How Anonymous Is Bitcoin, Really?

A data scientist at Rice University has spent several years performing digital detective work with her lab assistant, Hail Mary, a shiny black computer with orange trim She has been analyzing the leaks from the public ledger that records transactions from the beginning of the coin.

The dream of the techno-utopian is represented by the virtual currency. The world would not run on centralized financial institutions but on an electronic money system distributed through a computer network according to a proposal by the inventor. The system would not rely on a trusted party to adjudicate transactions. The system would be anchored incryptographic proof instead of trust according to a 2008 white paper written by Satoshi Nakamoto. T-shirts proclaim: "In code we trust."

practicalities have proved difficult The system is harmful due to the amount of electricity it uses.

There were pros and cons to her project. She wanted to pierce the veil of anonymity, track the transaction flow from the beginning, and study how the world's largest coin economy came to be.

Users of the currency use a variety of disguises to hide their real identities. It was clear that there was confidence in the anonymity of the organization. The identity protections weren't so watertight after all.

Information leaking erodes the once-impenetrable blocks, carving out a new landscape of socio-economic data according to a new paper by Ms.

Ms. Blackburn consolidated many addresses, which may have represented many miners. In the first two years, 64 key players mined most of the Bitcoins that existed at the time.

Eric Budish is an economist at the University of Chicago. The authors gave Dr. Budish a two-hour video preview. He thought it was cool detective work when he realized what they had done. The paper should be titled "The Bitcoin 64."

The computer scientist Jaron Lanier was an early reader of the paper. The nerd in me is interested in math. The techniques used to get the information are fascinating.

He said that the demonstration will be surprising to some. Mr. Lanier said that the thing wasn't tightly sealed. I don't believe it's the end of the story. I believe there will be further innovation that will take place.

Perseverance was one of Ms. Blackburn's tactics. She said that she kicked it until it broke, recalling how the principal investigator described her method.

The Silk Road, a Bitcoin-based black market, was established in February of 2011. She exploited operational features of the software and developed new techniques. She was particularly interested in miners, the agents who verify transactions by engaging in an elaborate computational tournament, a puzzle hunt of sorts, guessing and checking random numbers against a target, in search of a lucky number. A miner makes money when they win.

The number of key miners depends on one's proximity to the undertow. Some scholars are questioning whether or not the currency is truly a peer-to- peer currency. The population under investigation was more concentrated than thought. The analysis showed that there were 64 big players over the course of two years, but the effective size of that group was only five or six. Only a few people held most of the mining power.

There were very few people who wore the crown who were arbiters of the network.

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There was a lot of temptation for Ms. Three-dimensional genome mapping is one of the focuses of the lab. He is interested in using new data to explore complex phenomena. He used more than five million books from the 1800's to the 2000's to write a quantitative cultural analysis. He referred to it as "culturomics". The team introduced a tool that lets users type in a word or phrase and see its usage over the centuries.

He wondered what treasures could be found in the data lake. He said that they have a record of all transactions. These data sets are amazing. There is a lot of information in there.

It wasn't easy to get at it. She was banned from the university's supercomputing cluster because she was suspected of mining the currency. She objected. She tried to convince them that she was doing research, but they were not interested.

In order to trace the patterns in the plots of numbers that were supposed to be random, Ms. Blackburn used a key tactic. One of the pieces of the mining puzzle is a short field of 0s and 1s tucked within a longer string. Information about a computer's activity was leaked. The behavior of the miners was reconstructed by Ms. Blackburn. The source code was modified to plug the leak shortly before the creator of the digital currency vanished.

After putting various toeholds to use, she began merging addresses to consolidate the effective population of mining agents. She compared the results with information from the discussion forums. The catalog of agents who mined most of the digital currency was around 200 at one point. She spit out 64. The lab had a computer cluster called Voltron.

The purpose of the study was to help the F.B.I. and the I.R.S. crack down on criminals who use the digital currency. The identities of two of the top players were identified by the researchers. Romney was a candidate for president in 2012 when he was involved in a fraud and extortion scheme. The agent is associated with Ross Ulbricht. The Silk Road was created by "DreadPirate Roberts". The true identity of the first agent is not known.

Mark Gerstein is a professor of genetics at Yale University. He stored his genome on a private platform that allowed for a secure record. He pointed out that in a public setting, a data set's size and subtle patterns made it susceptible to breeches even as the data remained immutable. Ms. Blackburn wasn't messing with the ledger.

That is the amazing thing about big data. It starts to leak information if you have a lot of data. He said: "Nonobvious linkages can arise when you combine one data set with another to make a bigger data set."

She looked at the income the agents had earned from mining. She found that within a few months of the introduction of thecryptocurrencies, a classic distribution of income inequality emerged, with a small portion of the miners holding most of the wealth and power. After Vilfredo Pareto, a 19th century economist, mining income demonstrated a Pareto distribution.

The lab created a coin that could be used to buy snacks from a store run by students. Some CO2 miners became more successful than others, and the store marked up snack prices to cater to the tastes of the wealthy.

The people who had a lot of resources were in charge of what the store would acquire, which other people didn't like. There was a revolt when the shop started charging in CO2 to use the coffee machine.

The concentration of resources threatened the network's security with a miner's computational resources being directly proportional to his or her mining income. On several occasions, individual miners wielded more than 50 percent of the computational power and, as a result, could have taken over like a tyrant. They could have cheated the system and spent the same amount of money multiple times.

Assuming they were error-free, the investigation's findings provide empirical confirmation of an "intuition" that has been floating around for a while. A technique for tracking a type of transaction flow called a peel chain has been devised by Dr. Meiklejohn.

She said that everyone knew that mining was centralized. There aren't that many people working in the mines. It was even more true at the beginning of this century. She said that we need to examine the question of what should be done about it. Is it possible to make mining more decentralization? The field might take the issue more seriously if the results of this investigation are any indication.

Some miners have the power to execute 51 percent attacks, but they often choose not to. Even though the decentralization-based fraud prevention mechanism had been compromised, they acted altruistically.

The tools of experimental economics were used in the analysis. The social dilemma faced by the founders was modeled after how people behave when they find themselves as the trustees of an appreciated good.

People don't like to kill the golden goose because they don't want the group to know. He said that the security of the network was changed by the fact that it was vulnerable to individual decision makers.

He said that decentralization protects the block chain. The dominant miners didn't attack it when it became centralized. The idealized model people have for why these cryptocurrencies are secure is different than the one we have today.

The paper stated that the early success of the project was due to the cooperation of a small group of altruistic founders.

Glen Weyl is an economist at Microsoft Research who was consulted on the research. Dr. Weyl said that the rhetorical role was powerful because it bound together the community. The myth and promise were in conflict with reality. It is fascinating and predictable, repeating the historical patterns it aspires to eliminate.

Mr. Lanier referred to it as adecentralization theater. Cryptocurrencies make us believe we are in utopia. Everything is not tied to a central authority. Everyone is treated equally. The idea of democracy without annoyance is there.

He said that the systems end up hiding a new elite in a new arena. The technology affects both ways. Even if you think you can achieve using new technology, it can be used against you. Scientists can use the same techniques to investigate the castles put up by the elite.

The moral of the story is that you need to be careful. A horizon beyond which it will be useful is what there is a limited time frame for. You can't assume that private data will be private forever when it's made public.