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Darkcoin developers have built beyond bitcoin to create 'the perfect e-cash' of the digital world. IBTimes UK

The world of cryptocurrencies is chaotic. Although the first of its kind, bitcoin is regarded by many as fundamentally flawed due to its lack of anonymity and lengthy transaction times, which has led to hundreds of copycat cryptocurrencies emerging in its wake attempting to overcome these flaws. Until now, none have fully succeeded.

Since January 2014, software developer Evan Duffield has been on a mission to create the world's first truly anonymous digital currency that he hopes will soon be "the perfect e-cash": untraceable and instantaneous.

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Evan Duffield, darkcoin developer. CC

"What darkcoin's trying to be is just like cash, except you can transact over the internet with it," Duffield told IBTimes UK. "It's like me handing you ten bucks over the internet and there's no trace of that and it's instantaneous between the two of us.

"So you get all of the benefits of cash - like the security and the anonymity - without having to wait an hour like you would have to with bitcoin."

To achieve this, Duffield has developed two key technologies in the form of DarkSend, which promises the first truly anonymous web transactions, and InstantX, which validates transactions in the same amount of time as it takes a credit card to process - around 20 to 30 seconds.

Darkcoin on the dark web

Solving the problem of complete anonymity is inevitably going to attract users with nefarious intentions. This month saw the first major online black marketplaces operating on the dark web integrate darkcoin into their payment systems, in the form of Nucleus Marketplace and Diabolus.

For darkcoin, this is likely to signal a much wider adoption that could see it balloon in the same way as bitcoin and litecoin did in their early days.

Dark web explained

The dark web is a section of the internet that is not indexed by search engines such as Google, and not easily navigated to using a standard web browser.

Accessing the dark web requires specialised knowledge and software tools. An example of this is content only accessible by using the Tor software and anonymity network, which while protecting privacy, is often associated with illicit activities.

"Dark markets were one of the killer apps of bitcoin back in 2011," financial analyst Alex Gierczyk told IBTimes UK. "I apprehend it will be such for darkcoin and once darkcoin implements instant transactions it will really have a leg up on bitcoin for black market purposes."

Black market use may be an inevitable outcome of darkcoin's anonymity, but for Duffield it is a by-product he wants to distance himself from. For him darkcoin is about providing privacy to protect users from government snooping, corporate involvement, and against criminals seeking to exploit payment information.

"I don't support the black markets or anything like that," Duffield said. "I'm developing this purely from the standpoint of privacy. We've no idea how much information the block chain (bitcoin's public payment's ledger) is going to illuminate about a specific person in 10 years time. Because these block chains never go away.

"If we make something that is way easier to secure and anonymise, and faster to spend, then I'm sure that will draw in an amount of people that want to use it for illicit activities. That's the way that bitcoin started and it eventually moved away from that and more into legitimate areas, so I'm guessing that darkcoin will go the same route."

'Privacy for perfectly good reasons'

Ben Lawsky, Superintendent of Finacial Services for New York and the man behind the proposed BitLicense regulations for cryptocurrency, hopes that innovations like those brought about by darkcoin will "flourish" without providing a breeding ground for criminals.

"Some people want their privacy for perfectly good reasons," Lawsky said. "Some people want their privacy and to be anonymous for perfectly bad reasons. And I think that's what makes it hard. As regulators, we want to allow the online world to flourish, software to develop, entrepreneurs to innovate.

"At the same time, you have to do it in a way that does something about the people who want to do bad things with the anonymity that they would enjoy."

By way of mitigating against any potential involvement with the criminal aspect that darkcoin and its technologies may throw up, the cryptocurrency's website offers its own disclaimer, stating: "By using this software you agree to not use it for illegal purposes and not to hold us responsible for any lost darkcoin."

Indeed, many legitimate websites are already adopting darkcoin into their payments system, recognising the benefits that go above and beyond those offered by bitcoin. A steadily growing list of merchants already includes a precious metals vendor, a games retailer, and a pharmaceuticals firm.

"Bitcoin isn't just a currency, it's a platform," Duffield said. "What darkcoin's trying to be is just a currency and the perfect e-cash. We want to create an environment where people feel secure about buying things online and we want to create an environment where merchants feel very secure accepting darkcoin.

"We're not trying to do this to build an easier way to buy drugs online, we're doing this to provide users with an incredible amount of privacy."