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From the Schneier on Security blog



Andy Greenberg wrote a long article — an excerpt from his new book — on how law enforcement de-anonymized bitcoin transactions to take down a global child porn ring.

Within a few years of Bitcoin’s arrival, academic security researchers — and then companies like Chainalysis — began to tear gaping holes in the masks separating Bitcoin users’ addresses and their real-world identities. They could follow bitcoins on the blockchain as they moved from address to address until they reached one that could be tied to a known identity. In some cases, an investigator could learn someone’s Bitcoin addresses by transacting with them, the way an undercover narcotics agent might conduct a buy-and-bust. In other cases, they could trace a target’s coins to an account at a cryptocurrency exchange where financial regulations required users to prove their identity. A quick subpoena to the exchange from one of Chainalysis’ customers in law enforcement was then enough to strip away any illusion of Bitcoin’s anonymity...