With an increase
in the utilization and popularity of bitcoins and the overall blockchain
ecosystem, anonymousness in transactions is becoming the preference of many
users. There’s some distinction between anonymity while transacting via
cryptocurrency, and anonymity while using a search engine. As Bitcoin’s one of
the many fundamental principles is decentralization, keeping some portion of
the user’s information hidden is somewhat complicated. The complicatedness
occurs concerning the algorithms being written at the backend. Another reason
for the increase in anonymity is the fact that models around the blockchain
framework are experimenting on making it utilized across industries and in a
sustainable fashion. This piece focuses on various protocols through which one
may decide whether a scenario could be built practically or not.
Anonymity in
a Bitcoin
The whole concept
of bitcoin when designed and built was to become an anonymous payment system. A
framework where information between public key/Bitcoin addresses isn’t linked.
But in practicality, there exist some properties through which one could
analyze the features of a transaction, and how a transaction is being implemented.
Through some techniques, one could identify the owner’s behavior via bitcoin
address. One reason identified for anonymity not being effective was that not
many users were present in a network making a specific feature get quite
visible and easy to detect. Anonymity in a protocol may not operate properly
without a communication channel. As the anonymity characteristic is still being
researched and experimented by technical experts to date, there’s a probability
that a fresh prototype may be built in the future.
Another prototype
being developed to make transactions anonymous is Dandelion. Anonymousness
includes two variables, ‘recall’ and ‘precision’. A recall is a probability of
identifying, while precision detects the exactness of the estimator. The
prototype uses a dandelion spreading technique for achieving anonymity. The
technique consists of two phases. In the first phase, the message is spread
over a randomly-selected area for a non-structured number of hops. In the
second phase, the message is broadcasted using diffusion until the entire grid
receives the message. Employing these phases helps in optimizing anonymity and
latency.
Tracking
Digital Footprints:
The most recent
digital currency started being utilized by some percentage of the population in
Cryptocurrency. The idea of using a decentralized currency daily came around
2008-09, but it became a reality only around 2014-15. A currency’s worth
increases as the trust in individuals using it increases. It was so when gold
or silver was used as a currency. It certainly was true and even is true up to
some extent even today regarding currencies like Dollar, Yen, Pound, etc. The
same is happening with cryptocurrencies. As major financial institutions are
realizing it, they’re also starting to invest in them. But to avoid using it illegally,
some form of tracking is required for accountability’s sake. One such prototype is mentioned below.
As one may see in
the image above, the proposed prototype takes into account a little complex
route involving regulatory organizations also so that the probability of the
transaction being done illegally doesn’t arise. There are many web browsers
(like Tor) in which money laundering, funding terrorist organizations, and
similar activities take place. To avoid such scenarios and to intensify the
reliability, and trust of the user towards regular usage of cryptocurrencies,
such type of fresh mechanism was built.
Blindly
Signed Contracts:
Many experts have
been researching in resolving the anonymity issue. Another piece of research shows that through ‘epochs’ (on-blockchain) and ‘micro-payment
channel networks (off-blockchain)’, the issue of anonymity could be resolved. By
using the off-blockchain method, the confirmation of blocks happens within a
few seconds rather than a few minutes. Using these techniques, it was observed
that the transaction was unforgeable, DoS Resistant, and Sybil Resistant as
well. Employing the on-blockchain and off-blockchain technique turned out to be
quite effective, just like its comparatively harder (almost impossible) to
crack an iOS operating system in comparison with an android or a windows
operating system.
Anonymity in
Bitcoin via P2P network Traffic:
Technically
speaking, bitcoin functions as a data structure. Just like in a linked list,
some data from the prior block is used, after which it’s added and then sent to
the consecutive block. The block which receives the data again takes some data
as input, and then adds the data before sending it to the consecutive block. P2P network uses a gossip protocol for circulating the messages
to the rightful receiver. CoinSeer was developed after getting inspired by Dan
Kaminsky’s Black Hat presentation in 2011. To develop the protocol, initially,
a certain type of pattern was found. Then, the pairing of bitcoin address and
internet protocol (IP) was created. After this, the pairings were computed and
analyzed statistically. Then came the part where ownership pairings were
detected. Finally, the insignificant pairing was removed. In the end, applying
highly conservative constraints, the desired outcome was achieved.
2nd
Generation Bitcoins Anonymization Techniques:
With constant up-gradation
in technology and blockchain being decentralized, mechanisms to overcome the
anonymity issue becomes like a ‘piece of cake’. The second generation of anonymization techniques aims at eliminating the single point of failure while
being deployable in the present Bitcoin ecosystem. Some techniques include Fair
Exchange, Coin Swap, Coin Join, Stealth Address.
The above image is
an example of Coin Join. In layman words, using this technique is like using a
one-time-password (OTP). The transaction’s input needs to have a genuine
signature independent of other inputs. Each input is computed over the complete
transaction and hence is valid for only that particular transaction. The
anonymity in this type of technique depends on the extent of differentiability
and the difficulty of inferring valid subsets of inputs and outputs.
Concluding
Remarks:
As one could infer that numerous prototypes have been developed to date, and still researches are going on to build a foolproof technique. PrimaFelicitas is among few companies which have offices located at prime areas across the world i.e. where research around the blockchain happens 24*7. Besides that, the company’s founders have an educational background in computer science in the engineering field, and extensive experience related to such technologies as well. To know more about the upcoming platforms or to get some assistance to contact at PrimaFelicitas.
