Report considers Bitcoin’s anonymity insufficient

A new report by an open source advisory group has now found that Bitcoin users are still facing anonymity issues.

The Open Bitcoin Privacy Project (OBPP) published its study this week. The study is a survey of Bitcoin’s anonymity and privacy in 2016 and identifies vulnerabilities in the ecosystem.

The team consists of developers and scientists from the Bitcoin loophole area

OBPP has previously addressed anonymity and Bitcoin loophole issues and published two issues on the subject in 2015. The new report identifies four key threats that Bitcoin loophole users faced last year. These threats included aggregating co-owner transactions into individual transactions, re-using Bitcoin addresses, tracing a network identity back to specific Bitcoin addresses, and aggregating specific addresses to network activity.

The publication may address a core aspect here based on the Bitcoin. The digital currency provides a pseudonymous, open-access service to send money around the world. For some, financial privacy is the main reason why they have gone digital at all.

Security risks & judicial authorities of the news spy

The report also discusses how security risks can undermine the news spy and what steps need to be taken to mitigate these threats. For example, OBPP recommends the use of the Tor network or similar services. They are designed to route the data through various points around the world to disguise the news spy origin and destination. This is to bypass the fact that an identity is tied to a particular node.

The report appears in the midst of great concerns on the part of governments around the world. Anonymisation skills are a big issue. Last month, judicial authorities, including Interpol and Europol, called for raids on so-called transaction mixers. These tools disguise the origin of transactions before they are linked to other transactions.

In a previous conversation between CoinDesk and OBPP member Kristov Atlas, Atlas said the current status of the ecosystem’s privacy was “pretty bad”. He stressed that the work on wallet anonymity has degenerated over the past two years.

He continued:

“Practical implementations to improve privacy have currently stopped. In general, I would give the industry an insufficient rating.”

From Atlas’ point of view, the reasons for the weak privacy are particularly regulatory reasons, but also technical reasons, which combine to form a “confluence of challenges”.

Leaving out the challenges, Atlas stressed that anonymity should be preferred by companies when they offer tools for Bitcoin.

“I think it’s important to put these privacy concerns on the to-do list of companies and remind them that it’s important and that they haven’t really taken care of it yet,” he said.