Bitcoin is the new money: minted and exchanged on the Internet. Faster and cheaper than a bank, the service is attracting attention from all over the world. But a big question remains: are the transactions really anonymous?
Several research groups worldwide have shown that it is possible to find out which transactions belong together, even if the client uses different pseudonyms. However it was not clear if it is also possible to reveal the IP address behind each transaction. This has changed: researchers at the University of Luxembourg have now demonstrated how this is feasible with only a few computers and about €1500.
“It’s hard to predict the future, but some people think that Bitcoin could do to finance what the Internet did to communications”, says Prof. Alex Biryukov, who leads digital currency research at the University. “So I think especially for Luxembourg it is important to watch what happens with Bitcoin”.
The Bitcoin system is not managed by a central authority, but relies on a peer-to-peer network on the Internet. Anyone can join the network as a user or provide computing capacity to process the transactions. In the network, the user’s identity is hidden behind a cryptographic pseudonym, which can be changed as often as is wanted. Transactions are signed with this pseudonym and broadcast to the public network to verify their authenticity and attribute the Bitcoins to the new owner.
In their new study, researchers at the Laboratory of Algorithmics, Cryptology and Security of the University of Luxembourg have shown that Bitcoin does not protect user’s IP address and that it can be linked to the user’s transactions in real-time. To find this out, a hacker would need only a few computers and about €1500 per month for server and traffic costs. Moreover, the popular anonymization network “Tor” can do little to guarantee Bitcoin user’s anonymity, since it can be blocked easily.
The basic idea behind these findings is that Bitcoin entry nodes, to which the user’s computer connects in order to make a transaction, form a unique identifier for the duration of user’s session. This unique pattern can be linked to a user’s IP address. Moreover, transactions made during one session, even those made via unrelated pseudonyms, can be linked together. With this method, hackers can reveal up to 60 percent of the IP addresses behind the transactions made over the Bitcoin 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 the paper recently presented at the ACM Conference on Computer and Communications Security the team also described how to prevent such an attack on user’s privacy. Software patches written by the researchers are currently under discussion with the Bitcoin core developers.
The University of Luxembourg, founded in 2003, is a multilingual, international research university with 6200 students and staff from all over the globe. Its research focuses on computational sciences, law and especially European law, finance, educational sciences as well as interdisciplinary research conducted by the Interdisciplinary Centre for Security, Reliability and Trust (SnT) and the Luxembourg Centre for Systems Biomedicine (LCSB).
Notes to editor
The full scientific article “Deanonymisation of clients in Bitcoin P2P network” as published in the Proceedings of the ACM Conference on Computer and Communications Security can be viewed here: http://orbilu.uni.lu/handle/10993/18679 . DOI: 10.1145/2660267.2660379
http://orbilu.uni.lu/handle/10993/18679 - Full scientific article: “Deanonymisation of clients in Bitcoin P2P network”
http://wwwen.uni.lu/recherche/fstc/laboratory_of_algorithmics_cryptology_and_security_lacs - Laboratory of Algorithmics, Cryptology and Security (LACS) at the University of Luxembourg
Sophie Kolb | idw - Informationsdienst Wissenschaft
Fraunhofer FIT joins Facebook's Telecom Infra Project
25.10.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT
Stanford researchers create new special-purpose computer that may someday save us billions
21.10.2016 | Stanford University
Ultrafast lasers have introduced new possibilities in engraving ultrafine structures, and scientists are now also investigating how to use them to etch microstructures into thin glass. There are possible applications in analytics (lab on a chip) and especially in electronics and the consumer sector, where great interest has been shown.
This new method was born of a surprising phenomenon: irradiating glass in a particular way with an ultrafast laser has the effect of making the glass up to a...
Terahertz excitation of selected crystal vibrations leads to an effective magnetic field that drives coherent spin motion
Controlling functional properties by light is one of the grand goals in modern condensed matter physics and materials science. A new study now demonstrates how...
Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.
"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...
In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.
A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...
By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.
"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...
14.10.2016 | Event News
14.10.2016 | Event News
12.10.2016 | Event News
27.10.2016 | Life Sciences
27.10.2016 | Life Sciences
27.10.2016 | Power and Electrical Engineering