a bug in the code unleashed havoc upon the network, causing it to continually fork and putting the coin into a nonfunctional state. A hardfork had to be issued to fix the issue.

Having said all that, Duffield is no idiot. He knows the limitations of darksend. But he’s not concerned about it. Why, you ask? Darksend is very good at generating hype. Hype leads to price apprecation. And who benefits from price appreciation? Coin holders, of course. Which brings me to my next point…

Huge instamine and subsidy reduction

Since I’m writing about it, it should come as no surprise that this coin has an instamine associated with it. This one went unnoticed for quite some time, but by taking a quick look at blockchain data we can see what went on. During the first 15 hours, between block 1 and block 4000, approximately 1.75m darkcoins were generated.

Immediately after this period, Duffield claimed that there was a ‘bug’ in the block reward calculations, and issued a hardfork to address it. After this fork, the block reward quickly dwindled down to an insignificant amount. Right now, it sits at a pitiful 5 DRK. A farcry from the 500 that it used to be.

The result? Darkcoin is currently at 80,000 blocks, but there’s only 4.3m DRK out there. Five months later, the 1.75m generated during those first 4200 blocks still represents 40% of all DRK in existence.

Dark beginnings

Darkcoin was initially released as XCoin, and didn’t attract much fanfare. This is partially because it was released without a working windows client, one of the obvious marks of a scam, making mining it very difficult.

Who, then, was in the best position to mine the initial 4200 blocks? None other than Duffield and his buddies. The truth of the matter is that the aforementioned block reward ‘bug’ was intentional and allowed him to mine a large number of coins for himself, in an attempt to avoid the negative stigma associated with obvious premining/instamining… and it seems to have worked.

With a current market cap of just over $50m, Duffield has no doubt profited quite handsomely off of this scam. The real question is, how many of these coins have been dumped on the market? How many are in the process of being dumped? Hard to say without deep blockchain analysis, but it’s irrelevant either way. The price of altcoins are held up largely by people’s reluctance to sell. When one person, or a group of people, control a majority of coins, this creates a situation where the price of the coin is either artificially inflated, or gets pounded into the ground. A poor investment to be sure, made even poorer when you take a look at the 30 day price history. If you think growth like this is sustainable, history would like to have a word with you.


All hype and no substance, darkcoin is far from a serious contender in the altcoin world. Its suite of ‘anonymity’ features are falsely advertised, offering pseudonymity at best. At the end of the day, darkcoin offers nothing of true value over other coins. Couple this with shady release tactics, a sizable instamine, and unsustainable price increases, only a fool would dare ‘invest’ in this coin right now.

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