Abstract
This paper investigates the anonymity of bitcoin transactions and significance of awareness of the technology by bitcoin users, alongside their experiences in tracing transactions. Bitcoin enables users to carry out transactions anonymously with the virtual currency without unveiling where the real-world source of the income has come from. These transactions may occur without revealing locations or any personal identifiable information of the person who is sending or receiving bitcoins. While there are existing surveys which test bitcoin users’ awareness of the technology, they do not focus on bitcoin users’ own experience using the technology in terms of tracing transactions and use of anti-forensic tools to increase the level of anonymity. This paper reports significance of users’ opinions on traceability and anonymity of bitcoin transactions and compares users’ viewpoints collected from a survey with experimental findings observed using network analysis tools.
Highlights
Bitcoin offers its users a virtual currency which can be transferred to any bitcoin wallet in the world with little effort and small transfer fees
The results showed that while tools like Wireshark, Blockchain.info and a bitcoin client can be used to trace potentially illicit financial transactions through the bitcoin blockchain, tracing pseudonymous bitcoin addresses did not yield personal identifiable information (PII)
Bitcoin transactions work on TX functions in relation to the protocol, which require a signature when initialized, if the signature does not match the owner of the UTXO, it will return an error
Summary
Bitcoin offers its users a virtual currency which can be transferred to any bitcoin wallet in the world with little effort and small transfer fees. What makes Bitcoin anonymous is the lack of accompaniment between the public key and any requirements of identity data [3]. The introduction of “mixing services” or dark wallets allow for multiple people to contribute to a movement of bitcoins, which can expertly disguise a transaction by mixing it with other transactions, and sending that “mixed” transaction at a different time within that day [4]. This stops analysis being done on the time and amount that was sent on a transaction. In addition to mixing services, the use of a virtual private network (VPN) and a Tor type browser makes it more difficult to track a transaction [1], it does not make it impossible or a momentous barrier to tracing transactions
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