Web merchants routinely leak data about Bitcoin purchases

https://www.technologyreview.com/s/608716/bitcoin-transactions-arent-as-anonymous-as-everyone-hoped/

by sgoldfed • 9 years ago

158 54 9 years ago

schuetze• 9 years ago

IMHO anonymity has never been Bitcoin's strength, and we must stop pretending that BTC is the right tool for transactions that need to be private. At best, Bitcoin is pseudonymous.

Other currencies have attempted to fix this problem, such as Zcash. But I think it will be hard to escape the volumes of metadata created through transactions on merchant websites. Ultimately, your spending habits and browser cookies will say more about you than your BTC address.

StavrosK• 9 years ago

Sure, but it's quite nice that any random passerby who happens to look at the Monero blockchain has no idea what you've spent and where. If there's something like bitcoin's "new address per transaction" for Monero, they won't be able to tell anything even if they have data from all the merchants.

mahyarm• 9 years ago

Monero should be treated like the beta software it is. There have been vulnerabilities in the past to remove anonymity and there will be in the future. I would at least give it 5 years & a lot more adoption to start trusting it somewhat.

jacquesm• 9 years ago

Who is everyone? I highly doubt that anyone that actually studied the underlying protocol had any illusions about it being anonymous.

The important thing to remember is that all transactions are public and that any linking of a single transaction will allow someone to link all other purchases / receipts with that address.

At best bitcoin is pseudo anonymous.

wmf• 9 years ago

More interesting is that they broke CoinJoin.

mirimir8• 9 years ago

Maybe. But see https://www.reddit.com/r/joinmarket/comments/6d60f0/coinjoin...

randomdrake• 9 years ago

Some fairly intelligent folks have had, or continue to have this viewpoint. As an example, I was extremely delighted to meet Chris Dixon, whom I still consider to be rather intelligent and diligent fellow. When we met, in 2013, he was all about Bitcoin and the blockchain so I tried to engage him in conversation about it. The first thing I asked was what he thought about the fact that it was being used for some fairly nefarious things, but was not, in fact, anonymous.

He was convinced it was anonymous. I attempted to bring up some points to convince him otherwise but found it to be a rather short conversation.

So, you may be as surprised as I was that it's relatively uncommon knowledge, even for intelligent and diligent technical folks, that Bitcoin != anonymous.

gnaritas• 9 years ago

No one who understands what bitcoin is thought it was anonymous.

pen2l• 9 years ago

Hey, at least Satoshi's identity is still unknown, so there's that!

blunte• 9 years ago

Bitcoin's anonymity, or lack thereof, has not changed. This article is poorly titled.

The problem is with the endpoint - the person or business you are transacting with (or the technologies they use for the interaction).

This problem will exist with any cryptocurrency if the endpoints still operate the same.

randomwalker• 9 years ago

I'm a co-author of this paper. It's available here: https://arxiv.org/pdf/1708.04748.pdf

The surprise here isn't that Bitcoin isn't perfectly anonymous. There are two new findings. The first is the extent to which your Bitcoin payment details get leaked to third party trackers. I've been writing about the excesses of third party tracking for years [1], and I'm pretty jaded, but the extent of the leaks surprised me.

The second main finding is that CoinJoin isn't enough to protect yourself. We tested this on our own transactions, but also by coming up with a way to identity essentially all existing CoinJoins on the blockchain and analyzing their anonymity.

[1] http://randomwalker.info/web-privacy/

elmar• 9 years ago

thanks for sharing the paper, do you have any plans for a similar study on Monero transactions?

Exuma• 9 years ago

I'd also like to know this

godzillabrennus• 9 years ago

Seems like a good business opportunity to develop and offer a privacy shield service for customers who care.

QAPereo• 9 years ago

Is that already what a Tumbler does?

tehlike2• 9 years ago

or just use cryptocurrencies that support anonymous transactions?

sowbug• 9 years ago

dang, would be nice to change title/link to the paper (https://arxiv.org/abs/1708.04748 for non-PDF link). Too much commentary here is reacting to the article title.

(By dang I of course mean https://news.ycombinator.com/user?id=dang)

dang• 9 years ago

The article seems ok so perhaps we'll try changing the title to the subtitle instead.

mirimir8• 9 years ago

It's been clear for years that Bitcoin transactions aren't anonymous, and that web tracking is pervasive. To use Bitcoin anonymously, one must use mixers, such as Bitcoin Fog. CoinJoin just doesn't cut it.[0] With mixers, you get totally unrelated Bitcoin. Also, one must use VPN services and/or Tor, to avoid tracking. It's rather misleading to write a paper like this without letting users know how to do it right.

0) https://www.reddit.com/r/joinmarket/comments/6d60f0/coinjoin...

apo• 9 years ago

Bitcoin was never claimed to be "anonymous." It operates under a privacy model called "pseudonymity," which was described elegantly in Satoshi's white paper.

The distinction is important because conflating privacy in general (and pseudonymity in particular) with anonymity is one way people get into trouble.

UncleMeat• 9 years ago

Read the paper. This isn't what is being covered here.

jjcm• 9 years ago

I think because of it's lack of anonymity and how that helped with the recent hansa / alphabay takedowns, we're going to see a big boost in use of dash/zcash/monero/anonymous-crypto-coin-du-jour once the next round of markets rise up. I'm very curious to see the regulatory response to those style of coins, as until recently they've kinda been in the shadows.

stuaxo• 9 years ago

It's a public ledger of every single transaction, as soon as you link your identity to some payment, the game is up surely ?

mirimir8• 9 years ago

Well, one can have arbitrarily many Bitcoin wallets. I have dozens in current use. Each one is associated with an identity, at least an email address. Most of them only connect through Tor, so there's no IP address association.

