Adam Bannister

Editor, IFSEC Global

Author Bio ▼

Adam Bannister is editor of IFSEC Global. A former managing editor at Dynamis Online Media Group, he has been at the helm of the UK's leading fire and security publication since 2014.
December 15, 2015

Sign up to free email newsletters

Download

Dorgard Pro: Holding fire doors open – until the alarm sounds

“Bitcoin Anonymity a Myth” Says Analyst as Governments Seek Ban on End-to-End Encryption

Bitcoin anonymity is more fragile than many believe, according to a research analyst at Frost & Sullivan.

As a decentralised cryptocurrency , which means transactions are encrypted and there is no central authority or issuer like a bank, Bitcoin is favoured by the politically oppressed, the criminal underworld and technophiles suspicious of traditional banks.

But the evolution of blockchain analysis – the piecing together of transaction details to reveal details of otherwise obscured transactions – and regulatory changes sought by numerous governments could expose the identity of users of the peer-to-peer digital currency, says Vijay Michalik, research analyst for digital transformation at Frost & Sullivan.

Lw enforcement can deploy blockchain analysis, which collects metadata, incidental information linked to transactions and IP addresses and establishes common connections, to identify and blacklist criminals.

Seeking to undermine the financial activities of terrorists and criminal gangs many governments are seeking to ban end-to-end encryption, which is also used in popular consumer software like WhatsApp or Apple’s iMessage.

Threatening the currency’s anonymity, which many of its advocates would actually like to see strengthened through protocol changes, such a move would weaken the currency’s appeal. Some civil liberty campaigners defend the anonymity principle on the grounds that Bitcoin serves as a safe haven from oppressive governments for political dissidents.

“True anonymity in Bitcoin is only a myth, currently,” says Michalik. “There is full visibility of all transactions.

“While they’re only linked to a pseudonym and not a real-world name or address, every transaction is viewable through a number of different blockchain browsers.”

As Blockchain analysis techniques improve, Michalik believes, swathes of addresses could be de-anonymised over time, exposing hitherto hidden financial information to the public – and government – gaze.

“For most users, income and complete spending history would be available for anyone to see, from friends to colleagues, commercial businesses, governments and criminals,” continues Michalik. “For businesses operating in Bitcoin, cash flow, supply, demand and other competitive information would be exposed to their rivals.

“In this case, Bitcoin is a worse option than traditional finance channels.”

Discover the latest in cyber security - join the live conversation

Don't miss the Future of Security Theatre at IFSEC International 2019 - June 18-20, ExCeL London

As Europe's leading integrated security event, IFSEC 2019 is delivering a programme of education dedicated to innovation at the cutting edge of the security industry, courtesy of IFSEC’s education partner Tavcom.

Get your free ticket today to join the CPD-accredited sessions and presentations tackling the critical issues around advancing technologies.

Related Topics

Leave a Reply

avatar
  Subscribe  
Notify of

Sign up to free email newsletters