As follows from the report Untangling Shared Send in Bitcoin, this type of anonymisation does not provide sufficient security, in half of all cases allowing to detect both sender and receiver.

As the distributed ledger technology is gaining popularity, more and more people are looking for ways to maintain their pseudonymity in the network. One of such ways is to mix transaction with the help of special services (e.g., bitmixer) or the CoinJoin and CoinSwamp algorithms (Shared send). The researchers do not analyse the first method of anonymisation since it involves splitting of a deal into several transactions. Therefore, the connection between the transmitting and receiving addresses is nearly impossible to track. The second method involves combining several users to carry out a single transaction: the coins from different wallets are tangled together so that it becomes impossible to precisely associate the funds’ movement with particular wallets.

“Shared send mixing is one of the major types of anonymisation techniques in the Bitcoin network. Correspondingly, the problem of untangling shared send transactions (i.e., discovering value flows within the transaction) has great practical importance,” the researchers say.

Such methods of anonymisation can be employed by hackers. Published document is a theoretical approach based on computational experiments based on graph theory. As a result, the researchers proved that the majority of transaction tangling can be deciphered and analysed using moderate computational resources.

The publication is based on the analysis of a total of 10 million bitcoin transactions carried out between 27 May and 11 July 2016. The researchers found out that 2.5% of all bitcoin transactions have been processed with the help of the shared send technique, and about half of them could be untangled. The company plans to use the results of analysis in the forthcoming project - a web service for blockchain investigations and analysis BitFury Crystal Blockchain.

BitFury Group is one of the largest bitcoin miners and private blockchain infrastructure providers. The company develops and distributes software and hardware necessary for businesses, governments, organisations and individuals to securely move their assets in the blockchain. As reported earlier, BitFury proposed the establishment of a micropayments system Lightning Network, which will enable to scale processed transactions in the bitcoin network.

Lena Gabdullina