How One Paper Just Blew Up Bitcoin's Claim To Anonymity (zdnet.com) 51
An anonymous reader quotes a report from ZDNet: Lead researcher Alyssa Blackburn of Baylor and Rice, along with team-mates Christoph Huber, Yossi Eliaz, Muhammad S. Shamim, David Weisz, Goutham Seshadri, Kevin Kim, Shengqi Hang, and Erez Lieberman Aiden, used a technique called "address linking" to study the Bitcoin transactions in the first two years of its existence: January of 2009 to February of 2011. Their key discovery is that, in those first two years, "most Bitcoin was mined by only sixty-four agents [] collectively accounting for B2,676,800 (PV: $84 billion)." They are referring to the process of minting new coins by solving computer challenges. That number -- 64 people in total -- "is 1000-fold smaller than prior estimates of the size of the early Bitcoin community (75,000)," they observe. Those 64 people include some notable figures that have already become legends, such as Ross Ulbricht, known by the handle Dread Pirate Roberts. Ulbricht is the founder of Silk Road, a black-market operation that used Bitcoin for illicit means -- until it was shut down by the FBI.
For Blackburn and team, the point was to study the effects of people participating in game-theoretic situations as anonymous parties. Surprisingly, they found early insiders like Ulbricht could have exploited the relative paucity of participants by undermining Bitcoin to double-spend coins, but they did not. They acted "altruistically" to maintain the integrity of the system. That's intriguing, but a more pressing discovery is that addresses can be traced and identities can be revealed. To find out who was doing those early transactions, Blackburn and team had to reverse-engineer the entire premise of Bitcoin and of all crypto: anonymity.
As outlined in the original Bitcoin white paper by Satoshi Nakamoto, privacy was to be preserved by two means: anonymous public key use and creating new key pairs for every transaction [...]. Blackburn and team had to trace those key pairs to reveal early Bitcoin's transacting parties. To do so, they developed what they called a novel address-linking scheme. The scheme finds two patterns that point to users: one is the presence of recurring bits of code, and one is duplicate addresses for certain transactions. [...] The consequence of that, they write, is that it is possible to "follow the money" to expose any identity by following a chain of relatedness in a graph of addresses, starting from a known identity [...]. Further, they hypothesize that "many cryptocurrencies may be susceptible to follow-the-money attacks." Blackburn told The New York Times's Siobhan Roberts, "When you are encrypting private data and making it public, you cannot assume that it'll be private forever." As the team concludes in the report, "Drip-by-drip, information leakage erodes the once-impenetrable blocks, carving out a new landscape of socioeconomic data." The new paper, titled "Cooperation among an anonymous group, protected Bitcoin during failures of decentralization," has been posted on the researchers' server (PDF).
For Blackburn and team, the point was to study the effects of people participating in game-theoretic situations as anonymous parties. Surprisingly, they found early insiders like Ulbricht could have exploited the relative paucity of participants by undermining Bitcoin to double-spend coins, but they did not. They acted "altruistically" to maintain the integrity of the system. That's intriguing, but a more pressing discovery is that addresses can be traced and identities can be revealed. To find out who was doing those early transactions, Blackburn and team had to reverse-engineer the entire premise of Bitcoin and of all crypto: anonymity.
As outlined in the original Bitcoin white paper by Satoshi Nakamoto, privacy was to be preserved by two means: anonymous public key use and creating new key pairs for every transaction [...]. Blackburn and team had to trace those key pairs to reveal early Bitcoin's transacting parties. To do so, they developed what they called a novel address-linking scheme. The scheme finds two patterns that point to users: one is the presence of recurring bits of code, and one is duplicate addresses for certain transactions. [...] The consequence of that, they write, is that it is possible to "follow the money" to expose any identity by following a chain of relatedness in a graph of addresses, starting from a known identity [...]. Further, they hypothesize that "many cryptocurrencies may be susceptible to follow-the-money attacks." Blackburn told The New York Times's Siobhan Roberts, "When you are encrypting private data and making it public, you cannot assume that it'll be private forever." As the team concludes in the report, "Drip-by-drip, information leakage erodes the once-impenetrable blocks, carving out a new landscape of socioeconomic data." The new paper, titled "Cooperation among an anonymous group, protected Bitcoin during failures of decentralization," has been posted on the researchers' server (PDF).
Just One Paper!!1! (Score:1)
Uhm, no? We knew it wasn't really anonymous and there is prior work showing that just whatwasit four datapoints can identify real-world individuals from real-world location data, so why woulnd't that work more or less the same for bitcoin?
Though having a proper academic treatment isn't a bad thing, of course.
Just more Really Bad Science Reporting, or what's wrong with the paper that BeauHD fawns all over it?
