1y ago

How a 27-Year-Old Codebreaker Busted the Myth of Bitcoin’s Anonymity

www.wired.com

"This is the story of the revelation in late 2013 that Bitcoin was, in fact, the opposite of untraceable—that its blockchain would actually allow researchers, tech companies, and law enforcement to trace and identify users with even more transparency than the existing financial system."

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1y ago

A 27-Year-Old Codebreaker Busted the Myth of Bitcoin's Anonymity

www.wired.com /story/27-year-old-codebreaker-busted-myth-bitcoins-anonymity/

88 comments

Anyone in the crypto space has known this for years.
Thats why privacy coins like Monero exist
- You're not wrong, but the first words are literally "Just over a decade ago". It's not a news article, it's the story of the research in 2013 which revealed bitcoin isn't anonymous.
  
  It wasn't a revelation in 2013 either. The ledger data has always been public information.
- An article in Wired doesn't speak to the "crypto space", they speak to your aunt and uncle in Missouri who don't know about this.
  
  This is the Technology sub on Lemmy, I cant imagine you believe im talking to people in Missouri
- Or pay cash... ultimate "privacy coin"
  
  true, but paying in cash is sort of difficult over the internet.
  You can send it via mail, but mail is slow and it could potentially be traced back to you.
- How does Monero work compared to the other big ones?
  
  Every time there is a transaction the sender's funds are mixed together with a bunch of other senders, and the recipients receive their money from this random pool, so there is no direct association between sender/receiver
  
  Monero is fucking genius actually, I recommend reading about the cryptography and mathematics behind it, it's actually incredible.
  Basically, they've created a way to make the entire thing opaque. Even the people sending the coin are unable to identify the person they're sending to.
  I don't hold any Monero, because I don't see it as a good investment (no way governemnts allow something that powerfully opaque to thrive), but I respect the technology.
  
  your fake internet points are routed via north korean money laundering scheme
- And yet, crypto bros love pushing the false narrative that bitcoin is an untraceable currency of the future.
  In reality, anyone that's looked into crypto in all its popular forms knows it's just a ponzi scheme.
  
  It's so braindead. The entire point of Bitcoin is that it's 100% traceable
Transactions are public. But wallet ownership is not.
That's why it's widely used in cybercrime. You can make a wallet and authorities may know which wallet receibe the money, but it may be imposible to link that wallet with an actual person.
- but it may be imposible to link that wallet with an actual person.
  Impossible using the blockchain itself, but not as impossible when you add more traditional investigative techniques to the mix.
  
  Provided that the exchanges are cooperating (voluntarily or by law).
  Why do you think NK and other "impenetrable" countries are so fond of it? It provides them with the means to monetize something otherwise pretty useless: their relative independence and the resulting potential for secrecy.
  They are turning into new-age Swiss banks, keeping anyone's private ledgers private. For a hefty sum.
  And one does not need a strong currency to achieve that: other cryptocurrencies are also perfectly usable.
- Yeah, but retrieving actual useful currency from that wallet becomes nearly impossible. At that point, the only way, really, is peer-to-peer transaction. And even then, it seems fraught.
  
  Yeah, but retrieving actual useful currency from that wallet becomes nearly impossible.
  Then how do people set up drug empires built around it?
  Use your brains.
- And it becomes much, much easier to track down and remove anonymity the moment real currency transactions are made. Because of KYC requirements, the only way to stay anonymous with crypto is to keep your crypto transactions entirely outside of the real world. Once your digital anonymous currency interacts with real money you've not anchored your wallet to your identity.
  
