The paper is not so simplistic as you make it sound.
1. They analyzed clusters of addresses, not individual addresses, so one-time addresses are accounted for (unless the vendor never collected their payment from the DN, in which case they gave away the drugs for free)
And anyway since 5 years ago all the DNMs use monero, not bitcoin, so talking about DNMs in the context of bitcoin is an anachronism. If you use a traceable currency with a public ledger for drugs, you're not very bright.
2. Volume associated with a mixer is classified as illegal in the paper, so it's part of the 3%. Bitcoin mixers are not plausibly deniable the way Tornado Cash is (because of UTXOs) - mixers still leave an obvious trail.
3. The analysis covers data from 2015-2021, so it covers two halving cycles.
> flows to addresses which have been identified as illegal
transactions, scams, and gambling together make up about 4% of the volume at the
beginning of our sample in 2015. By the end of of our sample in the middle of 2021,
this fraction has fallen to less than 0.4%
Illegal activity is 0.4% in a bull market and 4% in a bear market. Overall it averages to the headline 3%. You can infer speculation volume goes up 10x in a bull market.
1. They analyzed clusters of addresses, not individual addresses, so one-time addresses are accounted for (unless the vendor never collected their payment from the DN, in which case they gave away the drugs for free)
And anyway since 5 years ago all the DNMs use monero, not bitcoin, so talking about DNMs in the context of bitcoin is an anachronism. If you use a traceable currency with a public ledger for drugs, you're not very bright.
2. Volume associated with a mixer is classified as illegal in the paper, so it's part of the 3%. Bitcoin mixers are not plausibly deniable the way Tornado Cash is (because of UTXOs) - mixers still leave an obvious trail.
3. The analysis covers data from 2015-2021, so it covers two halving cycles.
> flows to addresses which have been identified as illegal transactions, scams, and gambling together make up about 4% of the volume at the beginning of our sample in 2015. By the end of of our sample in the middle of 2021, this fraction has fallen to less than 0.4%
Illegal activity is 0.4% in a bull market and 4% in a bear market. Overall it averages to the headline 3%. You can infer speculation volume goes up 10x in a bull market.