Bitcoin laid bare: Boffins beat anonymity

Up to 60 per cent of transactions can be linked to IPs


The cyber-libertarian poster-child Bitcoin, meant to usher in a new age of anonymous transactions, is rubbish at protecting users' IP addresses according to research from the University of Luxembourg.

In this Association of Computing Machinery (ACM) conference paper by Alex Biryukov, Dmitry Khovratovich and Ivan Pustogarov of the Laboratory of Algorithmics, Cryptology and Security, “few computers” and a budget of €1,500 per for servers and traffic charges should be enough to start unmasking users' addresses with as much as 60 per cent accuracy.

If an attacker needed to be stealthy, their success rate would drop to 11 per cent.

In what they call “a generic method to deanonymise a significant fraction of Bitcoin users and correlate their pseudonyms with public IP addresses”, the authors say clients can be uniquely identified by their “entry nodes”, and that these identify the origin of the transaction.

“In a concrete example, an attacker with a few GB of storage and no more than 50 connections to each Bitcoin server can disclose the sender's IP address in 11 per cent of all transactions generated in the Bitcoin network”, the paper claims.

Even more scary: the boffins reckon they can identify users behind NAT firewalls – and think their attack could be extended to other P2P networks.

The key phase of the researchers' attack includes four steps:

  • Getting a list of Bitcoin servers using the GETADDR message and working out if the responder is a server using the ADDR response and sending it a VERSION message;
  • Building a list of nodes as targets for deanonymisation;
  • Mapping clients to entry nodes; and
  • Mapping transactions to entry nodes.

The paper notes that TOR would protect against this, but that, too, can be defeated if the attacker is willing to take a risk: Bitcoin servers can be prohibited from accepting TOR connections, but refusing those connections would be noticed.

Also likely to be noticed: to get their 60 per cent deanonymisation rate, the attackers noted, required “a slight DoS of the network”.

“This Bitcoin network analysis combined with previous research on transaction flows shows that the level of anonymity in the Bitcoin network is quite low,” explains Dr. Alex Biryukov in this announcement, which adds that the research team is currently discussing possible patches with Bitcoin's core developers. ®

Similar topics

Broader topics


Other stories you might like

  • Don't hate on cryptomining, hate the power stations, say Bitcoin super-fans
    We're not the ones telling them to burn fossil fuels, top names write in response to probe request

    Big names in Bitcoin have defended cryptocurrency mining, issuing a jointly signed letter hitting back at US lawmakers who last month urged a government watchdog to probe the practice.

    Twitter founder and Bitcoin champion Jack Dorsey, the CEO of Bitcoin-collecting MicroStrategy Michael Saylor, and others on Monday signed the letter [PDF] that is a point-by-point rebuttal to a memo [PDF] sent last month to America's Environmental Protection Agency (EPA) by Representative Jared Huffman (D-CA) and a couple dozen other Democrats.

    In that first letter, Huffman and pals asked the EPA to probe proof-of-work cryptocurrency mining facilities to ensure they're following US laws such as the Clean Air Act and Clean Water Act, and not having an outsized effect on climate change. Proof-of-work cryptocurrencies include Bitcoin, Ethereum, and Monero. Ethereum, for one, is planning to move to fully proof-of-stake approach, which is more energy efficient.

    Continue reading
  • Wiki community votes to stop accepting cryptocurrency donations
    Cryptocurrencies make up less than 1% of wiki donations, but as member points out, that $130k could pay a salary

    The wiki community held a vote as to whether the Wikimedia Foundation should continue to accept cryptocurrency donations, the result of which was a resounding "no".

    The proposal was made by Wikipedia administrator, checkuser and oversighter GorillaWarfare based on three points: it could be seen as an endorsement of cryptocurrency by the organization; the tech is not environmentally sustainable; and, last of all, accepting crypto could damage the reputation of the foundation.

    The Wikimedia Foundation currently accepts donations in Bitcoin, Bitcoin Cash and Ethereum, as well as traditional payment types. According to the community, crypto is one of the foundation's smallest revenue channels, making up a mere .08 percent of 2021 revenue, equating to $130,100. Total revenue for 2021 was around $162 million.

    Continue reading
  • Crypto inferno: Intel's Bitcoin-mining Blockscale ASIC to arrive in Q3
    Gelsinger's firm drops details on crypto chip – including hash rate of up to 580GHps

    Intel has disclosed more details of its Blockscale ASIC, the firm's entry into the realm of cryptocurrency mining with a dedicated chip built to provide users with energy-efficient hashing for proof-of-work consensus networks.

    As previously revealed, the chip now identified as the Intel Blockscale ASIC is designed to provide hardware acceleration for SHA-256 (Secure Hash Algorithm-256) processing for blockchain proof-of-work applications. It will start shipping in the third quarter of 2022.

    Intel has now claimed that its Blockscale ASIC has a hash rate of up to 580GHps, or giga hashes per second, and can support up to 256 integrated circuits per chain. The latter means that a customer could theoretically build and operate a mining system comprising 256 of the Blockscale chips, which would be capable of over 148THps, or tera hashes per second.

    Continue reading
  • Europe advances crypto-coin regulation – without potential ban on Bitcoin
    Vote held after red-tape targeting proof-of-work assets removed

    Europe's lawmakers this week moved ahead with their proposed cryptocurrency regulations, having ditched a rule that might have banned financial services from dealing in Bitcoin and Ethereum.

    The European Union is considering ways to regulate digital coins, particularly to stamp out money laundering, and as such in 2020 drew up a draft framework dubbed the Markets in Crypto Assets (MiCA) to achieve this. During the development of this red tape, an amendment was proposed that, depending on its interpretation, could have made it illegal for app and web services to handle transactions involving proof-of-work coins, such as Bitcoin and Ethereum.

    Proof-of-work algorithms underpin these cryptocurrencies, how they are mined, and how transactions are confirmed by the network. These algorithms have been criticized for being computationally intensive and consuming large amounts of energy, prompting some lawmakers to propose restrictions. Under the European Green Deal, member states are trying to slash greenhouse gas emissions, and are heavily scrutinizing activities like running proof-of-work algorithms.

    Continue reading

Biting the hand that feeds IT © 1998–2022