BitFury Group De-Anonymizes Over 15% of the Bitcoin Network With New Blockchain Analysis Tool
The ability to analyze and link Bitcoin transactions is something many governments and regulators hope to do more of moving forward. A lot of officials still think Bitcoin is anonymous, even though that is far from the case. BitFury Group recently demonstrated their latest analysis tool by de-anonymizing several million Bitcoin transactions. It’s an interesting turn of events, even though Bitcoin was never designed to be used in an anonymous capacity whatsoever.
ANOTHER NOTCH IN BITFURY GROUP’S BELT
Not too long ago, we touched upon the fact that BitFury Group has been making progress in the area of analyzing Bitcoin transactions. Given the company’s position in the world of transaction validation, it is in a prime position to dominate the other end of the spectrum as well. After all, Bitcoin is often associated with criminal activity, even though it lacks all of the necessary traits required in order to succeed in that area. By de-anonymizing suspicious transactions, companies hope to bring some more legitimacy to the world’s largest cryptocurrency by market cap.
Whether or not they will be successful in doing so remains to be determined. BitFury Group has made a lasting first impression, though, as its blockchain analysis tools successfully de-anonymized millions of transactions and their associated addresses. This was mainly due to the concept of Bitcoin address clustering, which exposes users by identifying addresses which may be linked to one and the same user. By gathering information from nearly 100 different sources, the company was more than able to perform a very successful test with its new tools.
Surprisingly, it seems Twitter and Reddit contain a treasure trove of information when it comes to de-anonymizing Bitcoin users. Close to 16% of the entire Bitcoin blockchain has been identified as a result of the first major test conducted by BitFury Group. To a lot of people, that is a rather worrisome statistic. Those who have nothing to hide have nothing to be worried about, though. Tools like these primarily exist to weed out criminals and track down individuals who may have conducted suspicious activity.
The 95 million identified Bitcoin addresses in question belong to 14 million individuals. It is good to see cryptocurrency enthusiasts not rely on the same address for all their Bitcoin activity, although it doesn’t matter much when clustering can be used to link everything together. At the same time, it also shows that people may need to use even more Bitcoin addresses in the future – not to hide their activity, mind you, but just as a way to see how well this system performs when even more addresses are in use.
For the time being, the big question remains whether or not BitFury Group is working in concert with law enforcement agencies. It seems likely the company will pursue this option at some point in the future, but for now, nothing has been confirmed on this front. It is evident blockchain analysis is useful for law enforcement agencies, but there are other implications as well. Corporations stand to benefit a lot from this technology as well moving forward. Public blockchains contain a lot of useful information, once you know what to look for and how to connect the dots.
Furthermore, this new venture by BitFury Group may force people to look for privacy and anonymity-oriented cryptocurrencies. A few of these currencies exist, although most of them focus on optional privacy and anonymity. The “hardcore” anonymity currencies are not as user-friendly as Bitcoin, but they are well worth investing some time in. It will be interesting to see how this research by BitFury Group affects the cryptocurrency ecosystem as a whole in the coming years.
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