Abstract
The modern financial world has seen a significant rise in the use of cryptocurrencies in recent years, partly due to the convincing lure of anonymity promised by these schemes. Bitcoin, despite being considered as the most widespread among all, is claimed to have significant lapses in relation to its anonymity. Unfortunately, studies have shown that many cryptocurrency transactions can be traced back to their corresponding participants through the analysis of publicly available data, to which the cryptographic community has responded by proposing new constructions with improved anonymity claims. Nevertheless, the absence of a common metric for evaluating the level of anonymity achieved by these schemes has led to numerous disparate ad hoc anonymity definitions, making comparisons difficult. The multitude of these notions also hints at the surprising complexity of the overall anonymity landscape. In this study, we introduce such a common framework to evaluate the nature and extent of anonymity in (crypto) currencies and distributed transaction systems, thereby enabling one to make meaningful comparisons irrespective of their implementation. Accordingly, our work lays the foundation for formalizing security models and terminology across a wide range of anonymity notions referenced in the literature, while showing how “anonymity” itself is a surprisingly nuanced concept, as opposed to existing claims that are drawn upon at a higher level, thus missing out on the elemental factors underpinning anonymity.
Highlights
Cryptocurrencies are undeniably one of the most attention-grabbing developments in security research of the last decade
Our objective in this work was to find a solution to our research question, i.e., to formulate a method to achieve a fine-grained systematization of anonymity modeling suitable for decentralized systems such as modern cryptocurrencies
We have demonstrated how such complexity is evident in real-world cryptocurrency schemes in a separate work, which focuses on specific case studies based on a subset of the general framework described here [32]
Summary
Cryptocurrencies are undeniably one of the most attention-grabbing developments in security research of the last decade They continue to open up new classes of inquiries for the crypto and distributed systems communities, while arguably offering tangible financial benefits to the common man and woman. The decentralized nature, ease of conducting cross-border transactions, resistance to censure, and promises (or hopes) of privacy and anonymity are factors that have contributed towards this popularity. Bitcoin is the first and by far the most widely used true (By which we mean permissionless, fully decentralized, with democratic governance, and transparently operated—in other words, conducive to trust from first principles.) cryptocurrency at the time of this writing, and has attracted much attention with respect to its privacy and anonymity aspects
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