Re: (Score:3)
Honestly, who really believed that a distributed ledger would ever be anonymous? The whole point of blockchain was that every transaction was public knowledge, and validated through popular agreement. How anyone expected to remain anonymous when their entire financial history was/is public knowledge is beyond me.
Cryptocurrency is only a harmless little bubble! (Score:5, Interesting)
You had a good, even insightful, point to make, but you got Subjected by a vacuous AC.
However the story has me wondering if this might be the pin that bursts the bubble. So the real question might be if the bubble is big enough to be harmful when it bursts? How much "real money" is involved in cryptocurrency scams and what will happen to it when the bubble implodes?
Enjoy the Grift! (Score:1)
Not anonymous but who owns a wallet... (Score:2, Informative)
With some work you can trace transactions back to a wallet but... who owns that wallet? If the wallet owner is careful, harder to tell that.
Re:Not anonymous but who owns a wallet... (Score:5, Informative)
With some work you can trace transactions back to a wallet but... who owns that wallet?
according to the article: [zdnet.com]
"the identity of a target bitcoin address can be ascertained by identifying a short transaction path linking it to an address whose identity is known, and then using off-chain data sources (ranging from public data to subpoenas) to walk along the path, determining who-paid-whom to de-identify addresses until the target address is identified."
If you never buy anything with bitcoin that can be identified in the real world, though, you might be safe.
That's why you need to be careful (Score:2)
If you never buy anything with bitcoin that can be identified in the real world, though, you might be safe.
It depends on who you buy from. That's saying they can perhaps make someone you pay tell them who paid them. But if they don't really know, or that person also can't be found to be forced, then you are still actually anonymous. If you are buying from Target or some company with shipping details, your identity can probably be easily traced.
Re: Not anonymous but who owns a wallet... (Score:1)
Re: (Score:3)
Re: Not anonymous but who owns a wallet... (Score:1)
Re: (Score:2)
Re: (Score:2)
That's assuming you did those transactions from the same address.
The design of bitcoin lets you have multiple addresses for different purposes, so every time you receive a payment you create a new unique address for doing so. The addresses are distinct unless you do something to create a link between them.
Re:Not anonymous but who owns a wallet... (Score:4, Insightful)
That was the problem that couple that stole an enormous amount of bitcoin faced. They had hundreds of millions of dollars worth, but no way to convert that to real money since any transaction would be public and once it hit something tying to them they would be toast. If you're just keeping your bitcoin online and paying for servers or something like that it's fine, but virtual money can only get you so far, sometimes you need currency that can affect your physical location
Re: (Score:2)
With some work you can trace transactions back to a wallet but... who owns that wallet? If the wallet owner is careful, harder to tell that.
Sure. For pretty extreme values of "careful". Once all quasi criminal exchanges have been brought under regulation (which is well underway), "careful" basically means "never use it" or close enough that the difference does not matter much.
Bitcoin wasn't supposed to be anonymous (Score:2, Informative)
Re:Bitcoin wasn't supposed to be anonymous (Score:5, Informative)
>>There are cryptocurrencies based around privacy, Bitcoin isn't one of them.
From the original Bitcoin white paper:
10. PRIVACY
The traditional banking model achieves a level of PRIVACY by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but PRIVACY can still be maintained by breaking the flow of information in another place: by keeping public keys ANONYMOUS. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the "tape", is made public, but without telling who the parties were.
Re: (Score:2)
Thanks. I was about to look that up to quote it at all the fools that will now be saying that BC of course _never_ claimed to provide any form of anonymity.
One has to admit that the white paper already clearly outlines the attack vector on that privacy/anonymity and that any competent security expert would immediately have translated that to "anonymous only if you basically never use it".
Re: (Score:2)
It's also disingenuous to imply that we haven't known for many years what Bitcoin's shortcomings are when it comes to privacy. Blockchain analysis companies have existed for years. All they do all day every day is come up with ways to de-anonymize Bitcoin transactions, and following the money by reading the blockchain and linking transac
Re: (Score:2)
What? (Score:2, Informative)
Re: (Score:2)
Its wallet addresses all the way until you try to convert it, and it remains your choice as to the manner of that, and the conversion itself can be another level of mixing.
As to when the mix is dilute enough that is probably dependent on total blockchain volume more than anything. At some point the "link" between wallet A and wallet B is homeopathic at best.
Re: (Score:2)
Re: (Score:2)
There's nothing in Bitcoin pertaining to "anonymity".
Hasn't been its primary selling point among its most vocal proponents? Perhaps with anonymity having been soundly broken, the desire for Bitcoin will fade away quickly. Perhaps then we can rid ourselves of the decay that has attached itself to so broken a concept, and Bitcoin will finally go the way of other useless fossils.
Re:What? (Score:5, Informative)
There's nothing in Bitcoin pertaining to "anonymity".