But yes, if you don't compartmentalize like that, everything is linked.

joosters• 9 years ago

You can have as many wallets as you like, but the problem is the same for all of them: getting coins into them. Transferring between wallets would obviously link them. You would have to go through a (different) convoluted way of obtaining the coins for each wallet.

nicostouch• 9 years ago

Pretty much everyone in the bitcoin community takes this knowledge for granted. If you want actual privacy go with either Monero or ZCash.

kobeya3• 9 years ago

I wouldn't trust in Monero's privacy. Most of the techniques uses to defeat CoinJoin would also work against Monero's ring signatures, which amount to effectively the same thing.

ZCash is definitely a different tier of privacy... or it would be if they made ZCash proofs required for every transaction. But instead they made anonymous payments opt-in and therefore your privacy can be defeated by people upstream or downstream of you.

ringaroundthetx• 9 years ago

Monero uses ring signatures in conjunction with one-time stealth addresses, so even if you figured out a transaction's link to a previous transaction, you would still be stuck with stealth addresses.

This is further hardened with RingCT

Please explain how this is undermined, using techniques applicable within the last 9 months.

ianmiers2• 9 years ago

I'm not sure I follow on the "your privacy can be defeated by people upstream or downstream of you." In ZCash, your transaction is completly indistinguishable from the other shielded transactions. The only thing the person you are paying learns is they were paid e.g. $10 by a shielded TX user. So they learn nearly nothing from upstream, and know nearly nothing to share downstream. In particular, this seems to completely negate the attack described in this paper. (Which coinjoin does not).

The limitation for ZCash is that shielded tx's are only 1/5th of the total number of TXs by volume, so your anonymity set is not as large as it could be. But it's likely considerably larger than the anonymity you get by mixing < 10 TX's and then doing this repeatedly both because of intersection attacks (which the attack here is) and because of the impossibility of correctly sampling the TXs to mix with.

nnfy• 9 years ago

Is this really a flaw in bitcoin?

And I do not agree that this makes bitcoin any less anonymous. There is still the gap between key and owner that needs to be bridged before identification can take place, and I do not believe that the word anonymous guarantees no history available, only that the history cannot be linked to a person. By definition, I mean to say.

I would compare this to a headline titled "bitcoin is less secure" because of the Mt.Gox hack. Similarly not the fault of bitcoin.

neuro_imager• 9 years ago

I'm new to cryptocurrency and it astounds me the amount of information I have to hand over just in order to buy currency on an exchange. Presumably this is a source of de-anonymization? I thought the whole point was that you don't have to give away information to a third party?

Does anyone know how to get cryptocurrency without going through this process? Is there a way just to buy cryptocurrency with a simple credit card transaction?

mirimir8• 9 years ago

US KYC law mandates all that. And exchanges have US customers, so they follow KYC. BTC-e didn't, and the US took them down. So hey.

But anyway, it doesn't matter that your initial cryptocurrency purchase is totally not anonymous. Just use mixing services. And do that through Tor. After a couple mixes, you will have totally different Bitcoin or whatever, with no association with your initial purchase.

Tenoke• 9 years ago

You can always use a site like localbitcoins for buying directly from someone. At least before you could occasionally find people willing to sell for money exchanged in real life.

Alternatively you can buy btc from bitcoin ATMs (tho some but not all ask for ID) depending on where you are.

novalis78• 9 years ago

In the US all Bitcoin ATMs are required to ask for picture ID

chatmasta• 9 years ago

You mine it; either with raw compute power, or by providing services fulfilling a contract.

Of course, if you then want to sell those coins, to "cash out" into a fiat currency, you'll need to comply with the KYC laws.

bassman9000• 9 years ago

Technically, the protocol is anonymous. Addresses/hashes are not human readable or, better said, you can't easily infer someone's identity/physical address/phone/nationality just by glancing at them.

Exchanges as entry points to the network are required to make that conection. Merchants as the paper say, do too.

If a merchant required a certain amount to complete your transaction, and that amount came from an unknown, unregistered wallet (in the sense you didn't acknowledge its ownership), would they legally be able to say it coming from you?

In the end, yes, it's a technicality, because it's difficult to enter the blockchain without leaving a trace at the fiat-border. But still...

nextstep• 9 years ago

Yeah. Monero would solve this problem.

maufl• 9 years ago

I'll just throw this out here because I still need feedback. https://www.comsys.rwth-aachen.de/fileadmin/papers/2017/2017... I think anonymous CoinJoin transactions are possible and could be the default in Bitcoin.

kbody• 9 years ago

Appreciate your work.

In a sense it's similar to talking on the phone and being recorded by a security camera. If anyone thought that using Bitcoin or any cryptocurrency for purchases magically hides any side-channel privacy leaks, I would say it's lack of (self-)education. The reality is with such influx of users in the space and countless of Youtube etc. channels educating without actually doing research and spreading wrong facts we have some poor level of intro-education for new people. But that happens to any new system getting mass attention.

Web merchants routinely leak data about Bitcoin purchases

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