Improving Address Clustering in Bitcoin by Proposing Heuristics

Abstract

The Bitcoin system uses anonymous transactions to protect users’ privacy, but attackers can use this defect of bitcoin transactions to discover the association between bitcoin addresses. At present, address clustering methods can make use of these vulnerabilities to associate the address as an entity to a certain extent. However, these address clustering methods have problems such as an insufficient inference rate of change addresses, inability to identify mixing transactions, and low efficiency of algorithm implementation. We propose some solutions to these problems. 1) We improve the method of change address identification to identify and mark more of them. 2) We propose a heuristic address clustering method related to mixing transactions, which can identify their privacy vulnerabilities. 3) We propose an incremental address clustering method that can store the historical state and more quickly discover the anonymity defect of Bitcoin. We use real Bitcoin transaction data to demonstrate our method’s feasibility and reliability.