Sk999 beat me to it, but the original Bitcoin whitepaper dedicates an entire section (section 10) to how it is supposed to protect anonymity. The article even quotes the entire section.
Re:I was one of only 64 early-day miners?! (Score:4, Funny)
please send a few hundred bitcoins to 18awryFxpSG2C1PRHWCteoak94HfdFbnfD
thank you in advance
Re: (Score:3)
It says "most" bitcoin was mined by those 64. There could've been millions, but the top 64 doing 51% of the work.
Re: (Score:3)
There are also mining pools, where multiple people would combine their effort to mine coins and each take a share of the resulting coins. From the blockchain perspective the pool would show as a single user.
Re: (Score:2)
I'm not going to read the paper because Satoshi was clear about a public ledger fending off corruption and his initial model allowed payments to IP addresses. They haven't uncovered shit.
That said, p2sh and key derivativations made improvements in later years.
not anon (Score:1)
Bitcoin claimed anonymity? (Score:1)
Can you say "Ponzi?" (Score:2)
Sure. I knew you could.
Re: Can you say "Ponzi?" (Score:1)
The early investors in Apple also held most of the shares
Guess Apple must be a Ponzi then.
Alternatively, you donâ(TM)t understand what a Ponzi actually is, but you think using the word makes you sound smart.
"Blew up"? Not really (Score:2, Interesting)
Essentially it has been known that Bitcoin (like most crapcoins) is not anonymous unless you are very, very careful and have help laundering the money right from when the first competent security expert looked at it. So basically from the start. The pump & dump crowd has just been pushing lies about as long to get more morons on board.
I am not sure how secure things like Monero are, but they are a niche. Also, one bad security problem can completely blow up any such designed-to-be anonymous crapcoin wit
Down 35% in the last six months (Score:2)
> I don't know about pump and dump, but BTC is holding steady
It's down 35% in just the last months.
> It is the USD that is having issues right now
The dollar is down several percent over the last 12 months.
BTC routinely falls that much in a single day.
Re: (Score:2)
I don't know about pump and dump, but BTC is holding steady
It's down 35% in just the last months.
You are talking to somebody trying to pump there...
It is the USD that is having issues right now
The dollar is down several percent over the last 12 months.
BTC routinely falls that much in a single day.
Indeed. One thing these fraudsters routinely use to bedazzle their victims is to ignore scales and equalize things that are nothing alike when you look at the actual numbers. Also used in other irrational spaces like "the vaccine is useless" when it does not protect 100%. Or "climate change is natural" when the part that is natural is not a problem and will not be a problem for a long time yet. And many other uses of the same manipulation technique. That th
Re: (Score:2)
You're absolutely right.
> And many other uses of the same manipulation technique.
> That these work on many people makes one wonder
I suspect that more often than we'd hope, you or are I are not paying close attention, or we want to see a particular result, so the same technique works on us more often than we'd like to admit. It doesn't work to change our mind from our preconceived notions. To further strengthen and our existing biases - I get it does sometimes
Re: (Score:2)
You're absolutely right.
Thanks.
> And many other uses of the same manipulation technique.
> That these work on many people makes one wonder
I suspect that more often than we'd hope, you or are I are not paying close attention, or we want to see a particular result, so the same technique works on us more often than we'd like to admit. It doesn't work to change our mind from our preconceived notions. To further strengthen and our existing biases - I get it does sometimes
Sure, everybody is susceptible. But I usually catch myself when it happens to me and I do not think much slips through anymore. Detection of this crap becomes automatic after you have practiced it for a few decades. I now recognize me wanting to agree to something as a sign of danger and a sign that actual thinking is required. Also I firmly divide what I think I know into "fact" (very, very likely, scientifically sound evidence available), "conjecture" (may be valid or not, evidence needed) and "thi
Re: (Score:2)
Thanks for your thoughts on that.
Re: "Blew up"? Not really (Score:1)
Re: (Score:3)
Re: "Blew up"? Not really (Score:1)
Re: (Score:2)
Morons? Crapcoins? That's not a respectful way to discuss. I am one of those people you call morons and I made money by trading what you call crapcoins. You are smart, so you probably didn't.
Oh sure. With the 99% morons there are 1% fraudsters with no honor or morals that intentionally destroy wealth for a minor (in comparison) personal gain and are at the root of the problem. You are one of the latter if your claim is true.
Now why would I ever "respect" scum like you? Oh, right, there is no reason to.
Interesting read, but Bitcoin was never anonymous (Score:3)
The paper is certainly interesting and a fascinating look at the origins of Bitcoin, but I really don't like the /. headline here -- people have done the same thing on much smaller scales for years now. The paper is quite interesting because it was very thorough and because the authors of the paper apparently did some optimizations to previously known techniques, but the method itself is not a revelation, it didn't blow up any claim to anonymity -- those claims were long dead.