  There are places you can exchange crypto that exist outside of KYC requirements.
This has to be the most convoluted way of saying someone clustered wallet addresses of a public blockchain. I'm sure there's much more to her work, but this beats so much around the bush.... I'm not going to speculate on the author's motivations for this article, I'll just say I wouldn't waste (more) time on it.
- The article’s point appears to be an ad for the book written by the same dude whose byline is on the article.
  
  that makes more sense, considering I felt like reading a darn book that never gets to the point
- The article seemed to focus on the person more than the actual issues with blockchain.
Which part of public ledger they don't understand?
I remember when Bitcoin first came out and one of the selling points of bitcoin was that literally anyone could trace the transfers using the wallet codes and what not no? I don't ever remember there being claims that it was untraceable at least as the selling point to the average consumer. There was even tools in like 2012 for tracking whether stuff internally in bitcoin was stolen or whatever...
"While the taint analysis tool aims at measuring the “correlation” between two addresses, there is another notion of taint in the Bitcoin community which refers to the percentage of bitcoins, that come from a known theft or scam and have been blacklisted by popular exchange markets. For example, in 2012 the bitcoin exchange Mt.Gox froze accounts of customers, who owned bitcoins that could be directly related to such an incident [20]." https://maltemoeser.de/paper/money-laundering.pdf
- I think people confuse anonymity (similar to the made up names we use here, or character names in online games, and your wallet ID in a crypto coin) to privacy. Technically, if you receive all your funds in crypto, and you spend all the crypto directly (on goods and services that do not require you to give any PII) without it ever turning to fiat. Then yes, it is anonymous but not private. People can see that wallet hash x received funds from wallet hash y and send some of that to wallet hash z and will be able to confirm that for as long as a copy of the ledger exists somewhere.
  Really not sure a codebreaker needed to work this out. Anyone that spent a bit of time understanding how it worked would realise this right away. I have no doubt though, that many people had a total pikachu face when their barely concealed illegal activities were easily discovered.
There should be more education on the difference between "privacy being available if you look for it" VS "privacy being ensured since the beginning and forever no matter what"
Spoiler: the last one does not exists
- Monero comes the closest, but there is a possibility that ring signatures could be broken in the future for sure.
  
  Ethereum supports anonymized tokens and rollups too, if you choose to use them.
- Spoiler: the last one does not exists
  Maybe technically... But we've come up with some pretty ridiculous cryptography schemes that would take billions of years to crack.
  
  You would be surprised in finding out that the majority of blockchains out there aren't Quantum resistant, tho (elliptic curves being the reason mainly but I am not an expert)
The main way criminals are caught is when they transfer their crypto to an exchange so they can convert it to cash. Law enforcement will subpoena the exange and ask “Hey, who exchanged 0.7886 bitcoin for cash on this date?” and they will get their identity. Using the public ledger, they will be able to trace the transactions done and show that this person sent money to an address advertised as belonging to a trafficking site, an illegal market, or recieved money from the bad wallet address.
The address owner is anonymous until there is a source of data that ties information the wallet, and often transactions can be used to do that, just as any way to advertise a wallet belongs to you can, or any way to exchange crypto to cash can.
I don't think this story is correct, just to chime in with everybody else. It was explicitly stated that bitcoin was a public ledger in the whitepaper.
- What part do you not consider correct?
  
  That someone busted the myth of Bitcoin four years after it was made public knowledge that bitcoin was not anonymous.
  There was no myth to bust. Bitcoin was explicitly public from its inception.
- There's a difference between "bitcoin is a public ledger" and "we can determine that Alice paid Bob 1 bitcoin".
  The bitcoin devs thought they could achieve the "public ledger" part while avoiding the second part. It turns out they couldn't.
I knew this in 2007 when I heard about shitcoin. A ledger is a collection of transactions which is widely share, yep sure confedental...
Seriously how stupid can ya be?
- That's crazy that you heard about crypto before it was created in 2008. Are you Satoshi? Did Hal Finney get Internet installed in his casket?
  
  So they were off by one year. This was years ago. Hell, I thought I remember reading about it in 2000,apparently not. I'm probably mentally conflating it with the white papers I was reading in the late 90's, some of my more technical coworkers at that company (which I left in 2000) were hot on what we now call crypto currency.
  
  That's confedental.
  
  Sorry I missed a year ya pedantic donkey
  I heard about it around that time and it was as stupid then as it is now

88 comments