blog/data/2014-01-29-bitcoin.txt

   1 Title: A fist full of non-anonymous Bitcoins
   2 Tags: english, bitcoin, personvern, sikkerhet, usenix
   3 Date: 2014-01-29 14:10
   4
   5 <p>Bitcoin is a incredible use of peer to peer communication and
   6 encryption, allowing direct and immediate money transfer without any
   7 central control.  It is sometimes claimed to be ideal for illegal
   8 activity, which I believe is quite a long way from the truth.  At least
   9 I would not conduct illegal money transfers using a system where the
  10 details of every transaction are kept forever.  This point is
  11 investigated in
  12 <a href="https://www.usenix.org/publications/login">USENIX ;login:</a>
  13 from December 2013, in the article
  14 "<a href="https://www.usenix.org/system/files/login/articles/03_meiklejohn-online.pdf">A
  15 Fistful of Bitcoins - Characterizing Payments Among Men with No
  16 Names</a>" by Sarah Meiklejohn, Marjori Pomarole,Grant Jordan, Kirill
  17 Levchenko, Damon McCoy, Geoffrey M. Voelker, and Stefan Savage.  They
  18 analyse the transaction log in the Bitcoin system, using it to find
  19 addresses belong to individuals and organisations and follow the flow
  20 of money from both Bitcoin theft and trades on Silk Road to where the
  21 money end up.  This is how they wrap up their article:</p>
  22
  23 <p><blockquote>
  24 <p>"To demonstrate the usefulness of this type of analysis, we turned
  25 our attention to criminal activity. In the Bitcoin economy, criminal
  26 activity can appear in a number of forms, such as dealing drugs on
  27 Silk Road or simply stealing someone else’s bitcoins. We followed the
  28 flow of bitcoins out of Silk Road (in particular, from one notorious
  29 address) and from a number of highly publicized thefts to see whether
  30 we could track the bitcoins to known services. Although some of the
  31 thieves attempted to use sophisticated mixing techniques (or possibly
  32 mix services) to obscure the flow of bitcoins, for the most part
  33 tracking the bitcoins was quite straightforward, and we ultimately saw
  34 large quantities of bitcoins flow to a variety of exchanges directly
  35 from the point of theft (or the withdrawal from Silk Road).</p>
  36
  37 <p>As acknowledged above, following stolen bitcoins to the point at
  38 which they are deposited into an exchange does not in itself identify
  39 the thief; however, it does enable further de-anonymization in the
  40 case in which certain agencies can determine (through, for example,
  41 subpoena power) the real-world owner of the account into which the
  42 stolen bitcoins were deposited.  Because such exchanges seem to serve
  43 as chokepoints into and out of the Bitcoin economy (i.e., there are
  44 few alternative ways to cash out), we conclude that using Bitcoin for
  45 money laundering or other illicit purposes does not (at least at
  46 present) seem to be particularly attractive."</p>
  47 </blockquote><p>
  48
  49 <p>These researches are not the first to analyse the Bitcoin
  50 transaction log.  The 2011 paper
  51 "<a href="http://arxiv.org/abs/1107.4524">An Analysis of Anonymity in
  52 the Bitcoin System</A>" by Fergal Reid and Martin Harrigan is
  53 summarized like this:</p>
  54
  55 <p><blockquote>
  56 "Anonymity in Bitcoin, a peer-to-peer electronic currency system, is a
  57 complicated issue. Within the system, users are identified by
  58 public-keys only. An attacker wishing to de-anonymize its users will
  59 attempt to construct the one-to-many mapping between users and
  60 public-keys and associate information external to the system with the
  61 users. Bitcoin tries to prevent this attack by storing the mapping of
  62 a user to his or her public-keys on that user's node only and by
  63 allowing each user to generate as many public-keys as required. In
  64 this chapter we consider the topological structure of two networks
  65 derived from Bitcoin's public transaction history. We show that the
  66 two networks have a non-trivial topological structure, provide
  67 complementary views of the Bitcoin system and have implications for
  68 anonymity. We combine these structures with external information and
  69 techniques such as context discovery and flow analysis to investigate
  70 an alleged theft of Bitcoins, which, at the time of the theft, had a
  71 market value of approximately half a million U.S. dollars."
  72 </blockquote></p>
  73
  74 <p>I hope these references can help kill the urban myth that Bitcoin
  75 is anonymous.  It isn't really a good fit for illegal activites.  Use
  76 cash if you need to stay anonymous, at least until regular DNA
  77 sampling of notes and coins become the norm. :)</p>
  78
  79 <p>As usual, if you use Bitcoin and want to show your support of my
  80 activities, please send Bitcoin donations to my address
  81 <b><a href="bitcoin:15oWEoG9dUPovwmUL9KWAnYRtNJEkP1u1b">15oWEoG9dUPovwmUL9KWAnYRtNJEkP1u1b</a></b>.</p>