Bitcoin is NOT anonymous

Does this surprise you?

Officially, only governments can issue currency, and banks control the flow of that currency. Unofficially, people barter products and services between themselves. Craigslist often helps a person who wants to trade a bicycle for a guitar find a person with a guitar who wants a bicycle. These transactions work only one to one, the most basic peer-to-peer. has created their own "P2P Virtual Currency" that makes it possible for people who can't get physically together to exchange bikes for guitars to still exchange goods and services. To keep one person from spending the same bitcoins over and over, network time stamps link to a "hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work" (Bitcoin origin document).

Rotating addresses promises anonymity within the Bitcoin systm.

Unfortunately, a new report by Fergal Reid and Martin Harrigan from the University College Dublin found that "Bitcoin is not inherently anonymous." This created a bit of conversation by people who were surprised, and those surprised at their surprise. The paper started as an investigation into the theft of 25,000 Bitcoins. They conclude: "It is important that users do not have a false expectation of anonymity."

Let's jail the thief

We don't set out to to de-anonymise the thief - we are researchers, not law enforcement, and we are just using that as an example to show its possible to trace the flow of Bitcoins around the network. (one of the authors) Fergal on

Ok, then how about this. If law enforcement were to perform the analysis you performed, is that enough to a.) identify the thief and b.) persuade a jury beyond a reasonable doubt?

Anon2VYWuQeG on

shocker. yes bitcoins can be traced from wallet to wallet.

Frycicle on

This is anonymous enough for me

Bitcoin may not be truly anonymous, but it sure isn't as easy as you suggest to implicate a transfer belonging to a single client.

TraderTimm on

In other words, Bitcoin currently does not replace the function of Tor (the onion router). So if you are going to use Bitcoin and wish to be anonymous, run it through Tor.

chonglibloodsport on

erm, it never stated to be, it's pseudonymous.

phatsphere on

Still worthwhile

But that's not the point of Bitcoin's anonymous capabilities. The relative ease which you can create multiple wallets and keep your questionable Silk Road and Wikileaks donation purchases separate, as opposed to creating multiple offshore bank accounts in Switzerland, can establish a high degree of anonymity. Almost like how drug dealers use prepaid cell phones and discard them for new ones the moment they suspect something is compromised.

gigantor on

Could a service that creates a new ´wallet´ for every single transaction provide effectively unbreakable anonymity?

danenania on

I imagine it will be much harder to track the flow of bitcoins as soon as larger laundering services start popping up.

seanalltogether on

As soon as larger laundering services start popping up? Uh oh. Do you think Bitcoin and other attempts to create currency outside normal channels are a fun exercise in computing? (Yes/No) Or do they enable or encourage criminal activity? (Yes/No)

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