Bitcoin Privacy and Secrecy

Brian Ridings

What is Bitcoin
First decentralized digital currency
Public transactions enforced by crypto
Private key to sign transactions

Distributed database
Database created using a block chain hash with a
nonce (SHA-256)
25 bitcoins created when new chain is created

P2P (no third party)

Bitcoins Continued
Mining
SHA-256 Hash on previous hash and new block
Brute-force a hard hash using a difficulty level and a
nonce.

Illegal in multiple countries

Russia, Vietnam, Singapore

Mining Example
sha256 hash of
<previous block hash>-<transactions hashes>-<new hash of transaction for your reward>-<nonce>

Depending on the difficulty is the number of

zeros you need in the hash preceding the
hash
Current number is 13
00000000000001adf44c7d69767585...

Little Privacy and Security

Built in Traceability
Public transaction history with addresses
No sender, receiver or relationship anonymity to
addresses.
Possible anonymity through person to address
Linkability and observability from public ledger.

Public balance
Know if you can pay

Built in Traceability
IP address logged from user interactions
IP address logged when you make a transaction

Aggregating addresses together

Other Traceability
Public linkability to Username, Company,
Person, project. (Donation)
Converting to real money

Improve Privacy
Use Change addresses to move your money
when making a purchase.
Use large pots move transactions through.
Use alt coins to move money to other
addresses in other currencies
Use eWallets (not secure but private)

Alternate Coins
Dash (aka DarkCoin)
Dark Wallet
Shared Coin
ZeroCoin

Dash (DarkCoin)
Automatically combine users transaction
with transactions of two other users

Dash Privacy
Sender has no anonymity
Receiver has anonymity there for
relationship anonymity
Cannot link the sender to the recipient

Resources
https://bitcoin.org/en/protect-your-privacy
https://www.dashpay.io/wpcontent/uploads/2014/09/DarkcoinWhitepaper.pdf
http://anonymity-in-bitcoin.blogspot.
com/2011/07/bitcoin-is-not-anonymous.html
http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf