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6 <title>Petter Reinholdtsen: A fist full of non-anonymous Bitcoins</title>
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14 <h1>
15 <a href="http://people.skolelinux.org/pere/blog/">Petter Reinholdtsen</a>
16
17 </h1>
18
19 </div>
20
21
22 <div class="entry">
23 <div class="title">A fist full of non-anonymous Bitcoins</div>
24 <div class="date">29th January 2014</div>
25 <div class="body"><p>Bitcoin is a incredible use of peer to peer communication and
26 encryption, allowing direct and immediate money transfer without any
27 central control. It is sometimes claimed to be ideal for illegal
28 activity, which I believe is quite a long way from the truth. At least
29 I would not conduct illegal money transfers using a system where the
30 details of every transaction are kept forever. This point is
31 investigated in
32 <a href="https://www.usenix.org/publications/login">USENIX ;login:</a>
33 from December 2013, in the article
34 "<a href="https://www.usenix.org/system/files/login/articles/03_meiklejohn-online.pdf">A
35 Fistful of Bitcoins - Characterizing Payments Among Men with No
36 Names</a>" by Sarah Meiklejohn, Marjori Pomarole,Grant Jordan, Kirill
37 Levchenko, Damon McCoy, Geoffrey M. Voelker, and Stefan Savage. They
38 analyse the transaction log in the Bitcoin system, using it to find
39 addresses belong to individuals and organisations and follow the flow
40 of money from both Bitcoin theft and trades on Silk Road to where the
41 money end up. This is how they wrap up their article:</p>
42
43 <p><blockquote>
44 <p>"To demonstrate the usefulness of this type of analysis, we turned
45 our attention to criminal activity. In the Bitcoin economy, criminal
46 activity can appear in a number of forms, such as dealing drugs on
47 Silk Road or simply stealing someone else’s bitcoins. We followed the
48 flow of bitcoins out of Silk Road (in particular, from one notorious
49 address) and from a number of highly publicized thefts to see whether
50 we could track the bitcoins to known services. Although some of the
51 thieves attempted to use sophisticated mixing techniques (or possibly
52 mix services) to obscure the flow of bitcoins, for the most part
53 tracking the bitcoins was quite straightforward, and we ultimately saw
54 large quantities of bitcoins flow to a variety of exchanges directly
55 from the point of theft (or the withdrawal from Silk Road).</p>
56
57 <p>As acknowledged above, following stolen bitcoins to the point at
58 which they are deposited into an exchange does not in itself identify
59 the thief; however, it does enable further de-anonymization in the
60 case in which certain agencies can determine (through, for example,
61 subpoena power) the real-world owner of the account into which the
62 stolen bitcoins were deposited. Because such exchanges seem to serve
63 as chokepoints into and out of the Bitcoin economy (i.e., there are
64 few alternative ways to cash out), we conclude that using Bitcoin for
65 money laundering or other illicit purposes does not (at least at
66 present) seem to be particularly attractive."</p>
67 </blockquote><p>
68
69 <p>These researches are not the first to analyse the Bitcoin
70 transaction log. The 2011 paper
71 "<a href="http://arxiv.org/abs/1107.4524">An Analysis of Anonymity in
72 the Bitcoin System</A>" by Fergal Reid and Martin Harrigan is
73 summarized like this:</p>
74
75 <p><blockquote>
76 "Anonymity in Bitcoin, a peer-to-peer electronic currency system, is a
77 complicated issue. Within the system, users are identified by
78 public-keys only. An attacker wishing to de-anonymize its users will
79 attempt to construct the one-to-many mapping between users and
80 public-keys and associate information external to the system with the
81 users. Bitcoin tries to prevent this attack by storing the mapping of
82 a user to his or her public-keys on that user's node only and by
83 allowing each user to generate as many public-keys as required. In
84 this chapter we consider the topological structure of two networks
85 derived from Bitcoin's public transaction history. We show that the
86 two networks have a non-trivial topological structure, provide
87 complementary views of the Bitcoin system and have implications for
88 anonymity. We combine these structures with external information and
89 techniques such as context discovery and flow analysis to investigate
90 an alleged theft of Bitcoins, which, at the time of the theft, had a
91 market value of approximately half a million U.S. dollars."
92 </blockquote></p>
93
94 <p>I hope these references can help kill the urban myth that Bitcoin
95 is anonymous. It isn't really a good fit for illegal activites. Use
96 cash if you need to stay anonymous, at least until regular DNA
97 sampling of notes and coins become the norm. :)</p>
98
99 <p>As usual, if you use Bitcoin and want to show your support of my
100 activities, please send Bitcoin donations to my address
101 <b><a href="bitcoin:15oWEoG9dUPovwmUL9KWAnYRtNJEkP1u1b&label=PetterReinholdtsenBlog">15oWEoG9dUPovwmUL9KWAnYRtNJEkP1u1b</a></b>.</p>
102 </div>
103
104 <div class="tags">Tags: <a href="http://people.skolelinux.org/pere/blog/tags/bitcoin">bitcoin</a>, <a href="http://people.skolelinux.org/pere/blog/tags/english">english</a>, <a href="http://people.skolelinux.org/pere/blog/tags/personvern">personvern</a>, <a href="http://people.skolelinux.org/pere/blog/tags/sikkerhet">sikkerhet</a>, <a href="http://people.skolelinux.org/pere/blog/tags/usenix">usenix</a>.</div>
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