How a 27-year-old busted the myth of anonymity in Bitcoin

A little over a decade ago, Bitcoin To many of its followers, it appeared to be the holy grail of crypto-anarchism: truly private digital money for the Internet.

“Participants can be anonymous,” Satoshi Nakamoto, the mysterious and little-known inventor of the cryptocurrency, stated in a Bitcoin introduction email. And the Silk Road The dark web drug market seemed like living proof of this potential, allowing hundreds of millions of dollars in illicit drugs and other contraband to be sold for bitcoin while flaunting its impunity from law enforcement.

This is the story of the revelation in late 2013 that Bitcoin was actually Bitcoin Reverse Untraceable – Its blockchain would actually allow researchers, technology companies, and law enforcement to track and identify users with greater transparency than the current financial system. This discovery could turn the world of cybercrime upside down. Bitcoin tracking, over the next few years, could solve the theft of half a billion dollars in bitcoins from the world’s first cryptocurrency exchange, helping to enable… The largest takedown of the dark web drug market in historyled to the arrest of hundreds of child molesters around the world Bust of the largest child sexual abuse video site on the dark weband it results from that Firstly-, second-, And third– The largest law enforcement financial seizure in the history of the US Department of Justice.

This 180-degree reversal in the world’s understanding of the privacy properties of cryptocurrencies, and the epic cat-and-mouse game that follows, is the larger saga that unfolds in the book. Trackers in the Dark: The Global Hunt for Cryptocurrency Crime Lordsreleased this week in paperback.

It all started with the work of a young, puzzle-loving mathematician named Sarah Meiklejohn, the first researcher to extract traceable patterns in the apparent hype of the Bitcoin blockchain. This is an excerpt from Traces in the dark Reveals how Meiklejohn made the discoveries that would launch this new era of crypto-criminal justice.

In early 2013, The shelves of a windowless storage room in a building at the University of California, San Diego, began to fill with strange, seemingly random objects. Casio calculator. A pair of socks made of alpaca wool. A small pile of magic cards: The Gathering. a Super Mario Bros 3 Original Nintendo cartridge. A plastic Guy Fawkes mask of the type popularized by the Anonymous hacker group. An album by the classic rock band Boston on CD.

Periodically, the door would open, the light would come on, and a petite, dark-haired graduate student named Sarah Meiklejohn would enter the room, adding to the growing piles of assorted artifacts. Then, Meiklejohn heads back out the door, down the hall, up the stairs, and into an office she shares with other graduate students in the computer science department at UC San Diego. One wall of the room was almost entirely glass, offering a view of the sunny Sorrento Valley and the rolling hills beyond. But Meiklejohn’s office was facing away from that space. She was completely focused on her laptop screen, where she quickly became one of the strangest and most active Bitcoin users in the world.

Meiklejohn personally purchased each of the dozens of items in the bizarre and growing collection in the UC San Diego locker using bitcoin, purchasing each item almost randomly from a different seller before the cryptocurrency. Between those e-commerce orders and trips to the stock room, she was performing almost every other task a person could do with Bitcoin, all at once, like some kind of cryptocurrency fanatic having a manic episode.

It moved funds to and from 10 different Bitcoin wallet services, and also converted dollars into Bitcoins on more than two dozen exchanges such as Bitstamp, Mt.Gox, and Coinbase. I bet these coins on 13 different online gambling services, with names like Satoshi Dice and Bitcoin Kamikaze. It contributed its computer’s mining power to 11 different mining “pools,” which are pools that pool users’ computing power to mine bitcoins and then pay them a share of the profits. Repeatedly, she moved bitcoins to and from accounts on Silk Road, the first drug market on the dark web, without actually purchasing any drugs.

In total, Meiklejohn executed 344 cryptocurrency transactions over the course of a few weeks. With each one, I carefully noted in a spreadsheet the amount, the Bitcoin address I used for it, and, after mining the transaction on the Bitcoin blockchain and examining the public history of the payment, the address of the recipient or sender.

Meiklejohn’s hundreds of purchases, bets, and seemingly meaningless money movements were not, in fact, signs of a psychotic breakdown. Each was a small experiment, adding to a study of a kind that had never been attempted before. After years of claims about Bitcoin’s anonymity — or lack thereof — by its users, developers, and even its creator, Meiklejohn was finally putting its privacy properties to the test.

All of her manual microtransactions were time consuming and tedious. But Meiklejohn had enough time: While she was performing these steps and recording the results, her computer was simultaneously running queries on a huge database stored on a server that she and her fellow researchers at the University of California had created, algorithms that sometimes took as long as 12 hours. To spit out the results. The database represents the entire Bitcoin blockchain, i.e. approximately 16 million transactions that have occurred across the entire Bitcoin economy since its inception four years ago. For weeks on end, Meiklejohn combed through those transactions while simultaneously tagging sellers, services, marketplaces, and other recipients on the other end of hundreds of test transactions.

When she began exploring the Bitcoin ecosystem, Meiklejohn saw her work as almost like anthropology: What were people doing with Bitcoin? How many of them were saving cryptocurrency versus spending it? But as my initial findings began to emerge, I began to develop a more specific goal, one that ran completely counter to the crypto-anarchists’ ideal of Bitcoin as the ultimate privacy-preserving currency on the dark web: I aimed to prove beyond doubt that Bitcoin transactions can often be traced. Even when the people involved thought they were anonymous.